CAR_Public/990908.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Wednesday, September 8, 1999, Vol. 1, No. 151

                                 Headlines

ACCEL INTERNATIONAL: SEC Filing On Suit Over Long-Term Care Policies
ACCELERATION LIFE: Long-Term Care Policies To Go To Ct In Dekota In Oct
BECTON DICKONSON: Stuck Uninfected Texas Health Workers Seek Class Cert
CHROMATICS COLOR: Decries Merit Of Securities Suit In New York
EQUIFAX CHECK: 7th Cir. In Illinois Keeps Class While Superset Settles

EUROPA CRUISES: Class Cert Sought For Suit In Nevada Over Gaming Fraud
EUROPA CRUISES: Contests Complaint On Discrimination Against Disabled
EUROPA CRUISES: Voluntary Dismissal For Gaming Fraud Suit In Florida
FORD MOTOR: Settles Sexual Harassment Case
HITSGALORE COM: Faces Securities Suit In California

NATIONAL GYPSUM: Texas 5th Cir Bars Appeal For Intervention In Fee Case
NORWEST MORTGAGE: Fax Fee Not A Prepayment Penalty, Minnesota Ct Rules
PEDIATRIC SERVICES: Decries Merit Of Securities Suit In Georgia
PEDIATRIC SERVICES: Decries Merit Of Securities Suit In Tennessee
PLANO INDEPENDENT: Parents In Texas Don’t Want “Connected Math” Program

RELIASTAR MORTGAGE: 11th Cir Georg To Rule On Volume-Based Compensation
TOBACCO LITIGATION: Cable News Network Coverages On Florida Hearing
U.S.: Federal Suit Targets Hiring Practices For State Investigators
UNISYS CORP.: Union Included in Suit In N.Y. Over Age For Layoff

                              *********

ACCEL INTERNATIONAL: SEC Filing On Suit Over Long-Term Care Policies
--------------------------------------------------------------------
In November 1997, suit was filed against ALIC by three long-term care
policyholders seeking to represent a class of North Dakota policyholders
alleging breach of contract, fraud and misrepresentation regarding an
alleged promise not to raise premiums "too much". Said long-term care
insurance business was entirely reinsured to and assumed by Commonwealth
Life Insurance Company ("Commonwealth") of Louisville, Kentucky, in
1991. The matter was tendered to Commonwealth to defend on behalf of
ALIC pursuant to the applicable provisions of the reinsurance agreement
between the parties, and Commonwealth also tendered the matter back to
ALIC.

The allegations of fraud and misrepresentation at the time of sale of
the long-term care policies are based on alleged statements that
premiums "would not be raised too much" even though the policy on its
face stated that the "Company reserves the right to increase premiums at
anytime." Moreover, premiums were increased subsequent to the
reinsurance of the business to Commonwealth by ALIC, and the increases
appear to have been approved by the proper regulatory authority.
Plaintiffs amended their complaint to set forth allegations that the
policies were intentionally underpriced and/or poorly underwritten, so
as to justify premium increases and induce policy lapses.

The Company and Commonwealth are cooperating to vigorously defend the
matter. Joint motions to dismiss and to strike the class action
allegations were filed in the U.S. District Court, District of North
Dakota, Southeastern Division.

The Court acted to deny all pending motions without prejudice to
refiling until development of the record occurred. The parties have
undertaken to conduct discovery to develop the record as directed by the
Court. Based thereon, the Company filed a motion for summary judgment.
On March 16, 1999, the Court issued a Memorandum and Order denying
Defendant's motion for summary judgment and granting Plaintiff's motion
for class certification.

The Company petitioned for interlocutory appeals of both rulings which
were subsequently denied. These recent developments involve one or more
theories of damages which if decided against defendants, including the
Company, might ultimately prove material although management cannot
currently estimate a range of potential loss.

At a recent status conference on the matter, a definition of the class
was established by the Court which reduced the membership of the class
by approximately 50 percent and the Court fixed October 4, 1999 as the
trial date. In the event the plaintiffs prevail, the Company believes
that it has a basis on which to seek indemnification from Commonwealth.

On March 3, 1999, a complaint was filed in the Circuit Court of Pinellas
County, Florida to represent a class of all Florida purchasers of
long-term care insurance sold by ALIC. The allegations are similar to
the allegations in the North Dakota litigation above. No response to the
complaint has yet been filed by the Company. The Company intends to deny
any liability therein and to continue to defend its interests vigorously
in these matters.


ACCELERATION LIFE: Long-Term Care Policies To Go To Ct In Dekota In Oct
-----------------------------------------------------------------------
Warning to people considering long-term care insurance: Some of these
policies are fatally flawed. Instead of protecting you when you're old,
they'll force you to drop the coverage before you can make a claim.

Long-term care (LTC) insurance protects the assets of the frail,
confused or ill. It will cover a certain amount of custodial care- help
with bathing, eating, dressing-in your own home or a nursing home. This
saves you from using your personal money to pay all the bills.

Most policies are sold with a "level premium." To buyers, that means
that the price of the policy won't go up. If you start at $200 a month,
that's where you'll stay.

The policy's fine print, however, says something else. Although the
insurer can't raise the price of your policy alone, it can put through a
price hike on your entire "class" of policies. That means all the
policies like yours that it sold within your state.

This loophole has spawned a dirty game. The insurer (often a small one)
will tout a new policy at a bargain price. It will carry rich benefits,
and might accept people who are in poorer health. You think you're
getting a terrific deal.

Two years later, however, premiums might jump by 15, 20 or 50 percent.
In another two years, they'll jump again.

At that point, the policy won't be competitive anymore. The healthy
customers will switch to something newer and cheaper.

Those left behind -- the older and sicker -- make claims at a higher
rate, so the premiums on the policy will rise again. One by one, most of
those older policyholders will let their coverage lapse, because they
can't afford to pay. Bye-bye to the old-age protection they had hoped
for most.

When consumers have no other voice, they call the lawyers in. A North
Dakota class action goes to trial in October, against Acceleration Life
and Commonwealth Life (whose business was bought by Aegon in 1997). The
attorney, Allan Kanner of New Orleans, filed a similar case in Florida.
He plans to sue in Wyoming and Washington state, too.

The policies at issue weren't going to make any money, according to a
company memo produced for the North Dakota case. To solve the problem,
the memo said, the insurer should "file large rate increases to
encourage higher lapses." In other words, raise the price in hopes of
driving people out.

They drove out Harold Hanson, 94. When he bought his "level premium"
policy in 1987, he paid around $1,094 a year, Kanner says. Nine years
later, his cost had soared to $3,603, which he couldn't afford to pay.

Nellie McIlroy, 93, saw her premiums leap from about $830 in 1987 to
$6,638 this year. McIlroy now has Alzheimer's disease, according to the
complaint. She's paying the high premium because she knows she needs the
coverage.

Of more than 2,000 people who bought these policies in North Dakota,
fewer than 130 are still insured, Kanner told the court.

A spokesperson for Aegon says its predecessor, Commonwealth Life, has
stood behind the policies at issue.

I heard a similarly sad story from Larry Blau, 72, and his wife Janet,
67, of Garden Grove, Calif. Two years ago, they bought a "level premium"
policy from American Travellers Life (ATL). Jointly, they paid $3,499 a
year-the most they thought they could afford. Less than two years later,
their premium jumped to $4,132.

