/raid1/www/Hosts/bankrupt/CAR_Public/990907.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Tuesday, September 7, 1999, Vol. 1, No. 150


ADAC LABORATORIES: Intends To Contest Securities And Derivative Suits
ALLSTATE INSURANCE: Fraud Charges Filed Over Quake Engineering Reports
AMEX TRUST: Loses Motion to Dismiss ERISA Fiduciary Breach Suit In N.Y.
ATLANTIC RICHFIELD: Maine Ct To Hear Arguments On Class Cert On Sept 16
AVTEL COMMUNICATIONS: Contests Suit In Oklahoma Over Privacy Violation

AVTEL COMMUNICATIONS: Will Defend Vigorously Securities Suit In CA
AVTEL COMMUNICATIONS: Joins Matrix To Contest Securities Suit In Texas
BLUE CROSS: 9th Cir. Clears Way For CMA Class Over Physicians Contract
CHAMPION ENTERPRISES: Stull, Stull Files Securities Suit In New York
CHRYSLER CORP.: MI Ap. Ct. Denies Class Certification in Lemon Law Case

CREDIT ACCEPTANCE: 8th Cir. Overturns Order For Lack Of Jurisdiction
EXIDE CORP.: Settles Securities Fraud Lawsuit
EXIDE CORP.: Sued In Different States Over Sale Of Defective Batteries
EXIDE CORP: Settles With Florida Over Sale Of Defective Batteries
FEN-PHEN: Oklahoma Residents Sue AHP And Pharmacies Stewart And Eckerd

FORD MOTOR: Suit Over Racism In Screening Test Dismissed At 6th Cir.
HUB OIL: Canadians Are Seeking Class Action Over Dioxin From Explosion
IMASCO LTD.: Investors Demand Explanation On Agreement To BAT Deals
METROMAIL CORP.: Direct Marketing Service Faces Nationwide Class Action
PAYDAY LENDERS: Nationwide Budget Sued Over Practice Of Debt-Collection

PHYSICIAN COMPUTER: May Reach Settlement For Securities Suit In N.J.
SAN FRANCISCO: Ct. Orders To Build New Jail In San Bruno
STEWART ENTERPRISES: Milberg Weiss Files Securities Suit In Louisiana
SUPERMARKET PRICE-FIXING: Jury Clears 3 CA Markets Of Complaint On Eggs
TACO BELL: Sp Ct Certifies Class Over Violation Of California's OT Laws

TENNESSEE VALLEY: Big Steelmaker Sues TVA For Alleged Overcharges
TOBACCO LITIGATION: Florida Ap. Ct. Spares Industry Of Lump-Sum Damages
UGA: Three White Female Plaintiffs Challenge Admissions Policies
US LIQUIDS: Milberg Weiss Files Securities Suit In Texas
US LIQUIDS: Shepherd & Geller File Securities Suit In Texas

US LIQUIDS: Steven E. Cauley Files Securities Suit In Texas
VIAGRA: Ct Denies Oxford Health’s Motion To Dismiss Complaint
WAL-MART: Contractor's Suit Upheld But No Damages For Their Employees
WORKER ILLNESS: Workers Sue Govt Contractors In Plutonium Scandal


ADAC LABORATORIES: Intends To Contest Securities And Derivative Suits
Commencing in December 1998, a total of eleven class action lawsuits
were filed in federal court by or on behalf of stockholders who
purchased Company stock between January 10, 1996 and December 28, 1998.
These actions name as defendants the Company and certain of its present
and former officers and directors. The complaints allege various
violations of the federal securities laws in connection with the
restatement of the Company's financial statements and seek unspecified
but potentially significant damages. In April 1999, these actions were
ordered consolidated and, in July 1999, the plaintiffs filed a
consolidated amended complaint. The Company intends to contest this
action vigorously.

A stockholder derivative action, purportedly on behalf of the Company
and naming as defendants Company officers and directors was also filed
in state court seeking recovery for the Company based on stock sales by
these defendants during the above time period. The Company is also a
defendant in various legal proceedings incidental to its business.

ALLSTATE INSURANCE: Fraud Charges Filed Over Quake Engineering Reports
The president of a company hired to do engineering reports for Allstate
Insurance Co. after the Northridge earthquake was charged with three
counts of fraud, according to the U.S. attorney's office. LeAndre Drake
Davis, 36, of San Jose is scheduled to appear in court Sept. 20 to enter
pleas, said Thom Mrozek, a spokesman for the U.S. attorney's office. "He
was hired by Allstate to go out to various locations to do inspections
and generate reports," Mrozek said. "But the reports were fraudulent for
a number of reasons."

In some cases, the U.S. attorney's office contends, reports were filed
by Davis' company--Shadowbrook Design Group--even though no engineers
had inspected the property in question. In others, the reports were
false or incomplete, Mrozek said. In addition, Davis is accused of
submitting inflated bills for his company's work to Allstate.

If convicted on all counts, Davis could be sentenced to a maximum of 15
years in prison, Mrozek said.

Last year, Allstate settled a class-action lawsuit filed by
policyholders who alleged their earthquake damage claims were mishandled
by engineers hired by the insurer. (Los Angeles Times 9-2-1999)

AMEX TRUST: Loses Motion to Dismiss ERISA Fiduciary Breach Suit In N.Y.
American Express Co. subsidiary American Express Trust Co. has lost its
motion to dismiss a New York federal suit that claimed the management
investment services company breached its Employee Retirement Income
Security Act (ERISA) fiduciary duties by purchasing near-worthless stock
for an EMCOR Group Inc. retirement plan. Koch v. Dwyer et al., No.
98-CV-5519 (SD NY, July 22, 1999).

AET had argued that its actions did not violate ERISA's fiduciary
obligations because it was simply a directed fiduciary or trustee and
lacked the discretion to independently buy or sell stock for the plan.

Southern District of New York Judge Robert P. Patterson Jr. disagreed.
He held that the question was not whether AET was a directed fiduciary,
but whether or not the investment manager knew the stock purchases
violated ERISA's prudent investment standards. That question should not
be resolved on a motion to dismiss, he said.

In 1994, Connecticut-based JWP Inc. emerged from Chapter 11 bankruptcy
as EMCOR. Many of its top officers remained the same.

Before and during the reorganization, JWP offered its employees a
retirement plan known as the JWP Employee Stock Ownership Plan (ESOP).
EMCOR later offered the employees a 401(k) plan known as the EMCOR Group
Inc. 401(k) Retirement Savings Plan, which was the successor in interest
to the ESOP.

EMCOR appointed a committee of trustees to oversee the 401(k) plan and
the committee retained AET to manage the plan's investments. The 401(k)
plan was a defined contribution plan under which employees could
contribute up to 12% of their pay and EMCOR would match the
contributions. Plan participants had the option of investing their money
in several funds, including a fund made up solely of JWP stock.

The suit alleges that by 1991, JWP was in a precarious financial
condition and its stock was near worthless. For the next two years,
however, ESOP and later EMCOR 401(k) plan committee trustees allegedly
authorized the purchase of JWP stock while concealing the stock's actual
value from plan participants. AET allegedly made the purchases at the
direction of the plan committee.

The class action suit at bar was filed by Thomas F. Koch on behalf of
other plan participants. The action alleged the plan committee and AET
had breached their fiduciary duties to plan participants by purchasing
the JWP stock for the plan at highly inflated prices. JWP filed for
bankruptcy in December 1993.

AET and the committee moved to dismiss the complaint, claiming, in
short, that it was only following orders and that under ERISA it had no
obligation to look further than those directives.

Judge Patterson noted that directed trustees such as AET must follow a
plan committee's directions "unless 'it is clear on their face' that
those directions constitute a breach of fiduciary duty." "If AET were
aware that the direction to invest in JWP common stock was imprudent or
that the fiduciaries' direction to make that investment was based on an
inadequate investigation, then AET would not be immune from liability
because it would have knowingly carried out a direction that was
contrary to ERISA," the judge said.

"What AET knew about the prudence of the investment in question, about
the basis on which the fiduciaries directed AET to make that investment,
and about the alleged fraud and conflicts of interest on the part of JWP
Board Chairman Andrew T. Dwyer, JWP CFO Ernest W. Grendi, and others are
factual questions inappropriate for resolution on a motion to dismiss,"
he concluded.

Judge Patterson's ruling also rejected the defendants' motion to dismiss
on statute of limitations grounds, i.e., the suit was filed within the
ERISA's six-year limitations period, and settlement of a prior related
suit released Dwyer and Grendi from Koch's action.

The judge held that the prior suit had involved securities fraud based
on securities purchased on the open market. The case at hand, he pointed
out, involved non-open market transactions in which securities were
purchased directly from JWP by the trustee fiduciaries of the EMCOR
401(k) plan. (Bank & Lender Liability Litigation Reporter August 18,

ATLANTIC RICHFIELD: Maine Ct To Hear Arguments On Class Cert On Sept 16
Both sides are claiming victory after a Cumberland County Superior Court
judge removed some defendants from a MTBE lawsuit and left in others.

The lawsuit has broad implications. If it is successful, it could lead
to the testing of 250,000 private wells at a cost that could exceed $ 15
million. In addition, landowners with wells contaminated with the fuel
additive MTBE could ask for clean-up costs and damages.

Superior Court Justice Roland A. Cole handed down a decision that
rejected Atlantic Richfield Co.'s motion that it be dismissed from the
case. In another decision handed down the same day, Cole, however,
dismissed defendants Nancy J. Balter, Patricia W. Aho and George Smith
from the case.

Balter, of Colorado, has worked for Atlantic Richfield. Aho, of Maine,
is head of the Maine Petroleum Association. Smith, of Mount Vernon,
headed an organization called Breathe Clean, which lobbied for the use
of MBTE.

Smith, who writes a column for the Kennebec Journal, said that when he
lobbied for reformulated gas, it appeared to be the best available way
to meet federal clean-air standards. 'Based on the information I had, I
didn't think we had any choice. ... This was far superior to the CarTest
program which everybody hated,' said Smith. He said he was surprised by
the results of the state study. 'I wasn't aware that this could be such
a problem,' said Smith.

The decisions essentially left the defendants, including ARCO Chemical
Co. and Lyondell Chemical Co., with the deep pockets needed to pay for
significant damages in the lawsuit, but removed individuals who had
lobbied on behalf of the fuel additive.

Arguments on whether the lawsuit should be certified in Maine as a
class-action lawsuit are scheduled Sept. 16 in Cumberland County
Superior Court.

Following those arguments, a judge will decide whether the lawsuit can
go forward as a class-action case - essentially a case brought by a
small group of people representing a large group of people.

Seven Maine counties - Andros coggin, Cumberland, Kennebec, Knox, Waldo,
York and Lincoln - used reformulated gas, beginning in 1994. MTBE is a
component of gasoline that has been used in small amounts - about 2
percent - for several decades. Reformulated gas contains between 11
percent and 15 percent MTBE. Use of reformulated gas was discontinued
after a state study, which found wells contaminated with MTBE in all
Maine counties, was released in October 1998. The highest levels of
contamination were found where reformulated gas was sold and where
populations were most dense. In Kennebec, Cumberland and Sagadahoc
counties, more than 20 percent of tested wells were contaminated.
Statewide about 15 percent of tested wells were contaminated.

William Kayata, of the Portland law firm of Pierce Atwood, said the
decision to remove the individuals who advocated for the reformulated
fuel protects free speech. 'This protects any person in Maine who wishes
to advocate a position on a matter of public importance,' said Kayata
Tuesday. The benefits of MTBE have been part of the public debate since
1986, according to Kayata. 'A group of class-action lawyers tried to
stifle that debate ... in our democracy that is a real big deal,' he

The high solubility of MTBE allows it to travel much faster in
groundwater than other gasoline components and more easily contaminate
wells after a relatively small spill.