David Larson of the Larson Long Term Care Group in Bothell, Wash., who
has surveyed LTC rate increases in 35 states, says that ATL is one of
the most aggressive price-hikers in the business. ATL spokesperson Jim
Rosensteele says that for these policies, claims were higher than
anticipated. (The company has just changed its name to Conseco Senior
Health Insurance Co.)

A well-managed LTC policy needn't rise in price, says Tom Foley of the
Kansas Insurance Department. Travelers Life & Annuity says it has never
raised premiums on existing LTC policyholders. GE Financial Assurance,
Unum and John Hancock Mutual Life say the same. They charge more at the
start than the "bargain" companies do, but you'll pay less in the end.
(The Washington Post 9-7-1999)


BECTON DICKONSON: Stuck Uninfected Texas Health Workers Seek Class Cert
-----------------------------------------------------------------------
An estimated 200,000 Texas health care workers who suffered needlestick
injuries, but were never infected with any disease, have moved for class
certification in a case against two companies they say have an oligopoly
on the needle industry (Joan Usrey, et al v. Becton Dickinson & Co.,
Inc., et al., No. 342-173329-98, Texas Dist., Tarrant Co.).

Certification arguments were heard on the May 21 motion in the Tarrant
County District Court. The putative class is suing needle manufacturers
Becton Dickinson & Co. and Sherwood Medical Co. Both have controlled
approximately 90 percent of the sharps market in the United States since
the 1960s.

(Text of Class Certification Motion in Section C. Mealey's Document #
28-990716-103.)

The class claims, however, that since then the firms have done nothing
with the design of their open hollow bore needles to prevent the
estimated 1 million needlestick injuries suffered by health care workers
each year. In each injury case, the plaintiff was injured by a hollow
bore needle after the sharp was no longer needed.

By some accounts, the annual cost of treating needlestick injuries has
risen to $ 1 billion, a expense that is primarily absorbed by employers.
Meanwhile, needle manufacturers have done virtually nothing to alter the
designs of their allegedly defective device designs, the putative class
alleges.

"These companies became aware of the needle stick problem about the same
time the computer industry began mass producing an alternative to the
vacuum tube," the motion says. "In the twenty years that followed,
computers shrunk from the size of entire building floors to the palm of
a hand. . . . All the while, BECTON and SHERWOOD whistled at the
gathering darkness of the needle stick epidemic."

The class complaint is the first of its kind, focusing only on a
"forgotten category" of Texas health care workers who have been injured
by syringe needles, but have not tested positive for the variety of
blood-borne illness they risk acquiring as a result of their injuries.

If certified, its members will seek the cost of medical treatment
necessary to ensure they have not contracted diseases such as HIV and
hepatitis.

"Only by way of this class action can a vast majority of health care
workers obtain the proper medical testing caused by their needle stick
injuries," the proposed class says.

                           Class Requirements

According to the motion, the putative class meets all of Texas'
requirements for class certification. Specifically, the motion says, the
number of possible members could at one point exceed 200,000 and each
member shares common legal concerns such as whether the non-safety
syringes and blood collection products used by the plaintiffs were
defectively designed and whether safer alternatives existed when the
accidents occurred. "In each Plaintiff's case, safer alternative
products were available, either through Defendants or others," the class
alleges.

For years now, both companies have marketed safer devices that shield
needles from health care workers, virtually eliminating the risk of
needlestick and infection. But according to Becton and Sherwood, the
market has been slow to accept them.

The motion also says the most compelling reason to certify the class is
because it is a negative value suit. The litigation costs, the class
claims, would undoubtedly outweigh the potential damage awards. "Similar
suits involving infected needle stick victims have been brought against
both Defendants, but the potential damage award in those cases justified
the expenses incurred in pursuing the individual claims," the motion
states.

The plaintiffs are represented by John S. Jose of Jose, Henry, Brantley
& Keltner in Fort Worth, Texas. Associate general counsel for Becton
Dickinson is Roy Weber of Franklin Lakes, N.J. The firm is also
represented by Jonathan Skidmore of Fulbright & Jaworski in Dallas.
(Mealey's Emerging Drugs & Devices 7-16-1999)


CHROMATICS COLOR: Decries Merit Of Securities Suit In New York
--------------------------------------------------------------
Three putative class actions were commenced against Chromatics Color
Sciences International and certain of its officers and directors in the
Southern District of New York. The first two actions were commenced in
June 1998 and are captioned L.F. Monk v. Chromatics Color Sciences
International, Inc., Darby S. Macfarlane, Arthur Guiry, David K.
Macfarlane and Leslie Foglesong, C.A. No. 98 CV 4111 (S.D.N.Y.) and
Daniel R. Marquis v. Chromatics Color Sciences International, Inc.,
Darby S. Macfarlane, Arthur Guiry and Leslie Foglesong, C.A. No. 98 CV
4335 (S.D.N.Y.). The third action was commenced in August 1998 and is
captioned Joseph Grunberg v. Chromatics Color Sciences International,
Inc., Darby S. Macfarlane, Arthur Guiry, David K. Macfarlane and Leslie
Foglesong, C.A. No. 98 Civ. 5646 (S.D.N.Y.)

The complaints were consolidated pursuant to the Consolidation Order
entered by the Court in December 1998. A consolidated amended complaint
in the matter now captioned In re Chromatics Color Sciences
International, Inc. Securities Litigation, Consolidated Matter File No.
98 Civ. 4111 (SHS), was filed and served in January 1999.

Plaintiffs purport to bring the class action on behalf of all purchasers
of the common stock of the Company, between July 30, 1997 and June 9,
1998, seeking damages for the alleged violation by defendants of Section
10(b) of the Securities Exchange Act of 1934, 15 U.S.C. ss.78j(b), and
Rule 10b-5 promulgated thereunder, 17 C.F.R. ss.240.10b-5, and pursuant
to Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C.
ss.78t(a), with respect to the individual named defendants as
"controlling persons."

The complaint alleges that the Company "embarked upon a scheme" to
inflate the price of the Company's Common Stock by making false and
misleading statements concerning: (i) the new and innovative nature of
the Company's ColorMate(Registered) TLc BiliTest(Registered) System;
(ii) the market size and revenue potential of the ColorMate(Registered)
TLc BiliTest(Registered) System; and (iii) the existence and status of
negotiations with potential distributors of the ColorMate(Registered)
TLc BiliTest(Registered) System. The allegations of the complaint arise
principally from a "report" prepared by Manuel I. Asensio of Asensio &
Company, Inc. that was disseminated at the close of the putative class
period.

Defendants have moved to dismiss the complaint, which motion is fully
briefed and is now pending before Judge Stein. Defendants believe that
the claims asserted against them are without merit and intend to
vigorously defend this action. No assurance can be given that the
resolution of the Action and/or future actions will not have a material
adverse effect on the Company's results of operations and liquidity. The
Company has directors and officers insurance which may cover a portion
of the liability asserted in the Action. The Company is exploring its
legal remedies in respect to what it believes to be false allegations
against the Company made by short sellers of its stock; the Company
expects to incur significant expenses in this regard.


EQUIFAX CHECK: 7th Cir. In Illinois Keeps Class While Superset Settles
----------------------------------------------------------------------
A court does not abuse its discretion in refusing to decertify a class
upon learning that it is a subset of another larger class, which has
failed to produce a final and binding decision. Different class actions
involving the same defendant and similar circumstances may continue
until a final decision is rendered. Blair, et al. v. Equifax Check
Services Inc., No. 99-8006 (7th Cir. 6/22/99).

Equifax Check Services Inc. attempted to collect on dishonored checks
written by Beverly Blair and Letressa Wilbon. Equifax mailed the
consumers a standard letter that implied it would not verify debts from
merchants for debtors who had not paid all outstanding checks. Blair and
Wilbon separately filed class actions against Equifax under the Fair
Debt Collection Practices Act alleging that its letter contradicted
their right to demand verification within 30 days. They sought statutory
penalties only.

The class actions were consolidated and the U.S. District Court for the
Northern District of Illinois certified a class and sub-class. However,
on the same day a superset of the class certified in Blair settled with
Equifax in Crawford v. Equifax Check Services Inc., No. 97 C 4240 (N.D.
Ill. 9/30/98). The attorneys in Blair and Wilbon attended the settlement
conference before Magistrate Judge Schenkier and allegedly learned for
the first time that the Crawford class included the Blair class. Class
counsel for Blair opposed the terms of the settlement and sought to
intervene in the proceedings, but the court rejected their arguments on
grounds "counsel should have found out about the overlap and acted
earlier."

The settlement agreement contained unusual terms, including a bar on the
prosecution of any other cases involving the surviving claims for
compensatory or statutory damages as a class action. Equifax filed a
motion for reconsideration with the District Court arguing that this
final portion of the settlement agreement required Judge Paul E.
Plunkett of the District Court to decertify the Blair class or risk
inconsistent outcomes.

Judge Plunkett refused to decertify the Blair class after finding the
Crawford settlement to be irrelevant. Judge Plunkett was miffed that
Equifax did not previously move for consolidation of Blair and Crawford.
Equifax utilized Fed. R. Civ. P. 23(f) and appealed the decision.

On appeal, the 7th U.S. Circuit Court of Appeals considered whether to
exercise its discretion under the new rule and review the appeal. It
listed economics, pressures to settle and development of the law as
reasons why a court would entertain an interlocutory appeal and
concluded that Equifax's appeal satisfied the third element. According
to Judge Frank Easterbrook, the relationship among multiple class
actions was "one of the issues that has evaded appellate resolution, and
the issue is important enough to justify review now."

The 7th Circuit found that all members of the Blair class were also
members of the Crawford class, thus a judgment binding the Crawford
class would bind the Blair class. This is true even if the judgment
proscribes further class actions, said the court. However, the court
pointed out that Crawford was not yet a final decision and until it was,
Judge Plunkett could properly proceed. In fact, said the court, Blair
may become final before Crawford or the counsel in Blair might prevail
on the appeal of the refusal to grant their motion to intervene in
Crawford. Furthermore, counsel in Blair could appeal the final approval
of the Crawford settlement. The court affirmed the decison.
(Consumer Financial Services Law Report 8-12-1999)


EUROPA CRUISES: Class Cert Sought For Suit In Nevada Over Gaming Fraud
----------------------------------------------------------------------
William Poulos, Et Al. V. Ambassador Cruise Lines, Inc., Et Al. (United
States District Court, District of Nevada) (Case No. CV-S-95-936-LDG
(RLH))

On or about November 29, 1994, William Poulos filed a class action
lawsuit on behalf of himself and all others similarly situated against
approximately thirty-three defendants, including Europa Cruises of
Florida 1, Inc. and Europa Cruises of Florida 2, Inc. in the United
States District Court, Middle District of Florida, Orlando Division
(Case No. 94-1259-CIV-ORL-22). Europa Cruises of Florida 1, Inc. and
Europa Cruises of Florida 2, Inc. were served with the Complaint on or
about March 15, 1995. The suit was filed against the owners, operators
and distributors of cruise ship casinos which utilized casino video
poker machines and electronic slot machines. The Plaintiff alleges
violation of the Federal Civil RICO statute, common law fraud and
deceit, unjust enrichment and negligent misrepresentation.

The plaintiff had filed a similar action against most major, land-based
casino operators in the United States. The earlier action, which did not
name the Company or any of its subsidiaries as defendants, was
transferred from the U.S. District Court in Orlando, Florida to the U.S.
District Court in Las Vegas, Nevada.

The plaintiff contends in both actions that the defendant owners and
operators of casinos, including cruise ship casinos, along with the
distributors and manufacturers of video poker machines and electronic
slot machines have engaged in a course of fraudulent and misleading
conduct intended to induce people to play their machines based on a
false understanding that the machines operate in a truly random fashion.
The plaintiff alleges that these machines actually follow fixed,
preordained sequences that are not random, but rather are both
predictable and subject to manipulation by defendants and others. The
plaintiff seeks damages in excess of $1 billion dollars against all
defendants. Management believes there is no support for plaintiff's
factual claims and the Company intends to vigorously defend this
lawsuit.

On September 13, 1995, the United States District Court for the Middle
District of Florida, Orlando Division, transferred the case pending in
that Court against Europa Cruises of Florida 1, Inc. and Europa Cruises
of Florida 2, Inc. and other defendants to the United States District
Court for the District of Nevada, Southern Division. Accordingly, the
case against Europa and the other defendants in the cruise ship industry
will be litigated and perhaps tried together with those cases now
pending against the land-based casino operators and the manufacturers,
assemblers and distributors of gaming equipment previously sued in
federal court in Nevada. Management believes the Nevada forum provides a
more favorable forum in which to litigate the issues raised in the
Complaint. The Company is sharing the cost of litigation in this matter
with other defendants.

On November 3, 1997, the Court heard various motions in the case,
including a Motion to Dismiss filed by the cruise ship defendants. The
motion was denied. On March 18, 1998, the Plaintiffs filed a Motion for
Class Certification. The motion is pending.


EUROPA CRUISES: Contests Complaint On Discrimination Against Disabled
---------------------------------------------------------------------
Association For Disabled Americans, Inc. Daniel Ruiz And Jorge Luis
Rodriguez V. Europa Cruises Of Florida 2, Inc. And Europa Cruises
Corporation (United States District Court for the Southern District of
Florida, Miami Division, Civil Action No. 98-1836)

On July 31, 1998, the Association for Disabled Americans, Inc., Daniel
Ruiz and Jorge Luis Rodriguez filed suit against Europa Cruises of
Florida 2, Inc. and Europa Cruises Corporation for injunctive relief
pursuant to the Americans With Disabilities Act.

The Plaintiffs claim, in part, that Europa has discriminated against
them by denying them access to and full and equal enjoyment of services,
facilities, accommodations, the subject vessel and premises and that the
Company has failed to remove architectural barriers and erect certain
architecturally required improvements. The Plaintiffs have requested
that the Court issue a permanent injunction enjoining Europa from
continuing its alleged discriminatory practices, ordering Europa to
alter the subject vessel and premises, close the subject vessel and
premises until the alleged required modifications are completed and to
award Plaintiffs attorneys' fees, costs and expenses incurred. The
Company intends to vigorously defend this action.