The lawsuit alleges that advocates touted the benefits of MTBE while not
discussing the dangers. In some cases advocates represented themselves
as part of a grass-roots movement when they were actually supported by
companies that marketed or manufactured the chemical, according to the

Attorney Jon Hinck, of the law firm Lewis Saul & Associates, of
Portland, who represents the plaintiffs, said he was disappointed in the
decision to remove Aho, Smith and Balter. 'These people were actually
doing the dirty work in Maine,' said Hinck.

Hinck, however, said the more important decision was the ruling that
Atlantic Richfield Co., should remain a defendant. 'The key thing is a
small group of companies, private interests, decided for their own
benefit that a change in gasoline would be a good thing,' said Hinck.
'Due to properties fully known to them, it created a new risk,' he said.

The most important question is whether the companies that created the
risk should pay the cost of cleanup. Otherwise, he said the cost will
fall on taxpayers and private-property owners. (Kennebec Journal
(Augusta, ME) 9-1-1999)

AVTEL COMMUNICATIONS: Contests Suit In Oklahoma Over Privacy Violation
On June 28, 1999, the Company was served with a complaint filed in the
District Court of Garfield County, Oklahoma. The complaint is styled as
a class action with Alexander B. McNaughton as representative of the
class. The suit alleges that members of the class received unsolicited
facsimile transmissions from an agent of the Company in violation of the
Telephone Consumer Privacy Act. The Company has filed an answer denying
the allegations. The parties are currently beginning the discovery
process. The Company intends to defend this complaint vigorously.

AVTEL COMMUNICATIONS: Will Defend Vigorously Securities Suit In CA
The Company is a defendant in a class action under the federal
securities laws (In re AvTel Securities Litigation, Case No. 98-9236)
currently pending in the United States District Court for the Central
District of California. This litigation is the consolidation of five
separate class action suits that were filed against the Company and
certain of its officers, alleging securities fraud. The plaintiffs are
purported investors who purchased shares of AvTel common stock on
November 12, 1998. On that date the trading price for the common stock
on The Nasdaq SmallCap Market rose from $2.125 to $31 per share, with
more than 3 million shares trading. The plaintiffs allege that a press
release issued by AvTel on November 12, 1998, announcing the launch of
its subsidiaries' DSLink Service for high speed Internet access, and an
interview with AvTel Chief Executive Officer Anthony E. Papa concerning
that service, as reported by Bloomberg News, were misleading and
defrauded the market for AvTel's publicly-traded securities.

This matter is still in the early stages of litigation. The plaintiffs
filed a consolidated and amended complaint on March 15, 1999. The
Company's initial motion to dismiss the matter was denied; however, its
motion to reconsider this denial in light of a recent appellant decision
under the Private Securities Litigation Reform Act is currently pending.
The plaintiffs have yet to state the amount of damages they seek.

The Company contends that its statements were not misleading, and
intends to defend vigorously this securities litigation.

AVTEL COMMUNICATIONS: Joins Matrix To Contest Securities Suit In Texas
On May 28, 1999, Matrix was served with a complaint filed in the
District Court of Dallas County, Texas, by E. Craig Sanders. Mr. Sanders
was an executive of Matrix Telecom from late 1994 until he was
terminated by Matrix Telecom in May 1995. In addition to Matrix, the
defendants in the action are Ronald L. Jensen, United Group Association,
Inc. (an entity affiliated with Mr. Jensen) and AvTel. The complaint
alleges that Mr. Jensen wrongfully foreclosed on Matrix Telecom stock
owned by Mr. Sanders after Mr. Sanders failed to repay a debt to Mr.
Jensen. Matrix Telecom then repurchased the stock from Mr. Jensen
pursuant to an existing buy/sell agreement with Mr. Sanders. In addition
to his claim against Mr. Jensen, Mr. Sanders is apparently seeking
171,548 shares of AvTel's common stock, or its monetary equivalent, from

The parties are currently beginning the discovery process. AvTel and
Matrix Telecom intend to defend this complaint vigorously.

BLUE CROSS: 9th Cir. Clears Way For CMA Class Over Physicians Contract
The United States Court of Appeals for the Ninth Circuit on August 27
sided with the California Medical Association, clearing the way for CMA
members as a class to sue Blue Cross of California for breach of
contract. The lawsuit, related to retroactive fee reductions in 1993,
1994, and 1995 for possibly 30,000 physicians participating in Blue
Cross's Prudent Buyer Plan, also charges Blue Cross with breach of the
implied covenant of good faith and fair dealing.

"This decision has broad ramifications for future lawsuits challenging
violations of physicians contracts with health plans," CMA legal counsel
Astrid Meghrigian said. "Especially significant is that the three-judge
federal court determined that federal ERISA law (Employment Retirement
Income Security Act of 1974) does not preempt a contract-related class
action suit by physicians against a health plan or a health insurer."

When CMA filed this lawsuit in state court in May 1997, Blue Cross
relied on the ERISA laws to remove the complaint to federal court where
plaintiffs would not necessarily be permitted to seek arbitration as a
class. The Ninth Circuit last week, however, determined that physicians'
contract complaints differ from "claims for benefits" commonly included
in patients' complaints, which are preempted by ERISA.

"Had the judges ruled against CMA," said CMA President J.C. Pickett,
M.D., "physicians' only recourse to fight such unfair actions by Blue
Cross would be for each of us to sue Blue Cross on our own. When in
1993, 1994, and 1995 Blue Cross announced that they had lowered our fees
-- and had done so for the medical services we had already performed for
our patients -- some of us lost a few hundred dollars and some of us
lost several thousands. For most of us the cost of individually
challenging Blue Cross would have exceeded the amount we were owed.

"CMA saw Blue Cross's fee reductions as yet another sign that many
health plans and insurers think they can take financial advantage of
physicians and patients," Dr. Pickett said. "After this round,
physicians, at least, now have a fighting chance."

CHAMPION ENTERPRISES: Stull, Stull Files Securities Suit In New York
The following is an Announcement by the Law Firm of Stull, Stull &

Notice is hereby given that a class action lawsuit was filed on Sept. 1,
1999, in the United States District Court for the Eastern District of
New York on behalf of all persons who purchased the common stock of
Champion Enterprises, Inc. (NYSE: CHB), between March 30, 1999 and July
29, 1999.

The complaint charges Champion and its chief executive officers with
violations of federal securities laws. Among other things, plaintiff
claims that defendants' material omissions and the dissemination of
materially false and misleading statements regarding the nature of
Champion's inventory problems drove Champion's stock price to a Class
Period high of $ 21.0625 per share and low of $ 13.50 per share,
inflicting enormous damages on investors.

Plaintiff is represented by, among others, the law firm of Stull, Stull
& Brody. If you are a member of the class described above, you may, not
later than sixty days from Aug. 26, 1999, move the Court to serve as
lead plaintiff of the class, if you so choose. In order to serve as lead
plaintiff, however, you must meet certain legal requirements. Contact
Tzivia Brody, Esq. at Stull, Stull & Brody by calling toll free
1-800-337-4983, or by e-mail at SSBNY@aol.com or by fax at 212/490-2022,
or by writing Stull, Stull & Brody, 6 East 45th Street, New York, NY

CHRYSLER CORP.: MI Ap. Ct. Denies Class Certification in Lemon Law Case
The Michigan Court of Appeals has affirmed the denial of class
certification in a lemon law case involving defects in a 1994 Dodge
truck and a 1995 Plymouth minivan. Plaintiffs in the consolidated case
claimed that various documents supplied by the automaker -- the lemon
law booklet in particular -- were misleading as to the existence of such
a law in Michigan. Zine v. Chrysler Corp. and Terry et al. v. Chrysler
Corp., Nos. 199594 and 209281 (MI Ct. App., June 18, 1999).

Christopher Zine bought the Dodge truck and T. Leonard and Lois Terry
purchased the Plymouth minivan. Under the law in some states, buyers are
entitled to receive information about those states' lemon laws; however,
some states, including Michigan, do not have that requirement. The
Chrysler booklet does not contain lemon law information concerning
Michigan and other similar states.

The booklet does contain a notice of an independent arbitration program,
which Chrysler said did not affect the pursuit of other legal remedies.
It also noted that states with lemon laws require written notice to the
automaker of any service problems, so repair attempts can be made.
Chrysler requested that in "other states," the automaker also be given
written notice of service difficulties.

In 1996, Zine filed a proposed class action suit in state court under
the lemon law, the Michigan Consumer Protection Act (MCPA). Zine claimed
the lemon law booklet was misleading because it allowed buyers to
believe Michigan had no lemon law, that the Chrysler arbitration program
was the only remedy and that notice of defect to the manufacturer was
not a prerequisite.

Also in 1996, the Terrys filed suit claiming their minivan was
defective, seeking damages for breach of warranty and good faith;
violation of the federal Magnuson-Moss Warranty Act; and violation of
the MCPA. The latter claim included the same allegations pleaded by Zine
relative to the lemon law; the cases were consolidated.

The trial court denied Chrysler's motion for summary judgment and Zine's
motion for class certification. In 1997, the Terrys moved for class
certification, filing a brief nearly identical to Zine's; this motion
was also denied.

Reversing the summary judgment ruling, the Michigan Court of Appeals
noted that if an item is purchased primarily for business or commercial
rather than personal purposes, the MCPA does not apply. In this case,
the panel said, Zine bought the truck for his business and used it for
that purpose approximately 80% of the time. "Chrysler was entitled to
summary disposition on this ground," the appeals court ruled.

On the booklet issue, the opinion states, "Zine's claim that Chrysler
failed to include information applicable to Michigan residents in the
lemon law booklet is predicated upon an alleged duty to provide that
information. As Chrysler was not obligated to provide lemon law
information to Michigan consumers and was not purporting to do so by
providing that information to consumers in other states as required by
law, the trial court erred in denying Chrysler's motion for summary

The booklet was not misleading, the panel said, because even if a
consumer could reasonably infer that the states omitted from the booklet
did not have lemon laws, residents of Michigan receive lemon law
information from the Secretary of State upon delivery of their new

Affirming the denial of class certification, the appeals court noted
that Zine did not have a cause of action under the MCPA and therefore
could not serve as representative of the class. The panel also said Zine
and the Terrys failed to meet the class action factors of numerosity and
commonality of law and fact. (Automotive Litigation Reporter August 17,

CREDIT ACCEPTANCE: 8th Cir. Overturns Order For Lack Of Jurisdiction
Credit Acceptance Corporation (Nasdaq:CACC) announced that the United
States Court of Appeals for the Eighth Circuit has overturned an August
1998 partial summary judgment order and injunction against the Company.
The order and injunction, entered on August 4, 1998 against the Company
by the United States District Court for the Western District of
Missouri, related to class action claims of alleged interest overcharges
and improper repossession notices.

The Court of Appeals held that the District Court lacked jurisdiction
over those claims, which are now expected to be litigated in state
court. The remaining class action claims of alleged public official fee
overcharges have not been finally adjudicated by the District Court and
were not part of the appeal. The public official fee overcharge claims
will remain before the District Court. The Company's Vice President and
General Counsel, Charles A. Pearce stated, "We are pleased with the
Court of Appeals' decision and will continue our vigorous defense of all
remaining claims."

Credit Acceptance Corporation is a specialized financial services
company which provides funding, receivables management, collection,
sales training and related products and services to automobile dealers
selling vehicles to consumers with limited access to traditional sources
of consumer credit.

EXIDE CORP.: Settles Securities Fraud Lawsuit
The Company recently entered into an agreement to settle a class action
lawsuit pending against the Company and three of its former senior
officers who were also directors that alleges violations of the
anti-fraud provisions of Section 10(b) of the Securities Exchange Act
and Rule 10b-5 promulgated thereunder.