EUROPA CRUISES: Voluntary Dismissal For Gaming Fraud Suit In Florida
--------------------------------------------------------------------
Robert M. Baer, Et Al V. Ambassador Cruise Lines, Inc. Et Al. (In the
Circuit Court of the Seventeenth Judicial Circuit In and For Broward
County, Florida) (Case No. 96-6177 (21))

On May 7, 1995, Robert M. Baer, on Behalf of Himself and All Others
Similarly Situated, filed a class action lawsuit against approximately
thirty-eight defendants, including Europa Cruises of Florida I and
Europa Cruises of Florida II in the Circuit Court of the Seventeenth
Judicial Circuit In and For Broward County, Florida. (Case No. 96-6177
(21) Europa Cruises of Florida 1, Inc. and Europa Cruises of Florida 2,
Inc. were served with the Complaint on or about July 11, 1996.

The suit was filed against the manufacturers, distributors and promoters
of video poker and electronic slot machines and the owners, operators
and promoters of cruise ship casinos which utilized casino video poker
machines and electronic slot machines. The plaintiff alleged fraud in
connection with the labeling, design, promotion and operation of casino
video poker machines and electronic slot machines, violation of the
Florida Racketeer Influenced and Corrupt Organizations Act, common law
fraud and deceit, unjust enrichment, and negligent misrepresentation.

The plaintiff contended that the defendant owners, operators and
promoters of cruise ship casinos, along with the manufacturers,
distributors, and promoters of video poker machines and electronic slot
machines, have engaged in a course of fraudulent and misleading conduct
intended to induce people to play their machines based on a false
understanding that the machines operate in a random fashion and are
unpredictable. The plaintiff alleged that these machines actually follow
fixed, preordained sequences that are not random, but rather are both
predictable and subject to manipulation by defendants and others. The
plaintiff sought damages in excess of one billion dollars, including
treble their general and special compensatory damages, punitive damages,
consequential and incidental damages, interest, costs, attorneys' fees
and a preliminary and permanent injunction requiring defendants to
accurately and properly describe their video poker machines and
electronic slot machines. The Company shared the cost of this litigation
with certain other defendants who retained the same law firm to
represent them.

On March 6, 1998, the Plaintiffs filed a Notice of Voluntary Dismissal
Without Prejudice.


FORD MOTOR: Settles Sexual Harassment Case
------------------------------------------
Ford Motor Co. agreed to pay $7.75 million in damages to settle federal
charges that it allowed sexual harassment of female employees at two
Chicago-area plants. Ford also agreed to block promotions of supervisors
who know of such activities and fail to take action.

The amount of damages was the fourth-largest sexual harassment
settlement in the history of the Equal Employment Opportunity
Commission.

''This settlement demonstrates EEOC's commitment to eradicate harassment
from the workplaces of America,'' chairwoman Ida L. Castro said.

The settlement follows final approval in June of a $34 million
resolution the largest ever of an EEOC sexual harassment case against
Mitsubishi Motors Manufacturing of America Inc. over problems at a plant
in downstate Normal.

An EEOC news conference to announce the settlement was interrupted when
a woman identifying herself as Suzette Wright, 29, a former Ford
employee, demanded an apology from James J. Padilla, Ford group vice
president for manufacturing. Padilla immediately said that to the extent
that any employee was not accorded full dignity, ''we apologize.''

Wright told reporters she was groped by male co-workers and subjected to
sexually oriented jokes and graffiti.

The EEOC did not sue Ford. Instead, the charges were resolved through
negotiation. They involve an assembly plant in Chicago and a parts
factory in Chicago Heights.

Under the settlement, Ford will establish a $7.5 million fund to be
distributed to an estimated 700 to 900 discrimination victims. Seventeen
women who have filed their own class-action lawsuit against Ford will
not be eligible for the money.

Ford also has promised to spend $10 million on training for its
employees. The EEOC and Ford also will work together through a
three-member, independent board for the next three years to root out
gender discrimination at the plants, and the number of female managers
will be increased, officials said. (AP Online 9-7-1999)


HITSGALORE COM: Faces Securities Suit In California
---------------------------------------------------
On May 13, 1999, May 16, 1999 and June 11, 1999, separate class action
suits were filed against the Company, Mr. Steve Bradford and Mr. Dorian
Reed (Case nos.99-05060R, 99-05152R and 99-0203-R, respectively) in the
United States District Court, Central District of California, involving
the purchase of the Company's securities during periods specified in the
complaints. These suits are based primarily on an alleged omission of
disclosure in the Company's report on Form 8-K filed with the Securities
and Exchange Commission regarding Mr. Reed and the action brought
against Mr. Reed by the Federal Trade Commission. On August 16, 1999,
the Court consolidated these three actions and took under advisement the
issues of who will be the lead plaintiff and lead counsel for the
consolidated lawsuits.

Because of the early stage of the proceedings, it is not possible to
predict the outcome of these cases or the likelihood or amount of any
losses, if any, in the event of an adverse outcome in any of these
cases. No provision has been made in the accompanying financial
statements related to these matters.


NATIONAL GYPSUM: Texas 5th Cir Bars Appeal For Intervention In Fee Case
-----------------------------------------------------------------------
The National Gypsum settlement trust on June 14 was barred from
appealing a district court's refusal to allow it to intervene in a case
involving financial advisors Donaldson, Lufkin & Jenrette Securities
Corp. (DLJ) by the Fifth Circuit U.S. Court of Appeals (In re National
Gypsum Company, No. 390-37213-SAF-11; Donaldson, Lufkin & Jenrette
Securities Corp. v. National Gypsum Co., et al., No. 3:94-CV-2452-R,
N.D. Texas, Dallas Div.; See 1/22/99, Page 9).

On Jan. 11, the U.S. District Court for the Northern District of Texas
ruled the New NGC Settlement Trust and other interested parties will not
be allowed to intervene in a final fee application determination case
involving DLJ because they failed to timely file their motions. On
appeal, the Fifth Circuit agreed to grant DLJ's motion to dismiss the
appeal. The appeals court also denied DLJ's motion for an award of
attorneys' fees but granted the request for costs.

                       Res Judicata Asserted

The proposed intervenors, the trust and Jeff P. Prostock, sought leave
to intervene because DLJ allegedly attempted to use a determination on
its final fee application as a basis for asserted res judicata or
collateral estoppel defenses to their claims against the company in a
class action lawsuit. The proposed intervenors also sought to vacate an
agreed order entered in this court in March 1998 awarding DLJ $ 2.4
million for services rendered to National Gypsum Co. (NGC) and Aancor
Holdings Inc.

DLJ was a financial advisor to NGC and Aancor, which were forced into
bankruptcy because of asbestos liability and three levels of publicly
traded debt from a 1986 leveraged buyout. The reorganization plan
created a trust for resolving and paying victims of NGC's asbestos
liability and transferred remaining assets to a new corporation (New
NGC) and distributed varying levels of securities in New NGC to holders
of publicly traded debt and other creditors, the court said. New NGC
also assumed the responsibility to pay DLJ's fees.