The complaint alleges that the market price of the Company's stock was
artificially inflated as a result of alleged misstatements and omissions
regarding the quality, adequacy and honesty of the Company's
manufacturing processes, the Company's revenues, cost of goods sold,
warranty expenses, net income, inventory, accounts receivable and
warranty liability. Specifically, the complaint alleges that senior
executives of the Company instructed employees to inflate publicly
reported financial results and sold old or used batteries as new
batteries, sold defective and mislabeled batteries and improperly
credited customer accounts.

The Company has entered into a settlement agreement with the plaintiffs
in this lawsuit, providing for a payment by the Company's insurers of
$10.25 million in satisfaction of all claims.

The court has preliminarily approved the settlement, certified a class
of all persons who purchased the Company's common stock from June 27,
1995 through July 29, 1998 and ordered that notice be sent to the class.
A final hearing will be held on September 2, 1999 and, if the settlement
is approved, will result in the claims asserted in this action, as well
as any other claims relating to the Company's common stock, SEC filings
or the conduct of the Company's business during the class period, being
released and dismissed with prejudice.

Current senior management and Board of Directors have retained outside
counsel to investigate and will continue to investigate the allegations
involved in the foregoing matters. The Company has no tolerance for the
practices alleged and senior management has taken and will take action
to prevent such practices in the future.

The Company is currently involved in litigation with certain former
members of senior management over their separation agreements. This
case, Arthur M. Hawkins v. Exide Corporation, 99-73346, U.S. District
Court for the Eastern District of Michigan, involves claim by Mr.
Hawkins to enforce his separation agreement with Exide and a
counterclaim by Exide seeking a declaration that the separation
agreement is void and a return of all consideration paid thereunder.
Exide has also joined Messrs. Pearson and Gauthier as additional
counterclaim defendants and is seeking similar relief against such

EXIDE CORP.: Sued In Different States Over Sale Of Defective Batteries
Exide is now or recently has been involved in several lawsuits pending
in state and federal courts in Alabama, North Carolina, Pennsylvania,
South Carolina, Tennessee and Texas, some of which were brought as
purported class actions. These actions allege that Exide sold old or
used batteries as new batteries, sold defective and mislabeled batteries
and improperly credited customer accounts and seek compensatory and
punitive damages and, in one case, injunctive relief.

The following lawsuits of this type are currently pending: Mathews v.
Exide Corporation, et al., CV-95-91-TH, Circuit Court for Montgomery
County, Alabama, Exide Corporation v. East Alabama Auto Parts,
CV-96-348, Circuit Court for Calhoun County, Alabama, The Battery Shop,
et al. v. Exide Corporation, et al., CV 9606976, Circuit Court for
Jefferson County, Alabama, Dynamic Enterprises v. Exide Corporation, No.
5:98CV119, United States District Court for the Eastern District of
Texas, Dynamic Enterprises v. Exide Corporation, No. 5:98CV120, United
States District Court for the Eastern District of Texas, Martin v. Exide
Corporation, No. 3:98-2035-10, United States District Court for the
District of South Carolina, Mathis Battery Company, et al. v. Exide
Corporation, et al., No. 15735, Chancercy Court for Weakley County,
Tennessee and Gamma Group, et al. v. Exide Corporation, No. 99-2942,
United States District Court for the Eastern District of Pennsylvania.
We cannot assure you that we will be successful in the defense of these
claims or that additional claims will not be brought.

On June 14, 1999, we went to trial in the case of The Battery Shop, et
al. v. Exide Corporation, et al. The case involved allegations that
Exide sold old, used or defective batteries as new batteries. The jury
returned a verdict rejecting the plaintiffs' claims against Exide.
Post-verdict motions are pending.

EXIDE CORP: Settles With Florida Over Sale Of Defective Batteries
In December 1997, the Attorney General of the State of Florida initiated
an investigation into certain alleged business practices of Exide,
including falsifying bids to the State of Florida, selling defective
batteries, selling used batteries as new, mislabeling batteries with
regard to warranty coverage, cold cranking amps, intended use and point
of manufacture; and also considered related allegations concerning
improperly transferring credits among customer accounts, procuring
falsified test data, making payments to employees of certain customers
to obtain business, securities fraud, and anti-trust violations. This
investigation was resolved by a settlement agreement with the Attorney
General dated May 24, 1999, which released Exide from all liabilities
and claims which have been or could be asserted against Exide in any
civil or administrative action arising out of, related to or connected
with, directly or indirectly, the following investigated matters:
falsifying bids to the State of Florida; selling defective batteries;
selling used batteries as new; mislabeling batteries with regard to
warranty coverage, cold cranking amps, intended use and point of
manufacture; and improperly transferring credits among customer

The Company said that when the current management of the Company learned
of the Florida Attorney General's investigation, they elected to fully
cooperate with the Attorney General. That cooperation led to the
settlement agreement. It was expressly understood and agreed that the
settlement agreement was not to be construed as an admission of
liability or any acknowledgment of the claims asserted against Exide.

Under the settlement agreement, the Company agreed to pay the State of
Florida $2.75 million in installments, with $1.25 million to be directed
to a Florida University of the Attorney General's choosing. In addition,
the Management have agreed to make restitution at an estimated cost of
$500,000 and to take certain further actions, including ceasing the
alleged practices, instituting certain battery labeling practices and
instituting a corporate ethics program. The settlement applies to all
batteries sold up to and including June 23, 1999.

While the Company believes the settlement marks the end of the Florida
investigation, the settlement does not preclude the Florida Attorney
General from bringing further claims with respect to the matters not
covered by the settlement. The Company has also brought certain issues
raised by the Florida Attorney General's inquiry to the attention of the
Securities and Exchange Commission and are voluntarily responding to the
Commissions follow-up inquiries. The Company said it cannot assure that
federal or state agencies or private claimants will not investigate or
bring charges with respect to these or other matters or that, if they
do, such claims would not have a material adverse effect on the Company.

FEN-PHEN: Oklahoma Residents Sue AHP And Pharmacies Stewart And Eckerd
Seven Oklahoma County residents have sued the makers of two diet drugs
that were popular from 1992 until 1997 when they were withdrawn from the

Attorneys in Oklahoma City, Shawnee and Houston, Texas, are representing
Richard Green, Pat Green, Lora Stowe, Jeanne Knol, Cindy S. Crawford,
Albert E. Bristow and Charles Allenbaugh. They filed the lawsuit Aug. 24
in Oklahoma County District Court against American Home Products, its
subsidiaries and two pharmacies.

The pharmacies are Stewart Drug Inc., 137 SE 44 in Oklahoma City, and
Eckerd, a Delaware Corp.

The plaintiffs are seeking a court-supervised and defendant-funded
program for medical screenings of people who took dexfenfluramine, also
known as Redux; fenfluramine, also known as Pondimin; or a combination
of either of the two drugs with phentermine, also known as phen-phen.

They are also asking an Oklahoma County judge to declare the lawsuit a
class action.

The plaintiffs, all from Oklahoma County, have not suffered any ill
effects from the diet drugs. They are seeking funds to pay for regular
health checks to see if they develop side effects.

Oklahoma City attorney R. Thomas Beadles said Charles Parker of Houston
will be lead counsel on the lawsuit. Parker was successful in getting a
similar lawsuit declared a class action in Texas and eventually got the
same type of medical screening program for people who took the diet
drugs there, Beadles said.

According to the Oklahoma lawsuit, the cost would not exceed $75,000 a
person. Medical screening would include an echocardiogram, which can
provide early detection and warning of disease of the heart valve and
pulmonary hypertension resulting from the drugs.

In the lawsuit, the plaintiffs claim the Federal Drug Administration
approved Redux and Pondimin but never approved the combination of the
drugs with phentermine. American Home Products promoted the combination
and failed to warn physicians and consumers the FDA never approved the
combination drug regimen, according to the lawsuit.

In September 1997, American Home Products withdrew the drugs from the
market after several studies showed that a large percentage of people
who took the drugs or drug combination developed heart problems.

Beadles said people interested in joining the lawsuit will have to wait
for it to be certified a class action. (The Oklahoman Online 9-1-1999)

FORD MOTOR: Suit Over Racism In Screening Test Dismissed At 6th Cir.
A pre-employment test that is job-related and significantly correlates
with job performance does not discriminate on the basis of race, the
U.S. Court of Appeals for the 6th Circuit held on Aug. 9, Williams v.
Ford Motor Co., Nos. 97-2049 and 98-1256.

The plaintiffs filed a state law employment discrimination class action,
claiming that a pre-employment test used by Ford Motor Co. discriminated
against black applicants for unskilled hourly positions, in violation of
Ohio Rev. Code @ 4112. The Hourly Selection System Test Battery (HSSTB)
measures reading comprehension, arithmetic, parts assembly, visual speed
and accuracy, and precision/manual dexterity. The district court granted
Ford's motion for summary judgment and dismissed the action.

The appeals court affirmed, ruling that the HSSTB had both content- and
criterion-related validity. (The National Law Journal August 23, 1999)

HUB OIL: Canadians Are Seeking Class Action Over Dioxin From Explosion
Penbrooke residents seeking compensation in the wake of the Hub Oil
explosion are organizing a class-action lawsuit. "We have some long-term
concerns -- what happens two to five years down the road if residents
start to get cancer? Or what if their gardens don't grow back next
year?" said Lillian Duxbury. "Who is going to compensate us for that?"

Duxbury has consulted lawyer Clint Docken about launching a suit and
she's also started gathering signatures from other residents interested
in joining the legal battle. "Everybody's very frustrated that nobody
seems to be taking responsibility for this," said Duxbury, adding the
suit would also seek clean-up expenses.

"I figure if I went to somebody's house, spread oil all over the place,
terrorized their family even for a moment, that maybe I would be made to
pay compensation myself," said Kevin Ilg, one of about 100 residents at
a public meeting at the Penbrooke Meadows Community Association hall
last night. The Calgary Regional Health Authority and Alberta
Environment told residents that test results show dioxin levels have
dropped since the Aug. 9 explosion and fire. (The Calgary Sun 9-2-1999)

IMASCO LTD.: Investors Demand Explanation On Agreement To BAT Deals
The directors of Imasco Ltd. should explain why they quietly agreed to
deals for two key divisions without consulting shareholders, say lawyers
representing an investor trying to block the $10.3-billion run for the
company by British American Tobacco PLC.

In an open letter to Imasco's board, obtained by the Financial Post,
they warn 'we intend to exhaust any further available legal and
regulatory remedies' unless answers are provided by Sept. 7. They make
it clear the practice of talking privately with institutional investors
will no longer be tolerated, threatening to complain to the Ontario
Securities Commission about a lack of disclosure.

The letter, written on behalf of shareholder Daniel Stern, who is lead
plaintiff in the class action, asks the directors why they are not even
trying to shop the whole of Imasco around as a 'multi-business company.'
'If Imasco has greater value on a break-up basis, then why did the
directors not pursue an auction process for Canada Trust or for Imperial

BAT, a British multinational that is one of the world's largest
cigarette makers, is trying to buy the 58% of Imasco it doesn't already
own. It is offering 'a minimum' of $40 a share. It says if the deal goes
through, it would sell Canada Trust to Toronto-Dominion Bank for
$7.85-billion. And it would keep Imperial Tobacco. It told Imasco
shareholders there will be an auction for the company's other two
divisions, Shoppers Drug Mart and Genstar Development. They have been
told they will get more money if the two subsidiaries sell for more than

Jim MacMaster, one the Vancouver lawyers behind the class-action suit,
says investors shouldn't be forced to accept Imasco's statements that it
got the best deal it could for the company. 'The main concern here is
there was no indication to us that they went through an auction
process,' said Mr. MacMaster. 'When they presented the deal they said:
'The Canada Trust deal looks real good and they're paying a premium
here.' We're attacking the assumption that those are done deals, and
they shouldn't be looked at. 'It has been pointed out that cash can't
match Imasco's stock performance. They are breaking up one of Canada's
star performers here.'

The class action is seeking an injunction to prevent the deal from
closing at $40, arguing it was engineered solely to allow BAT to get its
hands on Imasco, not to maximize value for shareholders.

Imasco's directors have not formally blessed the deal. But Purdy
Crawford, Imasco's chairman, said in announcing it to shareholders last
month that the board decided to 'facilitate' a decision on the offer
because, among other things, $40 is 'significantly higher than the price
at which Imasco's shares would trade in the absence of speculation
regarding the proposed transaction. He also said the 'price for [Canada
Trust] to be paid by TD is attractive.'

Mr. Crawford and Brian Levitt, Imasco's president, said in joint
statement late yesterday that 'the 'open letter' is essentially a rehash
of ther legal claims filed Aug. 19. 'Imasco has provided its
shareholders with full and proper disclosure of the proposed

The lawsuit alleges shareholders don't have enough information about the
structure, valuations and possible side deals to assess the offer

The letter, sent out late Tuesday night, points out that Imasco itself
has acknowledged it has met with 'a substantial number' of its own
institutional shareholders 'to explain the transaction and the process
we are following.'

The six-page letter says that is not good enough. 'Imasco seems to
believe that the meetings with institutional shareholders address
investors' concerns,' it says. 'In fact, this creates an additional
concern that Imasco is providing institutional investors with
information about the agreement that is not being disclosed to the
market as a whole. 'Such selective disclosure of material information is
unfair, oppressive and prejudicial to individual shareholders, and has
explicitly been condemned by the OSC.'

Mr. MacMaster said the issue is particularly troubling because BAT and
U.S. institutional shareholders, between them, control over 50% of
Imasco shares. 'In terms of ordinary decision making that is done - to
the extent that the directors need to get a majority - all they've ever
had to do it trek to the U.S. institutional investors who make up enough
shares to get them over the majority,' he said. 'So we think this issue
is fairly serious. The ordinary shareholder is not getting the benefit
of whatever these institutional investors are being told.

The letter also points out that public filings so far do not indicate
whether Imasco will have to pay BAT a breakup fee if the deal fails to
fly with shareholders.

Mr. MacMaster said the lawyers decided to give the company a chance to
explain once more before going before a judge because disclosure issues
are more routinely handled by securities regulators. He said if there is
no answer to the letter by next Tuesday's deadline, they intend to
complain formally about the lack of disclosure to the OSC.

Among Imasco's outside directors named in the class-action suit, along
with company executives, are Robert Prichard, president of the
University of Toronto; James Bullock, president and CEO of Laidlaw Inc.;
and Judy Erola, a former Liberal party cabinet minister from 1980-1985.
The company has said the suit is without merit.

METROMAIL CORP.: Direct Marketing Service Faces Nationwide Class Action
Q I'm confused. Can Action Line tell me what these legal papers I got in
the mail are all about? It came addressed to me using the version of my
name I use for subscriptions, sweepstakes and other unimportant things,
not my legal name. There's a green IRS form that asks for my Social
Security number. Is this a scam? -- Lisa Gordon, Miami

Q I just got a mailing that says someone in Texas is suing someone in
California because of a survey I filled out. The information was given
to prison inmates. Can you explain? -- Ida Goodman, North Miami Beach

A Sure. Those mailings are the result of a nationwide class action suit
against Metromail Corp., a direct marketing service. They are being sent
to the approximately 2.2 million people who filled out questionnaires in
Metromail's coupon mailers in 1993 and 1994. The results of the
questionnaire, which included personal information, were then given to
Texas prison inmates for data processing.

That's not all they did. An Ohio grandmother received a sexually
graphic, obscene and threatening letter full of her personal
information. "It really alarmed her," said lead counsel Mike Lenett of
Cuneo Law Group in Washington, D.C. "She didn't know how this person
knew so much about her." Investigators noticed the letter came from a
prison in Texas.

The grandmother sued. The case was negotiated over a one-year period. A
settlement was finally reached late this summer.

Those receiving the mailings are automatically in the class. You don't
have to do anything unless you want to make a claim for damages, exclude
yourself from the case or object to the settlement in court.

You won't get any money unless you make a claim for damages. If you do,
you have to provide proof you were harmed by prisoners having access to
your personal information. The IRS form is for those who may be awarded
money from the settlement fund. That money has to be reported as income
to the IRS.

To learn more, call the Metromail litigation information line,
1-800-893-7071, and listen to the recorded information. Lenett advises
you keep the paperwork even if you don't have a claim at the present
time. "The suit is requiring Metromail to pay if something happens in
the future, also." If you need help filling out the forms you can
request that service by calling the Metromail litigation information

PAYDAY LENDERS: Nationwide Budget Sued Over Practice Of Debt-Collection
A class-action lawsuit filed in federal district court takes issue with
the payday-lending firm Nationwide Budget Finance's practice of sending
aggressive notices to customers overdue in paying debts secured with
postdated checks.

The notices, which warn that local police departments will be notified
that the customer has written a "bad check," violate a federal law
governing fair debt collection, said Chicago attorney Daniel Edelman,
who filed the lawsuit.

Furthermore, Edelman said, it is ludicrous to threaten legal action over
a "bad check" when the firm urges customers to write postdated checks as
collateral for the short-term loans. The loans typically are taken by
customers to cover an emergency expense until their next payday, Edelman

"I think the only reason these lenders get these checks is to make
threatening statements like this, to threaten that kind of consequence
against the borrower to get them to pay up," Edelman said. "Basically,
payday lending is based on the principle that the lender can get you to
pay its debt before other debts."

A state hearing in mid-August called payday lenders to testify on the
practice alongside community leaders. While some lawmakers likened the
high-interest loans to legalized loan-sharking, lenders testified they
fill a niche market left open by banks too unresponsive to the
short-term needs of borrowers. (Chicago Tribune 9-2-1999)

PHYSICIAN COMPUTER: May Reach Settlement For Securities Suit In N.J.
Subsequent to the Company's announcements in early 1998 concerning the
delay in its annual audit and its expected restatement of previously
issued reports, numerous purported class actions were filed against the
Company, certain directors and former officers. These matters were
consolidated into one action in the United States District Court for the
District of New Jersey. This Securities Class Action charges the
defendants with various violations of the Federal securities laws and
regulations through the alleged overstatement of corporate earnings.

Although the Securities Class Action is pending and motions to dismiss
have been filed by all defendants, Physician Computer Network Inc. and
its directors have entered into a Memorandum of Understanding (MOU) with
the Class Action Plaintiffs pursuant to which all issues in the case may
be resolved, at the Company's option, for the payment of $25.25 million
to the Class Plaintiffs by August 10, 1999, or at a later date if the
Company has consummated an agreement of sale with an acceptable
purchaser by July 31, 1999 for a sale price as defined in the MOU. As a
result, the Securities Class Action Litigation is substantially held in
abeyance. The settlement is contingent upon approval of the Court after
notice and hearing.

SAN FRANCISCO: Ct. Orders To Build New Jail In San Bruno
U.S. District Senior Judge William Orrick Jr. this week laid down the
gauntlet for San Francisco to build a new jail in San Bruno and approved
fees for attorneys who have long railed about conditions at the city's
largest lockup.

On Monday, Orrick issued a written order approving a tentative
settlement reached in March between the San Francisco city attorney's
office and Golden Gate University School of Law professor Morton Cohen.
Under the agreement, the city promised to build a new jail next to the
old one by 2002. The city also agreed to a series of improvements to the
existing jail, including hiring additional sheriff's deputies to serve
as guards. The deputies will begin work in December.

But for Orrick, the new jail to replace the dilapidated 1930s facility
is the bottom line. "Although defendants have taken great strides in
improving the conditions at the jail, it is clear that conditions at the
jail are not, and never will be, ideal," he wrote in Jones v. San
Francisco, 91-3453. "Nevertheless, defendants' commitment to building a
new jail by 2002, coupled with their significant attempts to improve
conditions at the jail in the meantime, appear to be a reasonable
attempt to address all of the unconstitutional conditions at the jail."

The judge also awarded Cohen and his co-counsel $585,000 in fees for
work over the last eight years. But so far the plaintiffs' attorneys
have received only $180,000 of that money, and Cohen said he's not
expecting the balance anytime soon. Cohen said the remainder will not be
paid until the city has a signed and sealed deal with a contractor to
build the new jail, including approval from the Board of Supervisors and
the mayor. "The city was supposed to have a signed contract in June,"
Cohen said. "Then it was July. Then it was August. Now they tell us it's
September. There is no settlement until there's a signed contract."

Cohen has had litigation pending before Orrick alleging inadequate
conditions at San Francisco jails for the last 20 years, so he has
reason to be pessimistic.

The cases have resulted in improved conditions, but the city has been
slow to act on resolving the politically thorny problems. In 1996, for
instance, Orrick ended a consent decree Cohen had negotiated with the
city for overcrowding at the Hall of Justice jail. Cohen filed that
suit, Stone v. San Francisco, 78-2974, in 1978.

With Jones, Cohen and other attorneys originally filed the class action
in 1991, alleging that unconstitutional living conditions existed at the
San Bruno jail. In May 1993, the parties settled the suit, only to see
it re-open the following year after the plaintiffs complained that the
city was not living up to its side of the bargain.

Though agreements have been reached and breached before, Deputy City
Attorney Joanne Hoeper said city lawyers are moments away from hammering
out a deal with construction giant Morse Diesel International Inc. that
they can take to the Board of Supervisors. "This is a real proposal -- a
lot of work has been done on it," said Hoeper, the chief of complex
litigation for City Attorney Louise Renne.

But she said there are no guarantees the proposed contract will survive
the city's political process. Twice before, the question of building a
new jail has been rejected by San Francisco voters. While both ballot
measures garnered simple majorities, the two failed because they were
bond measures that needed two-thirds approval. Both campaigns were
opposed by an odd alliance of liberals who saw the measure as a way to
lock up more citizens and conservatives who opposed building a new jail
with borrowed money.

That's precisely why Orrick's Monday order is important, said James
Harrigan, a San Francisco Sheriff's Department lawyer who has worked on
the jail cases. "It's a victory for Judge Orrick more than anybody
else," Harrigan said, expressing optimism that a new jail will finally
be built. "He used his considerable power and charm to get the
plaintiffs to do their part and to get the city off its ass to build a
new jail." (The Recorder 9-1-1999)

STEWART ENTERPRISES: Milberg Weiss Files Securities Suit In Louisiana
The following was released by Milberg Weiss Bershad Hynes & Lerach LLP:

Notice is hereby given that a class action lawsuit was filed in the
United States District Court for the Eastern District of Louisiana, on
behalf of all persons and entities who purchased the common stock of
Stewart Enterprises, Inc. (Nasdaq: STEI), between October 1, 1998 and
August 12, 1999, inclusive.

The complaint charges Stewart and certain of its officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint
alleges that Stewart and certain of its officers and directors issued a
series of materially false and misleading statements regarding the
impact that the negative trends in the death-care industry were having
on Stewart. As a result of these materially false and misleading
statements, plaintiff alleges that the price of Stewart common stock was
artificially inflated during the Class Period. Prior to the disclosure
of the adverse facts described above the Chairman of the Board of
Stewart was able to sell over 700,000 shares of his personally held
Company stock to the unsuspecting investing public at artificially
inflated prices.

If you are a member of the class described above you may, not later than
sixty days from the date of the first filed notice, August 24, 1999,
move the Court to serve as lead plaintiff of the class, if you so
choose. In order to serve as lead plaintiff, however, you must meet
certain legal requirements.

Contact, at Milberg Weiss Bershad Hynes & Lerach, Steven G. Schulman or
Michael A. Swick at One Pennsylvania Plaza, 49th Floor, New York, New
York 10119-0165, by telephone 1-800-320-5081 or via e-mail at
endfraud@mwbhlny.com TICKERS: Nasdaq:STEI or visit website

SUPERMARKET PRICE-FIXING: Jury Clears 3 CA Markets Of Complaint On Eggs
A jury found that three of California's largest supermarket chains
didn't conspire to fix the price of eggs in Southern California over the
past seven years, a spokesman for The Vons Cos. said.