Under the confirmation order, final fee applications were to be filed no
later than 90 days after the entry of the order and any objections filed
no later than 150 days after the entry of the order. DLJ filed its fee
application on June 7, 1993. The Asbestos Committee, New NGC, the Bond
and Trade Creditors Committee and the legal representative all objected
to DLJ's fee application; however, no objection was filed. DLJ instead
negotiated with the parties and agreed to reduced its final fee from $
2.8 million to $ 2.4 million in exchange for the parties' withdrawal of
their objections.

DLJ presented its application to the Northern District of Texas
Bankruptcy Court, but the court elected to hold an evidentiary hearing
and in August 1994 issued an order setting the fees at $ 2 million. The
District Court affirmed the order, but DLJ appealed to the Fifth
Circuit, which reversed and remanded the issue.

Prostok filed a class action suit in October 1995 against DLJ and others
in Texas state court alleging fraud, gross negligence and breach of
fiduciary duties while advising NGC and Aancor in their bankruptcy
proceedings. Prostok also filed a declaratory judgment action in the
Bankruptcy Court seeking a declaration that a unique fee shifting
provision in the confirmation order did not apply to his state class
action. The trust filed a motion in September 1997 in Prostok's
declaratory judgment action seeking the same fee-shifting provision
sought by Prostok, the court said, adding that the trust also filed a
lawsuit in the Bankruptcy Court against DLJ and others in October 1997
alleging similar claims as Prostok, the court said.

DLJ argued in the declaratory judgment action that the confirmation
order and the May 1994 final fee application constituted res judicata or
collateral estoppel barring the intervenors claims against it.

                          Argument Rejected

In January 1998, the Bankruptcy Court issued an opinion and order
holding that the fee shifting provision did not apply to the state class
action and rejected DLJ's res judicata argument because it found that
the Fifth Circuits reversal of the District Court's order on the final
fee rendered the matter not final. Later that month, the proposed
intervenors filed an objection to DLJ's fee application in the
underlying NGC bankruptcy case, alleging that DLJ's fraud, gross
negligence and breach of fiduciary duties justified a complete
forfeiture of its fees, the court said.

In March 1998, DLJ filed an unopposed motion in the District Court to
enter an order awarding the company its fees as mandated by the Fifth
Circuit. The court approved the award of $ 2.4 million.

DLJ is represented by Gregory M. Gordon and Barbara J. Oyer of Jones Day
Reavis & Pogue in Dallas. Edward P. Perrin Jr. of Crouch & Hallett of
Dallas, John E. O'Neill of Clements O'Neill Pierce & Nickens in Houston
and Larry A. Levick of Gerard Singer & Levick of Dallas represent the
trustees. J. Robert Arnett of Sopuch Nouhan Higgins & Arnett in Dallas
represents Prostok. (Mealey's Litigation Report 7-16-1999)


NORWEST MORTGAGE: Fax Fee Not A Prepayment Penalty, Minnesota Ct Rules
----------------------------------------------------------------------
Fees that can be incurred at any time and that are unrelated to the
prepayment of a mortgage are not prohibited prepayment charges. The fact
that a cost for a facsimile transmission is imposed at the time a loan
is prepaid does not render the cost a penalty. Colangelo, et al. v.
Norwest Mortgage Inc., No. 96-15128 (Minn. Ct. App. 8/3/99).

Three separate consumers each decided to refinance their mortgages with
Norwest Mortgage Inc. Each mortgagor instructed his refinancer to obtain
a copy of his payoff statement from Norwest. Norwest complied by faxing
copies of the mortgagors' payoff statements to the proper parties;
however, Norwest charged each mortgagor a 10 fax fee, which was listed
in the payoff statement. In each transaction, Norwest did not provide
the satisfaction of the mortgage until after the consumer tendered
payment.

Each consumer filed an action against Norwest claiming that Norwest made
payment of the 10 fax fee a condition of satisfying their mortgage
although the fee was barred by the terms of their loan agreements.
Additionally, they contended that the fax fee was an unauthorized
prepayment penalty.

The cases were consolidated and an amended class action complaint was
filed. The plaintiffs' motion for class certification was stayed pending
a hearing on Norwest's motion for summary judgment.

The trial court granted Norwest's motion for summary judgment. It
concluded that the fax fee was not a prepayment penalty as defined in
the mortgage agreement but rather a charge for a special service
unrelated to satisfaction of the mortgage. The court also found the
satisfaction of the mortgage was not conditioned on the payment of the
fax fee.

The plaintiffs appealed the court's decision to the Minnesota Court of
Appeals. The appellate court compared the plaintiffs' argument with that
raised in Cappellinni v. Mellon Mortgage Co., 991 F. Supp. 31 (D. Mass.
1997).

In Cappellinni, the bank charged mortgagors a 25 fee for duplicate
payoff statements and a 15 fax fee. However, the U.S. District Court for
the District of Massachusetts held that the charges were not prepayment
penalties because they could be incurred in situations unrelated to
prepayment. The court explained that prepayment charges are fees
"peculiarly associated with prepayment alone." Furthermore, the District
Court held the mortgagors could have avoided the controversial fees by
obtaining the payoff statements by mail or prepaying their mortgages
without obtaining a payoff statement.

The Minnesota court found the reasoning in Cappellinni compelling
especially because the language in the mortgage agreements at issue was
identical to that in Cappellinni. Also like Cappellinni, the court held
that borrowers could incur a fax fee when engaged in activity with the
mortgagee that was unrelated to the prepayment of a mortgage. The court
identified another similarity between Cappellinni and the Norwest
mortgagors - the mortgagors could have prepaid their loans without using
a payoff statement or obtained a payoff statement free of charge through
the mail.

In conclusion, the court ruled that because the fax fee was not
contingent on prepayment, the 10 charge was not a prepayment penalty
barred by the plaintiffs' loan agreements.

Next, the plaintiffs contended that the fax fee was not permitted
because the mortgage instruments failed to list the charge as a
serving-related fee. The court, however, interpreted the omission
differently. It held that fees not specifically prohibited by the
mortgage instruments are, by implication, authorized. Therefore, Norwest
was not hindered by the mortgage documents from imposing the fax fee.

The court affirmed the lower court's decision.

Charles H. Johnson and Neal A. Eisenbraun of Charles H. Johnson &
Associates P.C. in New Brighton, Minn.; Hart L. Robinovitch of Zimmerman
Reed PLLP in Minneapolis; and Peter A. Pease of Berman, Devalerio &
Pease LLP in Boston represented the plaintiffs. Alan H. Maclin, Brent R.
Lindahl and Mark G. Schroeder of Briggs & Morgan PA in St. Paul, Minn.,
represented Norwest. (Consumer Financial Services Law Report 8-24-1999)


PEDIATRIC SERVICES: Decries Merit Of Securities Suit In Georgia
---------------------------------------------------------------
On March 11, 1999, a putative class action complaint was filed against
Pediatric Services Of America Inc. in the United States District Court
for the Northern District of Georgia. The Company and certain of its
then current officers and directors were named as defendants. To the
Company's knowledge, no other putative class action complaints were
filed within the sixty day time period provided for in the Private
Securities Litigation Reform Act. The plaintiffs and their counsel were
appointed lead plaintiffs and lead counsel, and an amended complaint was
filed on or about July 22, 1999. The amended complaint also identifies
the Company's auditors, Ernst & Young LLP, as a defendant.

In general, the plaintiffs allege that prior to the decline in the price
of the Company's common stock on July 28, 1998, there were violations of
the Federal Securities Laws arising from misstatements of material
information in and/or omissions of material information from certain of
the Company's securities filings and other public disclosures
principally related to its reporting of accounts receivable and the
reserve for doubtful accounts. The amended complaint purports to expand
the class to include all persons who purchased the Company's common
stock during the period from July 29, 1997 through and including July
29, 1998. The Company and the individuals named as defendants deny that
they have violated any of the requirements or obligations of the Federal
Securities Laws; however, there can be no assurance that the Company
will not sustain material liability as a result of or related to this
shareholder suit.


PEDIATRIC SERVICES: Decries Merit Of Securities Suit In Tennessee
-----------------------------------------------------------------
On July 28, 1999, a civil action was filed against the Company and
certain of its current and former officers and directors in the United
States District Court for the Middle District of Tennessee. The action
was filed by Phyllis T. Craighead, Healthmark Partners, LLC, and The
Kids and Nurses Liquidating Trust. In general, the plaintiffs allege
that the defendants violated Federal and State (i.e., Tennessee)
Securities Laws and committed common law fraud in connection with the
Company's purchase of Kids and Nurses, Inc. in November, 1997. The
plaintiffs seek actual damages in an amount between $2.5 million and
$3.5 million, plus punitive damages and the costs of litigation,
including reasonable attorneys fees.

The Company and the individuals named as defendants deny that they have
violated any of the requirements or obligations of any applicable
Federal or State Securities Laws, or any other applicable law; however,
there can be no assurance that the Company will not sustain material
liability as a result of or related to this shareholder suit.


PLANO INDEPENDENT: Parents In Texas Don’t Want “Connected Math” Program
-----------------------------------------------------------------------
A nontraditional middle school math curriculum developed through the
National Science Foundation is once again under fire, this time in Texas
where a group of angry parents has filed a federal lawsuit demanding
that the local school district allow their children access to
traditional math classes.

The "connected math" program taught in the Plano Independent School
District and used in several school districts around the nation has been
criticized by parents, including several in Montgomery County, Md. They
fear its structure, which favors group learning and the use of
calculators, dumbs down education and lowers academic standards, leaving
children without fundamental math skills needed for higher education.

In Texas, six families from Plano filed a class-action lawsuit late last
month claiming their children were not learning in the connected math
program, and were not given the option of a more traditional math course
- a violation, they say, of the Texas Education Code.

The parents, who are represented in their case by the Texas Justice
Foundation, a public interest law firm in San Antonio, also say their
free-speech rights were violated when school officials refused to allow
them at school-sponsored forums to pass out literature critical of the
new math curriculum.

More than 550 parents in Plano have signed a petition circulated by the
parents requesting alternative courses to connected math, but school
officials have yet to respond to that request. More than 10,000 middle
school students are enrolled in public schools in Plano, an affluent
Dallas suburb. "The connected math program could produce as much math
illiteracy as whole-language reading instruction has produced reading
illiteracy in Texas," said Allan Park, president of the Texas Justice
Foundation. "This lawsuit is important to protect parents' rights and
their rights to freedom of speech and expression as well as their
fundamental right to direct the education and upbringing of their
children."

One mother in the lawsuit, Celia J. Chiu, pulled her son out of the
Plano public schools last year after his once-stellar math grades
declined. She taught him at home for several months with a traditional
math textbook, bringing his grades back up to where they were before he
was forced to take connected math, TJF attorney Tom Slack said.

"Parents there are very upset," and have been negotiating for
traditional math courses for more than a year and a half, he said. Many
have gone so far as to offer to buy their own textbooks. "The school
system's position has been rather arrogant - that they know what's best
for the kids, not the parents," Mr. Slack said.

Earlier this year, families in Montgomery County expressed similar
concern about the connected math program that is being voluntarily
tested at several local schools this fall.

"I am very uneasy about this curriculum," said John Hoven, co-president
of a group for parents of students in the Montgomery County's gifted and
talented program, in an interview with The Times in June. "There is an
emphasis on the pedagogy rather than content, and the perception is that
children have to be enticed into math."

Mike McKeown, a biological researcher in San Diego, and his wife, Erica,
a math tutor, founded an independent group known as Mathematically
Correct to get the word out about a growing trend in math education that
moves children away from traditional instruction.

The couple are part of a national movement of parents and others
disturbed by the alternative "whole-math" programs - called "fuzzy math"
by critics - in elementary and secondary grades.

"We are people who really, truly use math to get where we are, and we
recognize that these 'whole-math' programs are leaving kids unprepared
to do the jobs their parents do," Mr. McKeown said.

Connected mathematics was designed "with the belief that calculators
should always be available and that students should decide when to use
them," according to an eighth-grade geometry teacher's guide. The
teacher's role in the program is to pull the class together at the end
of each problem and help students explain the mathematical ideas,
relationships and strategies they used to solve the problem. (The
Washington Times 9-7-1999)


RELIASTAR MORTGAGE: 11th Cir Georg To Rule On Volume-Based Compensation
-----------------------------------------------------------------------
Volume-based compensation may prove to be the newest line of attack on
fees paid by lenders to mortgage brokers. Lenders and consumer advocates
await the 11th U.S. Circuit Court of Appeal's ruling on McBride v.
Reliastar Mortgage Corp., et al., No. 1:98-CV-215-TWT (N.D. Ga.
4/29/99), in which the plaintiff class challenged, under the Real Estate
Settlement Procedures Act, a lender's alleged payment of volume-based
bonus fees to brokers supposedly to influence the direction of future
loan business.

Scott McBride Jr. retained the services of Kingston Mortgage, a mortgage
broker. Kingston then contacted Reliastar Mortgage Corp. about
table-funding McBride's mortgage. Reliastar agreed to fund the loan at
an above-par interest rate.

At closing, McBride received a settlement statement that indicated
Kingston would receive a 1,520 yield spread premium from Reliastar.
McBride subsequently sued Kingston and Reliastar under the RESPA,
contending the YSP was not based on services actually performed by
Kingston. McBride moved for class certification on two fronts: the issue
of the payment of the YSP to Kingston and Reliastar's practice of paying
volume based bonus fees as a further incentive for the broker to send it
prospective loans. The plaintiff also moved for summary judgment.

                    Individual Issues Predominate

The U.S. District Court for the Northern District of Georgia first
addressed McBride's motion for class certification. It concluded that
the class satisfied Fed. R. Civ. P. 23(a)'s requirements of numerosity,
commonality, typicality and adequacy of representation. However, Judge
Thomas W. Thrash Jr. opined that it did not meet Fed. R. Civ. P. 23
(b)(3)'s predominance requirement "because the alleged RESPA violation
[could not] be determined without analyzing the specific facts of each
loan transaction, regardless of whether the Defendant purportedly used
uniform forms and procedures." In particular, the District Court found
that individual questions predominated as to whether the YSP or
volume-based bonus was intended as an additional payment for Kingston's
services and if the payment was reasonably related to the market value
of the services provided.