The 9-3 verdict in favor of Ralphs Grocery Co., Vons and Lucky Stores
Inc., which came after shares stopped trading, ended a six-week trial in
San Diego Superior Court. At issue was whether the chains conspired to
set egg prices in Orange County and five other Southern California
counties and to refrain from competing in the retail market.

Plaintiffs' attorneys had brought the case on behalf of every Southern
Californian who has purchased eggs since 1992, and sought $ 80 million
in damages. When the suit was filed in 1996, Southern Californians paid
more for eggs than consumers in any other part of the country, an
average $ 1.99 to $ 2.09 a dozen, the plaintiffs said. "We felt all
along that this lawsuit had no merit," said Kevin Herglotz, director of
public affairs for Vons.

In the suit, consumers Sheri McCampbell and Carrie O'Husky claimed the
three supermarket chains used employees or contractors to monitor retail
egg prices in the region in order to raise prices to "unreasonable and
artificially high levels." (The Orange County Register 9-3-1999)

TACO BELL: Sp Ct Certifies Class Over Violation Of California's OT Laws
A lawsuit alleging that the 300 company-owned Taco Bells in California
systematically violate wage and hour laws has been granted class-action

The suit charges that the Irvine-based fast-food chain has misclassified
as exempt employees an estimated 2,300 to 3,000 managers and assistant
managers to avoid paying overtime. Similar lawsuits have been filed
against such companies as Wendy's International and the Mervyn's
department store.

Taco Bell paid no overtime to managers and assistant managers who spent
most of their time "mopping floors, making tacos and doing the exact job
as crew members," said San Jose labor attorney Diane Ritchie, who
represents the plaintiffs in Santa Clara Superior Court. "California law
says you have a right to overtime (pay) if you spend more than half of
your time doing non-manager duties."

Taco Bell spokeswoman Laurie Gannon said in a written statement that
Taco Bell's policy is to comply with all state wage and hour laws and
denies that restaurant general managers were entitled to overtime. She
declined to respond to the suit's claim that the workers should not have
been classified as managers.

Letters were mailed Tuesday to people who were Taco Bell managers from
Oct. 4, 1992 through August of this year. They have until December to
decide if they want to be part of this suit or pursue action on their
own. A trial will probably be set for late spring.

The California case is similar to a class-action suit Taco Bell lost in
Washington state in 1997. That case represented 16,000 nonmanagement
workers who were required to do certain work off the clock. The amount
paid to those workers was not disclosed.

In California, Taco Bell requires its managers to work a minimum 50
hours and many are putting 70-hour weeks, said plaintiff attorney

Previously, Ritchie represented one Taco Bell manager in Cupertino with
the same claims as in the current lawsuit. That case was "resolved,"
Ritchie said, for undisclosed terms. A newspaper article about that case
"brought me calls from other people who said the same thing happened to
them," Ritchie said.

Another plaintiffs' attorney, James Caputo of Milberg Weiss Bershad
Hynes & Lerach in San Diego, says such employment cases are "purely

"The restaurant industry has a low margin of profitability, and one of
the few variables is labor costs," he said. "As the pressure mounts to
increase profits, so does the pressure to get people to work hours
without being paid overtime." (The Orange County Register 9-2-1999)

TENNESSEE VALLEY: Big Steelmaker Sues TVA For Alleged Overcharges
The Tennessee Valley Authority overcharged hundreds of its largest
industrial customers last summer by as much as $100 million, claims a
lawsuit filed by Birmingham Steel Corp. The lawsuit, filed in federal
court in Birmingham, Ala., seeks class-action status on behalf of other
industrial customers who were members of TVA's "economy surplus program"
(ESP) last summer. The lawsuit estimates there are about 400 industrial
customers who are members of TVA's ESP program, which the agency
initiated in 1986.

The lawsuit capped a week of contentious accusations against TVA,
including one claim that the agency suspended its own inspector general
because he was investigating the overcharge controversy. TVA has
strongly denied the allegations, first raised by an energy consultant in
news stories published by the Knoxville News-Sentinel.

Birmingham Steel, with its large, power-hungry electric arc furnaces, is
one of TVA's biggest industrial customers. Last summer, the steel maker
was a member of TVA's ESP program, which allows industrial customers to
buy surplus power, which comes at a low rate but which can also be
interrupted when TVA's system lacks sufficient capacity.

The lawsuit, before U.S. District Judge Inge Johnson, claims that TVA
failed to honor its ESP pricing provisions between June and August of
last year. Until that time, the lawsuit says, TVA always quoted and
billed ESP on the basis of its actual hourly incremental cost of
available production, plus a markup and in-lieu-of-tax charges. When
questions arose last winter about TVA's ESP program and possible
overcharges, the agency rebated $8.5 million to its industrial

"They've already admitted they overcharged," said Birmingham lawyer
Bruce McKee, who represents the steelmaker. "The question is, how much?
We estimate it's far more than what they've already rebated, at least
$100 million."

Last summer, wholesale prices on the hourly electricity spot market
soared to as high as $4,900 per MWH, the lawsuit says, up from the
normal range of $20 to $60/MWh. TVA seized on this opportunity to
generate millions of dollars in revenue, at the expense of its ESP
customers, the lawsuit says. Between June and August, TVA made
off-system sales from its own generation system to utilities in the
Northeast that were in desperate need of power.

"For TVA, it was a win-win situation," the lawsuit charges. "By
purchasing high-priced power off-system, and calculating ESP prices
using off-system purchases, TVA was able to make much more than it would
have made off the ESP customers than had it honored the ESP contracts."
The lawsuit says this is because TVA calculates ESP prices by taking the
cost of the power and multiplying it by agreed upon mark-ups. With the
higher cost, TVA makes more off the mark-up. And by buying power for its
ESP customers from third-party producers, TVA was able to free up
significant portions of its own generation resources, the lawsuit says.
"TVA then sold this power produced at a low cost on the open market
while prices were at record levels," the lawsuit says. "TVA reaped a
windfall at the expense of its ESP customers."

McKee, in his lawsuit, said if the industrial customers can become
certified as a class, they will seek reimbursement of far more than the
excess rates TVA allegedly charged them. In addition to being "grossly
overcharged," many of TVA's ESP customers were "forced wrongfully to
curtail or cut back their power purchases due to the high prices being
charged by TVA," the lawsuit says. "These ESP customers shut down
assembly lines, curtailed their own production, lost profits and
otherwise suffered economic damages in the process."

TVA has previously denied that it overcharged its industrial customers.
(The Electricity Daily 9-7-1999)

TOBACCO LITIGATION: Florida Ap. Ct. Spares Industry Of Lump-Sum Damages
The threat of a crippling, multibillion dollar verdict against the
tobacco industry vanished Friday when a Florida appeals court ruled that
damages in a path-breaking lawsuit may not be awarded in a single lump

The decision is a victory for cigarette makers in a class-action lawsuit
which had, until Friday, been considered a potentially lethal danger.
Analysts had predicted that some of the smaller players in the industry
might have been forced to file for bankruptcy had they been slapped with
a gigantic, one-time verdict.

The ruling stems from a lawsuit seeking damages on behalf of 500,000
injured smokers in Florida, the first successful suit of its kind. In
June, a Miami jury decided that the tobacco makers had "engaged in
extreme and outrageous conduct," a verdict that raised the possibility
that the companies would be hit with a record-setting damage award.

But in a two-paragraph ruling Friday, a panel of appeals judges in
Florida's Third District stated that damages must be considered one
smoker at a time. Tobacco makers could still end up spending billions of
dollars on the litigation, but the expense will trickle in rather than
arriving with a calamitous thud.

The difference is vast, experts said. Some of the small players in the
industry, already shaken by a $ 206 billion settlement with attorneys
general last year, might have folded, unable to find an insurer willing
to put up the money for an appeals bond. And the decision makes it less
likely that attorneys in other states will file their own class-action

"All along, the banner of success has shifted from one side to the other
in the tobacco wars, and I'd say this is a win for the industry," said
Mary Aronson, an industry analyst. "Although the individual cases will
continue, you're not going to see the huge numbers."

Still, anti-tobacco activists Friday found bits of encouraging news in
the decision. Though it's now more likely that cigarette makers will
survive, they are still going to suffer, they said.

"They've ducked a cannon ball, but they've opened themselves up to a
fusillade of bullets," said Richard Daynard, an anti-tobacco lawyer with
the Tobacco Products Liability Project. Daynard said cigarette makers
might end up spending more as a result of this case-by-case approach
because courts often whittle down massive, all-in-one awards.

"It's a short-term victory for tobacco, even if it's not reversed," said
Matthew Myers of the National Center for Tobacco-Free Kids. "While it
does alter the likelihood that there will be a devastating verdict, it
doesn't alter the fact that the industry is facing hundreds if not
thousands of potentially damaging suits in Florida."

The plaintiffs' lawyer in the case, Stanley Rosenblatt, as well as the
defendants -- Phillip Morris Co., R.J. Reynolds Tobacco Co., Brown &
Williamson Tobacco Corp., Lorrilard Tobacco Co. and Ligget Group -- are
barred from discussing the case. The second phase in the trial, to
determine whether the first two plaintiffs in the case should be
compensated, will start Tuesday.

Last year's settlement with attorneys general blocks states from filing
suits against tobacco makers, but it does not prevent private lawyers
from suing. In recent months, both sides in this decades-old battle
could claim victories. The industry beat back litigation in Ohio and
several other states, but lost cases in Oregon and California.

Historically, such suits have proven exceedingly difficult to win,
particularly class-actions cases that seek to lump scores of plaintiffs
into one legal action. Judges and juries have often concluded that
injuries suffered by the class members are too diverse to be considered
altogether. (The Buffalo News 9-4-1999)

UGA: Three White Female Plaintiffs Challenge Admissions Policies
In a second attack on University of Georgia admissions standards, three
white women are charging reverse discrimination and, perhaps more
significantly, are asking a federal judge to allow hundreds of others to
join their case.

The lawsuit, filed in U.S. District Court in Savannah, contends UGA's
admissions policies have been unconstitutionally discriminatory because
they provide preferences to male and African-American applicants.

The three women --- Aimee Bogrow, Lindsay Donaldson and Molly Ann
Beckenhauer --- were denied admission to UGA this school year.

Their lawyer, Lee Parks, who attacked the admissions standard in a
lawsuit by another white female last month, said if the lawsuit
prevails, the financial cost to the state could be steep.

Donaldson and Beckenhauer qualify for the HOPE scholarship, but their
parents are paying as much as $ 20,000 a year for them to attend
out-of-state schools, he said. The three women will want to be
reimbursed for their current tuition costs, and Parks said he will ask
the state to pay his attorney fees. "These are real numbers," Parks
said. "This is not symbolic, and it's not going to be cheap."

UGA communications director Tom Jackson said the university is aware of
the lawsuit. "We haven't determined any course of action on it," he

Bogrow, 18, a graduate of North Springs High School, said she wants to
go to UGA. "I am very disappointed, because I had high hopes of going,"
she said. "I felt sure that I would be able to get in. I had the
extracurricular activities, the GPA, a good SAT, community service,
everything.. . .Why am I not going? Because I'm not a black male. That
is what I am guessing." Her mother, Cheryl Bogrow, a principal at State
Bridge Crossing Elementary School in Alpharetta, said the family was
shocked when UGA rejected her daughter's application. "Her whole goal
was to go to UGA," she said.

When Parks filed a similar lawsuit last month on behalf of Jennifer L.
Johnson, the university quickly admitted her.

The school also said it no longer will give male applicants a slight
advantage in the applicant weighting process, called the Total Student
Index. But UGA has not changed policies that grant a preference to
African-American applicants. UGA is the only state-funded university
that says it uses such an admissions formula.