                         Petition For Review

Finding that individual issues predominated, the court denied McBride's
motion for certification and summary judgment. McBride petitioned the
11th Circuit for immediate review of the denial of his motion for
certification pursuant to Fed. R. Civ. P. 23(f). He cited the ruling in
Dujanovic v. Mortgage America Inc., No. CV-98-TMP-0235-S (N.D. Ala.
3/26/99), in which class certification was granted, as the reason why
the 11th Circuit should clarify the important issue of class
certification in a RESPA class action.

In addition to stating that the District Court's decision was "wholly
contrary to the evidence, McBride argued that the alleged illegality of
the bonus fees can be proven on a classwide basis using common proof
such as the lender's "Loan Purchase Agreement." McBride added that
Reliastar admitted its uniform practice of paying YSPs to referring
brokers for the purchase of future loans.

Furthermore, McBride claimed in his petition for review that the
District Court failed to consider the Department of Housing and Urban
Development's Statement of Policy when rendering its decision because
under the statement certification is proper. McBride argued that the
lower court not only failed to consider the evidence before it when
ruling on his motion for class certification but also failed to explain
why certification could not be granted.

According to McBride, if the District Court had properly applied HUD's
two-part analysis for evaluating the appropriateness of the YSPs, it
would have concluded that the broker's fee was not permissible
consideration under RESPA because the payments were only for the
purchase of prospective loans and not goods or services actually
rendered. This issue of whether lenders may pay referring brokers
premiums for the purchase of prospective loans and serving rights is an
issue ripe for classwide adjudication, said McBride.

Barry Reed and Hart Robinovitch of Zimmerman Reed in Minneapolis and W.
Lewis Garrison of Garrison & Sumrall in Birmingham, Ala., represent the
plaintiffs. Robert Pratte, Margaret Savage and Torbjorn Svensson of
Briggs & Morgan in Minneapolis and Robert Ambler Jr., Jonathan Vogel and
Stephen Devereaux of King & Spalding in Atlanta represent the defendant.



TOBACCO LITIGATION: Cable News Network Coverages On Florida Hearing
-------------------------------------------------------------------
Broadcast on September 7, 1999; Tuesday 9:04 am Eastern Time

Transcript # 99090702V09

SHOW-TYPE: PACKAGE

Florida Jury to Hear Two Cases Against Big Tobacco for Punitive Damages

BYLINE: Daryn Kagan, John Zarrella

HIGHLIGHT: Phase two of a landmark class-action lawsuit against the
tobacco industry was supposed to determine just how deep cigarette
companies would have to dig in their pockets. An appeals court decided
last Friday that damages cannot be awarded to a class in a lump sum;
each case, the court ruled, must be decided individually.

BODY:

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND
MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: Within the hour, a hearing is scheduled in a
landmark lawsuit against the tobacco industry. A Florida jury has
already found cigarette makers liable for causing smoking-related
illnesses, but an appeals court ruling has put the penalty phase of the
trial in limbo.

CNN's Miami bureau chief John Zarrella has more.

(BEGIN VIDEOTAPE)

    JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF (voice-over): Phase two of a
landmark class-action lawsuit against the tobacco industry was supposed
to determine just how deep cigarette companies would have to dig in
their pockets.

    JUDGE ROBERT KAYE, MIAMI DADE CO. CIRCUIT COURT: Our cigarettes have
contained nicotine, addictive or dependence-producing. The answer is
"yes."

    ZARRELLA: In July, a Miami jury ruled against five tobacco giants.
The jury found the companies sold a defective product that caused deadly
illnesses like cancer and also misled people about the health risks from
smoking.

    KAYE: Abnormal blood clotting, blood vessel damage, miocartial
enfarction (ph), a heart attack, yes.

    ZARRELLA: The jury's decision meant that the nine named plaintiffs
of the class and up to half-a-million other sick smokers in Florida
could collectively press their damage claims against the industry.

(on camera): Those claims, totaling about $200 billion, were to be
determined in phase two of the trial. But an appeals court decided last
Friday that damages cannot be awarded to a class in a lump sum; each
case, the court ruled, must be decided individually.

(voice-over): One legal expert believes as long as the jury's original
verdict is not overturned, the industry is still in trouble.

    CLARK FRESHMAN, UNIV. OF MIAMI LAW SCHOOL: If the liability part of
this holds up, all this is going to mean is that instead of one big
check all at once, it's going to be a series of fairly large checks over
a period of years.

    ZARRELLA: The second phase of the trial can still proceed, but the
jury's ax has been dulled. The jurors are expected to hear the cases of
two of the nine principle members of the class and determine how much
they are entitled to in damages, but the jury no longer has the
authority to level a potentially industry-busting punitive award to
half-a-million Florida residents.

    John Zarrella, CNN, Miami.

(END VIDEOTAPE)

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SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Broadcast on September 7, 1999; Tuesday 9:31 am Eastern Time

Transcript # 99090704V09

SHOW-TYPE: ANALYSIS

HEADLINE: Taking the Class-Action Out of the Florida Tobacco Lawsuit; A
90-Year Lie for Cisneros?

BYLINE: Daryn Kagan, Roger Cossack

HIGHLIGHT: An appeals court in Florida has taken the class-action out of
the tobacco lawsuit. A look at what this means for the tobacco companies
and the plaintiffs. Also the trial of Henry Cisneros, former housing
secretary, gets under way, where he could face 90 years in prison for
lying to the FBI.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND
MAY BE UPDATED.

    DARYN KAGAN, CNN ANCHOR: The tobacco trial is just one of several
legal cases making news this morning. For some insight let's check in
with our legal analyst Roger Cossack, who is in our Washington bureau
this morning.

Roger, good morning to you.

    ROGER COSSACK, CNN LEGAL ANALYST: Hello, Daryn.

    KAGAN: First, let's talk tobacco here. The appeals court basically
took the class-action out of this lawsuit. Is this a huge break for the
tobacco companies?

    COSSACK: Well, you know, it can be argued, like a lawyer, you know,
it can be argued both ways, I suppose. No one has still said or
disturbed the original verdict, which is that the tobacco companies are
liable for selling a product that causes all kinds of diseases, and they
knew about it. No one has disturbed that ruling. What appeals court has
said, though, is that there's not going to be a lump sum, that everybody
who claims to be entitled to damages for what the tobacco company has
done is going to have to come to court and prove those damage. Now that
could take, you know, forever.

    KAGAN: Does that mean a half million separate claims? That's a paper
nightmare.

    COSSACK: Well, that's right. So that's the part of the argument
where they say, well, the tobacco companies won because, you know, the
tobacco companies have greater lasting power than the claimants who are
going to come to court. On the other hand, as I said, you know, no one
has said that they are not going to have to pay. So I suppose the
argument is pay me now, pay me later, but, you know, after a certain --
there is going to be attrition, people are going to drop out.

I would suspect that somewhere down the line there will be a settlement
in this case. But, if you ask my opinion, I think this is a break for
the tobacco companies.

    KAGAN: Let's talk about Henry Cisneros, the former housing
secretary, his trial under way. He could face 90 years in prison, not
for lying that he had a mistress, not for lying that he admitted he made
payments, but he fudged on the number, apparently, or allegedly fudged
on the number of how much he paid her. And, for this, you could face 90
years in prison.