Parks estimated hundreds of white women could seek damages against the
state Board of Regents if the case, before U.S. District Judge B. Avant
Edenfield, is granted class-action status. The regents oversee higher
education in Georgia.

If UGA decides to admit Bogrow, Donaldson and Beckenhauer --- as it
decided to admit Johnson --- that action would bolster his class-action
claims and "not resolve the problem," Parks said. "It's important for
them to recognize that people who have been harmed get in as soon as
possible --- that's good," Parks said. "But they're dragging their heels
on institutional change."

Even if UGA ultimately adopts race-neutral admissions policies, Parks
said, he will press the class-action lawsuit.

Edenfield has put UGA on notice that he thinks its current admissions
program is unconstitutional. In a ruling in July, the judge said: "UGA
cannot constitutionally justify the affirmative use of race in its
admissions decisions." (The Atlanta Journal and Constitution 9-2-1999)

US LIQUIDS: Milberg Weiss Files Securities Suit In Texas
Milberg Weiss announced that a class action has been commenced in the
United States District Court for the Southern District of Texas on
behalf of purchasers of U.S. Liquids, Inc. (AMEX:USL) common stock
during the period between May 12, 1998 and August 25, 1999.

The complaint charges USL and certain of its officers and directors with
violations of the Securities Exchange Act of 1934. The complaint alleges
that defendants' false and misleading statements about strong
profitability of USL's liquid waste management services, which generated
more than 90% of USL's revenue, would result in 20% EPS growth for USL
for the 3rdQ and 4thQ 1999 and 1999, allowed USL to complete secondary
offerings on 6/5/98 at $ 19 and on 3/12/99 at $ 21 and artificially
inflate its stock to a Class Period high of $ 26-3/8 on 2/9/99. USL sold
almost 6 million shares of its stock at as high as $ 21 for almost $ 120
million in proceeds, and allowed the Individual Defendants to reap, in
the aggregate, millions in bonuses through their false financial
reporting of USL's earnings, liabilities and equity, while concealing
USL's illegal dumping activities. On 8/25/99, just months after USL's
stock hit its Class Period high, USL revealed that, due to its
revelations that it was the subject of both an FBI and EPA investigation
resulting from improper dumping activities at its most profitable site,
its financial results were going to be much worse than earlier forecast,
and trading in USL's stock was halted. When trading resumed the price of
USL stock fell by over 50% to $ 6-5/8.

The plaintiff is represented by several law firms, including Milberg
Weiss Bershad Hynes & Lerach LLP. If you are a member of the Class
described above, you may, no later than 60 days from August 31, 1999,
move the Court to serve as lead plaintiff of the Class, if you so
choose. In order to serve as lead plaintiff, however, you must meet
certain legal requirements. Contact plaintiff's counsel, William Lerach
or Darren Robbins of Milberg Weiss at 800/449-4900 or via e-mail at
wsl@mwbhl.com TICKERS: AMEX:USL

US LIQUIDS: Shepherd & Geller File Securities Suit In Texas
The Law Firm of Shepherd & Geller, LLC announced that it has filed a
class action in the United States District Court for the Southern
District of Texas on behalf of all individuals and institutional
investors that purchased US Liquids, Inc. common stock (AMEX:USL)
between May 28, 1998 and August 25, 1999, inclusive.

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by, among other things,
failing to disclose to the investing public that the Company was in
violation of applicable environmental laws, was illegally dumping
hazardous waste, and otherwise misleading investors. When the truth
about the Company's operations was revealed, as well as the pendency of
an FBI investigation, the stock price fell.

If you have any questions about how you may be able to recover for your
losses, or if you would like to consider serving as one of the lead
plaintiffs in this lawsuit, you must take appropriate action no later
than 60 days from August 31, 1999. Contact Paul J. Geller SHEPHERD &
GELLER, LLC 7200 West Camino Real, Suite 203 Boca Raton, FL 33433 (561)
750-3000 Toll Free: 1-888-262-3131 or by e-mail at
pgeller@classactioncounsel.com or Scott R. Shepherd SHEPHERD & GELLER,
LLC 117 Gayley St., Suite 200 Media, PA 19063 (610) 891-9880 Toll Free:
1-877-891-9880 or by e-mail at sshepherd@classactioncounsel.com TICKERS:

US LIQUIDS: Steven E. Cauley Files Securities Suit In Texas
The Law Offices of Steven E. Cauley, P.A. announced that a class action
lawsuit has been filed in the United States District Court for the
Southern District of Texas, on behalf of all purchasers of U.S. Liquids,
Inc. (Amex: USL) securities during the period May 28, 1998 through
August 25, 1999.

The lawsuit's goal is to enable investors to recover money they have
lost through purchases of U.S. Liquids securities. The lawsuit alleges
that U.S. Liquids and certain of its officers violated the U.S.
securities laws by issuing false statements about the quality of U.S.
Liquids' business. In particular, the Complaint alleges that defendants
falsely represented that the Company was in material compliance with
applicable environmental laws when defendants knew, or were reckless in
not knowing, that certain of the Company's employees, including the Vice
President in charge of the Company's Detroit, Michigan facility, had
ordered and supervised an illegal hazardous waste disposal method where
untreated toxic liquid waste was dumped directly into the Detroit sewer

If you wish to serve as one of the lead plaintiffs in this lawsuit you
must file a motion with the court within 60 days of August 31, 1999. If
you have any questions regarding this lawsuit or how you may be able to
recover for the losses you have incurred, please E-mail or call one of
the attorneys listed below: Steven E. Cauley, or Scott E. Poynter, or
Gina M. Cothern, 1-888-551-9944, or CauleyPA@aol.com

VIAGRA: Ct. Denies Oxford Health’s Motion To Dismiss Complaint
Sibley-Schreier V. Oxford Health Plans (Ny), Inc., Qds:03310376

Defendants move to dismiss plaintiffs' complaint pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure based upon plaintiffs'
alleged failure to exhaust the administrative claims process provided by
their insurance plans. Defendants also request that attorney fees be
awarded pursuant to 29 U.S.C. @ 1132(g)(1). Plaintiffs argue that they
are excused from the exhaustion requirement on the basis of futility.
Defendants' motions are denied.


Plaintiffs bring this class action seeking declaratory judgment,
injunctive relief, and to recover damages resulting from defendants'
wrongful denial of insurance coverage for the prescription medicine
Viagra. In sum, plaintiffs claim that defendants denied benefits in
violation of 29 U.S.C. @ 1132(a)(1)(B) and that the denial is a breach
of fiduciary duties under 29 U.S.C. @ 1104. Am. Compl. PP 53-62.

Plaintiffs filed a motion for class certification on September 9, 1998.
In light of the outcome of defendants' motion to dismiss, defendants are
directed to respond to plaintiffs' motion on or before October 1, 1999
Plaintiffs' reply brief, if any, shall be filed on or before October 22,

Defendants Oxford Health Plans (NY), Inc. and Oxford Health Insurance,
Inc. are insurance companies organized and incorporated under the laws
of New York State, John Doe Number 1 and John Doe Number 2 are the plan
administrators of the defendant insurance companies. Plaintiffs Patient
1, Patient 2, and Patient 3 are covered under defendants' Freedom Plan.
Plaintiff Patient 4 is covered under defendants' Medical Advantage Plan.

In an attempt to protect the plaintiffs' privacy, their names will not
be used in this opinion. Plaintiffs will be referred to as Patient 1,
Patient 2, Patient 3, and Patient 4.

Viagra was approved by the FDA as an effective treatment for erectile
dysfunction on March 27, 1998. Prior to Viagra, the prescribed course of
treatment for erectile dysfunction included painful, complicated, and
expensive injections, suppositories, and pumps, These methods were
covered, and continue to be covered, under defendants' insurance
policies. Patient 2 Aff. P 5.

On May 1, 1998, defendants stopped paying for Viagra and announced that
It would issue a final policy regarding coverage within 45 days (the "no
pay" period). On June 15, 1998, Oxford publically announced that it
would pay for only six Viagra pills per month regardless of the number
of pills prescribed by the physician (the "six pill" policy).

Each plaintiff claims to suffer from "organic impotence." Am. Compl. PP
20, 22, 24. Each plaintiff further alleges that his physician prescribed
Viagra soon after the FDA had approved its use for impotence. Am.
Compl.. PP 32, 33, 34, 35. Plaintiffs challenge defendants' denial of
coverage during the 45 day period and the six pill policy.

Defendants argue that plaintiffs failed to exhaust the administrative
claims process provided by the insurance plans before filing the instant
action. Each plaintiff, however, communicated with defendants on
numerous occasions in an effort to get an exception from defendants'
publically announced policies. Each of the named plaintiffs submitted
affidavits detailing their efforts at securing coverage for the
prescribed medication.

                             Patient 1

Patient 1 is 43 years old. He was diagnosed with prostate cancer in 1996
and underwent a radical prostatectomy. Patient 1 Aff. P 3. The surgery
caused erectile dysfunction. Id. Soon after Viagra was introduced,
Patient 1's physician recommended that Patient I take Viagra every day
in order to overcome his erectile dysfunction. Id. at P 5. The physician
sent Oxford a letter of medical necessity. Id. Patient 1's wife called
Oxford to inquire whether her husband's prescription for Viagra would be
covered and was told that there would be no coverage for at least one
month. Id. at P 6. Patient 1's wife then asked her employer
representative to call Oxford on her behalf. Id. at P 7. The
representative was also told that no prescriptions would be covered for
at least one month. Patient I Aff. P 7. At no time was Patient 1's wife
informed that she could seek further review of the decision during the
"no pay" period. Id. at P 8.

Patient 1's wife submitted the affidavit in support of plaintiffs'
opposition to defendants' motion to dismiss since she was the person who
actually dealt with defendants and attempted to get an exception on
behalf of her husband. In the interests of brevity, the affidavit is
referred to as Patient 1's Affidavit.

After the "six pill" policy was implemented, Patient 1's wife called
Oxford again to ask whether an exception was available for her husband
since his doctor had prescribed a daily dose of Viagra. Id. at P 10, She
was told there were no exceptions to the policy. Id. Patient 1's wife
denies receiving a "Certificate of Coverage & Member Handbook.' Id. at P
11. Patient 1 never presented a prescription for Viagra because he was
unable to afford the cost of the full prescription. Id at P 12.

                               Patient 2

Patient 2 is 51 years old and has suffered from diabetes since the age
of 11. Patient 2 Aff. P 2, In January 1994, he had surgery to remove his
right testicle due to a diabetes related atrophic condition. Id. at P 4.
Patient 2 has experienced erectile dysfunction since the operation. Id.
On April 14, 1998, Patient 2's physician prescribed 50-milligram tablets
of Viagra. Id. at P 8. This prescription was filled and covered by
defendants without question, Id.

The 50-milligram dose was ineffective. As a result, Patient 2's doctor
instructed him to take two tablets at a time. Id. On April 28, 1998,
Patient 2 presented a second prescription for thirty 100-milligram
tablets which was rejected by the pharmacy at the direction of the
defendants. Patient 2 Aff, PP 9, 10. Patient 2 called the customer
service telephone number located on his Oxford membership card. Id. at P
10. He was informed that defendants would not pay for Viagra for a
forty-five day period and that there would be no exceptions. Id. at P
11. Patient 2 called a second time to speak to an "executive officer"
and was again informed that there were no exceptions to the policy. Id
at P 12. Dr. Sotiropoulos, Patient 2's treating physician, attempted
without success to get Oxford to change its decision. Id, at P 13.

After receiving the written notification about the "no pay" period,
Patient 2 made a third telephone call and asked to speak with "a person
of higher authority," Id. at P 14. This "person of higher authority"
denied his request for an exception. Id. On or about June 15, 1998,
Patient 2 read about the "six pill" policy in the newspaper. Patient 2
Aff, P 15. Patient 2 proceeded to call Oxford for a fourth time and
asked to speak with a representative of the "Customer Care" department
which he was told was a higher level group than Customer Service Id. at
P 16. He was told that the "six pill" policy applied to everyone and his
request for 15 pills a month was "flatly" denied. Id. at PP Patient 2
was never given any indication that the decision could he "appealed,
questioned, or modified." Id. at P 16. Defendants also told Patient 2
that there would be no reimbursement for prescriptions filled at the
insured's expense within the "no pay." period. Id. at P 18. Patient 2
denies ever receiving the "Certificate of Coverage & Member Handbook."
Id. at P 19.

                               Patient 3

Patient 3 is 49 years old. On September 16, 1997, he underwent a radical
prostatectomy after being diagnosed with prostate cancer. Patient 3 Aff.
PP 2, The prostatectomy and the subsequent radiation caused complete
erectile dysfunction. Id. at 4, After hearing about Viagra in the news,
Patient 3 called the Dedicated Service Manager assigned to him by Oxford
to inquire whether his policy covered Viagra prescriptions. Id. at P 5.
He was told that Oxford would cover the prescription provided that his
doctor forwarded a letter of medical necessity to Oxford. Id. On or
about April 20, 1998, Patient 3 unsuccessfully attempted to fill a
prescription for thirty 50-milligram pills of Viagra. Id. at P 6-7.

Patient 3 then contacted the employee liaison representative at his
office, Patient 3 Aff. P 8. The representative and Patient 3 contacted
the Dedicated Service Manager assigned to the employer by Oxford, The
Service Manager requested that Patient 3's physician resend the medical
necessity letter, Id. at P 9. About an hour later the pharmacy called
Patient 3 to inform him that his prescription was ready. Id. at P 10.
However, by the time he got to the pharmacy, Oxford had rescinded the
approval. Id. The employee representative and Patient 3 called the
Oxford Dedicated Service Manager designated to the employer two more
times that day in an attempt to determine what had happened. Id. at P
11. The following day, the employee representative and Patient 3 called
a third time, and were told that the prescription had been rejected
because it was for more than six pills. Patient 3 Aff. P 12. Patient 3
then attempted to get six pills. After unsuccessfully attempting to get
the six pills, Patient 3 was told that Oxford would only cover
100-milligram tablets, not the 50-milligram tablets prescribed by his
doctor. Id. at P 13.

After finally receiving the six 100-milligram tablets, Patient 3 called
his Oxford Dedicated Service Manager, to inquire how he could get
approval for a larger amount of pills given his "condition." Id. at P
15. The Oxford Dedicated Service Manager told Patient 3 "that Viagra was
strictly for impotence and that if [he] was taking it because [he] had
prostrate surgery, [he] was taking it for the 'wrong thing'" Id. After
pressing the Service Manager, he was told that the "six pill" policy
applied to all policyholders and that there would be no exceptions. Id.
P 16.

In June 1998, Patient 3 attempted to fill a prescription that had been
written by his doctor before the 45 day "no pay" period. Id. at P 23.
Patient 3 was informed, without explanation, that the prescription was
denied because it had been written before the 45 day "no pay" period.
Patient 3 Aff. P 23. The customer service representative told Patient 3
that his doctor would have to write a new prescription and submit
another letter of medical necessity. Id. Patient 3 asked if he could
receive coverage for more than six pills and he was again told that
there would be no exceptions to the "six pill" policy. Id. At no time
was Patient 3 informed that there was a grievance procedure he could
pursue, Id. at P 16.

On May 1, 1998, Patient 3 sent a complaint letter to the New York State
Attorney General's office and a copy to John Sierra, Oxford's Corporate
Director of Pharmacy Services. Id. at P 21. Oxford never responded to
the letter. Id. In all, Patient 3's physician sent Oxford three letters
of medical necessity. Patient 3 Aff. P 24. Based on Patient 3's
experiences, it is not surprising that he "regarded any further efforts
to speak to Oxford as a waste of time." Id. at 22.

                               Patient 4

On November 10, 1992, Patient 4 underwent radical prostate surgery due
to prostate cancer. Patient 4 Aff. P 3. The surgery resulted in erectile
dysfunction, Id. On May 13, 1998, Patient 4 received a prescription for
ten 50-milligram Viagra pills. Id. at P 4. The pharmacy informed Patient
4 that Oxford would not cover the prescription. Patient 4 paid for it
out of his own pocket. Id. at 5. Patient 4 called an Oxford Customer
Service Representative to find out why the prescription was not covered.
Patient 4 was told that there would be no Viagra coverage for a few
months and that there would be no exceptions Id. at P 6. Patient 4 asked
to speak to a supervisor who reiterated the same policy. Id. at P 7.
Patient 4 was never informed that there was a way to appeal the policy.
Patient 4 Aff. P 8.

In addition to plaintiffs' individual dealings with Oxford, there is
other evidence to support plaintiffs' belief that defendants' "no pay"
and "six pill" policies were not subject to exception or appeal. On
April 28, 1998, the New York State Department of insurance directed
insurance carriers to "develop a policy, including any and all
conditions, concerning Viagra within forty-five days." Defendants
reacted in a peculiar way. Defendants suspended all coverage for Viagra.
After the 45 day period, defendants informed the regulator that it had
"engaged in an extensive utilization management process to develop its
Viagra policy," and that it worked with "medical experts and ethicists
to formulate an effective policy." Defendants once again issued a public
announcement declaring that its Viagra coverage would be limited to "6
tablets per month" and that to "receive greater than 6 tablets... per
month the Member must self pay." Defendants did not offer any specific
findings or medical conclusions supporting the six-pill policy, The
public announcement contained no mention of the possibility that the
general policy was subject to exception based on medical necessity or
any other factor. Indeed, the announcement gave no indication that the
policy was in anyway flexible or subject to change.

                           Standard Of Review

Defendants move to dismiss the complaint pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure based upon plaintiffs' failure to
exhaust the administrative remedies provided for in plaintiffs'
insurance plans. The parties submitted affidavits and other exhibits
with their motion papers. Under Rule 12(b)(6), if "matters outside the
pleading are presented to and not excluded by the court, the motion
shall be treated as one for summary judgment and disposed of as provided
for under Rule 56, and all parties shall be given reasonable opportunity
to present material made pertinent to such a motion by Rule 56." Fed, R.
Civ. Proc. 12(b)(6). The issue before the Court has been extensively
briefed by experienced counsel who no doubt fully understand that the
matter is more appropriately addressed in the context of summary

Summary judgment is appropriate only when "there is no genuine issue as
to any material fact." Fed. R. Civ. Proc. 56(c). The moving party bears
the burden of demonstrating that there are no genuine issues of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party
opposing summary judgment "may not rest upon mere allegations or denials
of" the moving party's pleadings, Fed. R. Civ. P 56(e). The Court must
draw all reasonable inferences and ambiguities in favor of the
non-moving party. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 255
(1986). For the reasons explained below, summary judgment is denied.

                     The Requirement of Exhaustion

Section 503(2) of the Employee Retirement Income Security Act ("ERISA")
requires that "every employee benefit plan shall... afford a reasonable
opportunity to any participant whose claim for benefits has been denied
for a full and fair review by the appropriate named fiduciary of the
decision denying the claim." 29 U.S.C. @ 1133 (1998). There is no
statutory requirement that plaintiffs exhaust administrative processes
before filing an action in federal court. However, relying an @ 1133,
"courts have 'developed the requirement that a claimant should
ordinarily follow internal plan procedures and exhaust internal plan
remedies before seeking judicial relief under ERISA.'" Ludwig v. NYNEX,
838 F. Supp. 769, 781 (S.D.N.Y. 1993), quoting John H. Langbein & Bruce
Wolk, Pension and Employee Benefit Law 588 (1990); see also Kennedy v.
Empire Blue Cross & Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993)
(dismissing action based on plaintiff's failure to pursue plan

The purposes of the judicially created exhaustion requirement are to:

(1) uphold Congress, desire that ERISA trustees be responsible for
    their actions, not federal courts;
(2) provide a sufficiently clear record of administrative action if
    litigation should ensue; and
(3) assure that any judicial review of fiduciary action (or inaction)
    is made under the arbitrary and capricious standard not de novo.

Kennedy, 989 F.2d at 594 (citations omitted) Courts have also noted that
the exhaustion requirement is intended to: reduce the number of
frivolous lawsuits, promote consistent treatment of claims, provide
nonadversarial method of claim settlement, and minimize costs. See Amato
v. J. W. Bernard, 618 F.2d 559, 567 (9th Cir. 1980).

As set forth in defendants' motion papers, both the Freedom Plan and the
Medical Advantage Plan provide a framework for appealing adverse
decisions. Defs.' Br. in Supp. of Mot, to Dismiss at 5-8. These review
procedures are outlined in a "Certificate of Coverage and Member
Handbook." Id. at Exs. B, C. According to the Membership policy for the
Freedom Plan, the prescribed "grievance procedure... should be used when
[a member has] a problem with any of [Oxford's] polices, procedures or
determinations" other than a determination that a service is not
medically necessary, Ex. B. at 22. The grievance procedure "may" be
initiated by a telephone call to a customer service representative. Id.
at 23. From there, the policy states that the insured "may" file, either
by telephone or in writing, a grievance with the Issues Resolution
Department. Id. Subsequently, an unsatisfied insured "may" file a
written grievance with the Grievance Review Board. Id. If the insured is
still dissatisfied he "may" appeal in writing to a Committee of the
Board of Directors. Id. Finally, an insured "may" appeal a final
decision to the New York State Insurance Department or Department of
Health. Id.

Alternatively, to challenge a determination concerning "medical
necessity," an insured "may" appeal within 45 days in writing or by
calling the Medical Management Appeals Department. Ex. B at 24. If an
insured is not satisfied with the result of that appeal, he "may" appeal
to the Board of Directors, Id.

Under the Medical Advantage Plan, an insured "may" initiate an appeal
process after a denial is issued by submitting a written request Ex. C.
at 29. If the insured is still dissatisfied, the insured "may request,
verbally or in writing, that the grievance be presented to the Health
Plan Grievance Review Board." Id. Neither policy alerts the policyholder
that these apparently permissive avenues of redress are preconditions to
commencing a legal action.

Exhaustion of the statutorily required administrative process is not
always required. Most notably, exhaustion is excused "where claimants
make a 'clear and positive showing' that pursuing available
administrative remedies would be futile." Kennedy, 989 F.2d at 594. To
fall within the futility doctrine, claimants must "show that it is
certain that their claim will be denied on appeal, not merely that they
doubt an appeal will result in a different decision" Communications
Workers of America v. American Tel. & Tel. Co., 40 F.3d 426, 432 (D.C.
Cir. 1994). The exhaustion doctrine, however, does not require
plaintiffs to "engage in meaningless acts or to needlessly squander
resources as a prerequisite to commencing litigation." Corsini v. United
Healthcare Corp., 965 F. Supp. 265, 298 (D.R.I. 1997).

Courts have been unwilling to conclude that pursuit of the
administrative process is futile absent evidence that a plaintiff
sincerely attempted to resolve its dispute extrajudicially. Certainly,
an allegation of futility is not satisfied by the mere showing that a
claim was denied when initially presented to the insurance company.
Communications Workers, 40 F.3d at 433; see also Leonelli v. Penwalt
Corp., 687 F.2d 1195, 1199 (2d Cir. (dismissing plaintiff's claim where
no attempt to challenge insurer's denial of coverage was made). Nor is
futility demonstrated by the fact that the members of a review committee
consist of the insurance company's management rather than a neutral
arbitrator. Amato, 618 F.2d at 998; Communications Workers, 40 F.3d at
433. But see Jonas v. New York State Soc'y of CPA Ins. Plans, No.
91-CV-4399, 1992 WL 390291, at *3-4 (E.D.N.Y Dec. 8, 1992) (Spatt, J.)
(finding genuine issue of material fact as to whether claimant properly
appealed adverse decision where only review process was reconsideration
by same person who initially denied claim).

The case at bar differs significantly from these cases. According to
plaintiffs' affidavits, numerous telephone calls were made to defendants
in an effort to get an exception to the "no pay" and six pill policies.
Plaintiffs' physicians were required to, and did, submit letters of
medical necessity, in some cases on more than one occasion. In one
instance, a treating physician. interceded on behalf of his needy
patient. Regardless of the efforts and opinions of plaintiffs'
physicians, defendants consistently denied coverage during the 45 day
no-pay period and coverage beyond six pills after that policy was
announced. One plaintiff wrote a complaint letter to the New York State
Attorney Genera1's office. Despite the fact that plaintiff copied
Oxford's Corporate Director of Pharmacy Services, Oxford never responded
to the letter.

In their reply brief, defendants note that the letter did not
specifically "request" that Oxford review, or take any particular
action, regarding [the insured's] claim." Apparently, defendant's did
not feel obligated to respond to Patient 3's concerns because the letter
was not addresed to them.

Defendants take great comfort in a recent Southarn District decision. In
an unpublisbed. decision, Judge Martin concluded that a plaintiff had
not demonstrated that exhaustion was futile even though she wrote four
letters to Oxford and met with an Oxford representative to discuss
Oxford's denial of 24 hour private nursing care. Fay v. Oxford Health
Plans, 98 CV 0350 (S.D.N.Y. July 31, 1998) In Fay, Oxford refused to pay
for private nursing care because in its opinion placement in a Skilled
Nursing Facility was not only less expensive but "a superior option
because it provide[d] a full range of health options" to the plaintiff.
Id. The differences between this case and the case at bar are obvious.
First, the plaintiff in Fay challenged a care decision applicable only
to her, not to all members. Second, Oxford provided alternative coverage
that in their opinion was superior to the coverage requested by the
plaintiff. The dispute in Fay was not about a blanket denial of
coverage, but instead whether the coverage offered was appropriate to
the insured's medical needs. In the instant case plaintiffs are
challenging a policy that they have been told over and over again is not
subject to exception. In addition, defendants have not offered any
comparable alternatives to plaintiffs. Everyone seems to recognize that
there are no other currently available alternatives to Viagra except the
cumbersome and uninviting choices of the past.

Other cases are far less sympathetic to Oxford's theory of defense.
Exhaustion has been excused when the plaintiff alleged that she was
unaware of an appeals process and the defendant insurance company failed
to plead or supply proof of the existence of, or plaintiff's knowledge
of, the appeal process, Novak v. TRW Inc., 822 F. Supp 963, 969
(E.D.N.Y. 1993) (Wexler, J..); Clay v. ILC Data Device Corp., 771 F.
Supp. 40, 45 (E.D.N.Y. 1991) (Wexler, J.). Similarly, futility has been
demonstrated when an employee made inquiries to management on four
different occasions about the reinstatement of his pension and was never
informed of his right to appeal the denial Ludwig, 838 F. Supp. 769, 781
(S.D.N.Y. 1993).

Exhaustion has also been satisfied where an insurance company failed to
timely respond to a claimant's written request to revIew its denial of
benefits. Ritzer v. Nat'l Org. of Indus. Trade Unions Ins. Trust Fund
Hosp., 807 F. Supp. 257, 260 (E.D.N.Y. 1992) (Nickerson, J.) An
insurance company's steadfast refusal to extend benefits in response to
a claimant's multiple benefits was sufficient to overcome the exhaustion
requirement even though the plaintiff filed the complaint two months
before the actual denial of benefits. Wilczynski v. Lumbermens Mut. Cas.
Co., 93 F.3d 397, 405 (7th Cir. 1996). Finally, futility was
demonstrated by an insurance company's unexplained refusal to accept a
treating physician's opinion that certain services were "medically
necessary." McGraw v. Prudential Ins. Co., 137 F.3d 1253, 1264 (10th
Cir. 1998).

Insurers have also invoked the judicially crafted exhaustion requirement
to argue that claimants challenging general policies may not initiate an
action before using the administrative claims process provided by the
insurance plan. However, plan participants were not required to pursue
administrative remedies when they sought to challenge the calculation of
co-paymemt obligations under a "long standing policy" that was
consistently applied and "vigorously" defended by the insurance company.
Corsini, 965 F. Supp. at 269-70. Similarly, exhaustion would have been
futile when it was clear that the company had adopted a policy of
denying all applications for a specific plan. Berger v. Edgewater Steel
Co., 911 F. 2d 911, 917 (3d Cir. 1990).

Defendants argue that the fact that the "no pay" and "six pill" policy
are uniform and generally applicable, does not in itself excuse
exhaustion, Defendants primarily rely on the Second Circuit's opinion in
Kennedy. In Kennedy, the plaintiffs challenged the insurance company's
reforumulation of the geographic zones used in determining physician
reimbursement amounts. Kennedy, 89 F.2d at 583. The Second Circuit
rejected the plaintiffs' claims of futility based upon a finding that
the plaintiffs took "no action whatsoever with respect to their disputed
claims." Id. at 594. The plaintiffs never notified the defendant of any
disputed claim before bringing the action in federal court. Id. The
court rejected the plaintiffs' argument that the correspondence between
the defendant and the plaintiffs demonstrated that an appeal would he
futile. Id. at 594.

Once again, the facts in Kennedy are wholly different from the case at
bar. In Kennedy, the correspondence between the defendants and
plaintiffs explicitly made reference to the available avenues of appeal.
Id. at 591. Here other than the fact that the appeal process was set
forth in the membership handbook (that some plaintiffs deny ever
receiving), the availability of an appeal process and the mandatory
nature of it were never expressly communicated to plaintiffs before the
filing of this complaint. A fully informed insured might be hard pressed
to argue that he or she should be excused from complying with an express
condition of coverage.

As described above, each of the named plaintiffs claims to have had
telephone contact with defendants on numerous occasions Each of the
plaintiffs denies ever being informed that they had the right to appeal
to a "higher authority-" Defendants deny any record of any telephone
calls by plaintiffs and argue that the appeal procedure is clearly set
forth in the Membership Handbook. According to defendants, employers axe
responsible for ensuring that insureds receive the appropriate
membership materials. It is curious that defendants plead the doctrine
of exhaustion as a shield against litigation, yet rely on others to
ensure that policyholders are aware of the administrative process rather
than simply educating policyholders about the need to exhaust at the
time adverse decisions are made.

The same interests identified by courts in favoring administrative
review are served by requiring carriers to ensure that their insureds
are aware of opportunities within the administrative scheme to seek
review or reconsideration. Relying on a simple provision in a handbook
that the employee may or may not see, much less understand, is
unreasonable and merely encourages the "slight of hand" suggested here.
"The industry may not have it both ways -- insisting on compliance with
the judicial requirement of exhaustion and at the same time, hiding the
requirement behind an arguably thicket of misleading legalese."

Assuming arguendo that plaintiffs were aware of their need to pursue all
administrative appeals and the procedure for pursuing such appeals,
there is overwheIrning evidence that such efforts would have been
futile. While an insured's belief, even in good faith, cannot by itself
justify bypassing a contractually binding review process, there are
circumstances here, not genuinely in dispute, that make it perfectly
clear, as the course of events now confirms, that Oxford would not make
any exceptions to the announced policy. Each of the four named
plaintiffs called defendants on numerous occasions and received the same
"no exceptions" answer to their repeated pleas for consideration.
Letters of medical necessity sent to Oxford by treating physicians had
no impact on plaintiffs' efforts to obtain coverage. Plaintiffs Patient
2, Patient 3, and Patient 4 allege that they spoke with higher level
employees and received the same. answer, "How many times can
policyholders be expected to contact their insurance company before
concluding that they are wasting their time?" The question is
particularly germane when the insurance company's refusal to pay is in
keeping with a publically announced policy applicable to all insureds.

Finally, there remains a genuine question as to whether exhaustion
should be required in a case of this nature. In the face of a
company-wide promulgation of limited or no coverage unrelated to the
personal circumstances of individual claimants, it is fair to question
whether it makes sense to require insureds to jump through procedural
hoops on their way to an inevitable denial of coverage, The same worthy
considerations that spawned the judicially crafted exhaustion
requirement in individual cases seem to counsel against such a
precondition in those cases that feature across the board company-wide
coverage policies. "indeed exhaustion for the sake of exhaustion,
without any reasonable expectation of relief, serves no legitimate
purpose except to deter insureds from seeking redress in the only forum
that would offer a meaningful opportunity to vindicate rights secured in
the insurance contract."

The named plaintiffs in this case acted entirely reasonably. When faced
with Oxford's sudden denial of coverage, they contacted the insurer
directly or with the help of the employer's representative for
reconsideration and an explanation. They persisted in their request for
coverage; they provided medical documentation; they pursued their claims
up the hierarchy of Oxford's bureaucracy, and, quite understandably,
came eventually to recognize that relief would not come from Oxfcra at
any level. Ultimately, Oxford proved them right. Nevertheless, Oxford
now argues that they stopped too soon and despite their entirely
reasonable efforts, that misjudgment has cost them the opportunity to
press their claims before this Court.

"Oxford's position seems particularly untenable when seen in the light
of the policy language itself. In neither policy handbook, is the
insured instructed that administrative remedies must be utilized These
materials are strangely silent on the exhaustion requirement that Oxford
now embraces with such enthusiasm." Like the named plaintiffs, insureds
are left to their own devices, instructed that they should use the
grievance procedure and may file a claim or may appeal, as the
exhaustion requirement lurks in the background waiting to be deployed
should a frustrated policyholder seek to inititate judicial proceedings.
The scenaio ends notions of fairness and common sense."

Defendants' motions are denied. So Ordered. (New York Law Journal

WAL-MART: Contractor's Suit Upheld But No Damages For Their Employees
A company that contracted with Wal-Mart was entitled to sue Wal-Mart
under @ 1981 for allegedly providing a racially hostile work environment
to the contractor's employees, the First Circuit ruled. However, the
court held, because it was the company, not its employees, that had the
contract, the company should have been limited to seeking relief from
its own damages. The business was not automatically entitled to
compensation for its employees' damages, and the employees were not
entitled under @ 1981 to damages on their own behalf. Danco Inc. v.
Wal-Mart Stores Inc., 1999 U.S. App. Lexis 9033 (1st Cir. 1999). (The
Corporate Counsellor, July 1999)

WORKER ILLNESS: Workers Sue Govt Contractors In Plutonium Scandal
Workers at a US government uranium plant have filed a 10-billion dollar
lawsuit against three government contractors, saying employees were
deliberately exposed to deadly plutonium, the Washington Post reported

The suit names Lockheed Martin, General Electric and Union Carbide, and
seeks one of the largest damage awards ever claimed in a worker class
action, the daily reported.

The Post first reported last month that workers at the weapons plant in
Paducah, Kentucky were exposed to deadly plutonium over a period of
several decades. Workers reportedly believed they were handling uranium,
which is much less radioactive.

"The time has come for accountability, compensation and punishment,"
said William F. McMurry, one of the lawyers who filed the suit in US
District Court in Paducah.

The suit alleges that the corporations reaped unjust profits by failing
to properly monitor and protect workers from radioactive and chemical
hazards in the workplace.

An earlier lawsuit filed by three workers at the plant alleges that
radiation exposure at the Paducah plant was a problem beginning in the
1950s and possibly as late as the 1990s, affecting thousand of workers.

Plaintiffs in the lawsuit allege a connection between worker illnesses
and exposure to radioactive materials at the plant.

The 10-billion dollar sum includes five billions in punitive damages,
and is based on a class of at least 10,000 current and former workers
and their family members.

The Post cited court documents, plant records and interviews with
current and former workers, which suggested that "contractors buried the
facts about the plutonium contamination" in reports filed in archives.

Scientists say that as little as a millionth of an ounce (about 1/30,000
of a gram) of ingested plutonium may cause cancer. (The Washington Post


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

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

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