    COSSACK: Well, that's not exactly what you could face 90 years in
prison for.

    KAGAN: OK.

    COSSACK: It is not for the good stuff, as you point, it is not for
saying about whether or not he had a mistress and not for lying about
whether or not he paid her. But it is for lying to the FBI, it is for
lying about how much he paid her. There is a rule that says, if you
decide to speak to the FBI, you can't lie to them. And, if you lie to
the FBI, that's a crime. And that's what he is being charged with, he is
being charged with lying to the FBI, several counts of lying to the FBI.
And that's what he faces, the 90 years in prison, it is not for having a
mistress and it is not for paying the mistress, it is for lying about
how much he paid the mistress.

Now, the big argument here is, is this really worth the prosecution?
This is an independent counsel prosecution, in which millions of dollars
have been spent to prosecute this man for lying to the FBI. There was an
argument that says, there has been a reported, that Louie Freeh, head of
the FBI, was outraged that Cisneros lied to the FBI and pressed for this
prosecution.

The argument on the other side is, come on, it is just not worth it.
But, nevertheless, Cisneros goes to trial. They are going to have a
difficult time because the woman that he paid the money to, she already
has been sentenced to 31 years.

    KAGAN: And she is in prison right now.

    COSSACK: She is right now, and has lied about the tapes, lied about
whether or not the tapes...

    KAGAN: Well, let's talk about these tapes, I mean, we haven't
mentioned these tapes, as with another high-profile case in Washington
there are tapes here, phone tapes that she made...

    COSSACK: What do we learn from this about talking to people over the
phone, Daryn?

    KAGAN: Be very careful. Next time you call, Roger, I am going to
make sure you are not taping.

    COSSACK: OK, it's a deal.

    KAGAN: Thank you very much for joining us. We will see you later on
CNN on "BURDEN OF PROOF." You can hear more from Roger and Greta Van
Susteren. They are on CNN's "BURDEN OF PROOF" 12:30 p.m., 9:30 a.m.
Pacific.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR
SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


Broadcast on September 7, 1999; Tuesday 8:10 am Eastern Time

Transcript # 99090706V08

SHOW-TYPE: LIVE REPORT

HEADLINE: Tobacco Industry Lawsuit: Phase-Two Set to Begin

BYLINE: Leon Harris, John Zarrella

HIGHLIGHT: In Florida, a jury begins the process of determining how to
compensate smokers and their families after this year's verdict against
the five major tobacco companies. A look at how this phase of the
class-action lawsuit is going to proceed.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND
MAY BE UPDATED.

    LEON HARRIS, CNN ANCHOR: In Florida, a jury begins the process of
determining how to compensate smokers and their families after this
year's verdict against the five major tobacco companies.

Miami bureau chief John Zarrella joins us this morning to explain how
this phase of the class-action lawsuit is going to proceed.

Good morning, John.

    JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: Good morning, Leon.

Well, I think that's really the $20,000 question, no one is exactly sure
what's going to happen here this morning, behind me, in a courtroom here
at the Dade County Courthouse. Proceedings are expected to get under way
about 9:30 a.m., and that's when attorneys representing the five major
tobacco companies and attorneys representing the plaintiffs will begin
arguments in what is supposed to be the second phase of the class-action
lawsuit against big tobacco, a lawsuit that is expected to -- could
generate up to $200 billion against the tobacco industry.

It all began about two months ago when a verdict was handed down in
court here by a jury that said that big tobacco was responsible for
producing a defective product that caused all kinds of deadly illnesses,
from heart diseases to forms of cancer. And it also said, the jury, that
big tobacco conspired and actually covered up evidence and hid things
from smokers about the health hazards of smoking.

Well, that was all a huge victory for people, the plaintiffs, at that
time, but, then, last Friday, a Florida appeals court ruled that the
class-action suit was really no good; that the punitive damages against
big tobacco couldn't be handed out in one lump sum. So the $200-billion
damages for up to half a million Florida smokers, plus the nine named
plaintiffs in the case, is kind of up in the air, not exactly sure what
will happen today when we get in court.

Now, not everybody sees this as a tremendous loss for the plaintiffs
following their victory two months ago. As a matter of fact, some
attorneys say that six smokers in Florida still have the advantage.

(BEGIN VIDEO CLIP)

    CLARK FRESHMAN, UNIV. OF MIAMI LAW SCHOOL: All that will have to be
argued by Florida smokers is, how much money did they lose because of
medical bills, how much money did they lose because of lost wages, and
how much should tobacco companies be punished in their particular case
for punitives. So it's still a very big victory, and it's still a very
big loss for tobacco.

(END VIDEO CLIP)

    ZARRELLA: What we expect to happen today is that phase two of the
trial, two of the plaintiffs' cases will begin to be heard; those two
cases for compensatory and punitive damages will be heard in phase two,
but, again, does not look like there will be a major, huge pool of money
now set aside for a punitive assessment against tobacco. Each case has
to be judged on its individual merit, said the appeals court. So that's
where we stand, but everything is subject to change.

This is John Zarrella reporting live from Miami.

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U.S.: Federal Suit Targets Hiring Practices For State Investigators
-------------------------------------------------------------------
Kevin Thornburg wanted a state job and thought he had come across a good
one investigating abuse and neglect at a state mental hospital.
The Jackson County resident figured he had a pretty good shot at the
job. He was an ex-Army sergeant who had served in the Green Berets. He
had a bachelor's degree in justice administration. He had been a
probation officer for five years. He got an "A" on the state exam. He
didn't even get an interview.

The Department of Human Services said Republican Gov. Jim Edgar's
administration had determined the internal security investigator job was
exempt from the rules against political favoritism in hiring. Merit
didn't have to be the deciding factor.

In fact, the jobs of at least 54 such investigators--the people hired to
root out problems within state agencies--have been declared exempt in
various state agencies. As long as applicants meet certain minimum
qualifications, the state is free to hire them based on who they know or
how they vote.

Thornburg claims in a federal lawsuit that he was a victim of politics
and should receive hundreds of thousands of dollars in back pay and
damages. At his side is Mary Lee Leahy, the Springfield attorney who in
1990 won the historic "Rutan" case in which the U.S. Supreme Court ruled
that politics may not figure in the hiring of most state employees. The
court indicated politics can be considered only when it directly affects
the job, such as that of a high-level policy adviser.

Seeking to make the case a class-action suit, Leahy says thousands of
others may have been improperly denied state jobs because the positions
were designated Rutan-exempt and filled on a political basis. She admits
having no evidence but hopes it would be found during a court-approved
discovery process in Thornburg's case.

Of the 66,388 people working for agencies under the governor's control,
3,494 people--about 5.2 percent--fill positions that are exempt from the
Rutan restrictions on political hiring.

Leahy contends the state isn't just hiring people for political jobs
from which they could also be fired for political reasons. She accuses
officials of making political hires in positions from which they can
only be fired for "just cause," such as poor job performance. "I think
they're hiring them . . . so they can be frozen into jobs forever," she
said.

David Jimenez-Ekman, an attorney for the state, said the only issue in
court relates to hiring. He would not discuss whether investigators
hired on a political basis could be fired for political reasons.

The job Thornburg sought in 1997 went to Richard Tweedy, former chief of
Cobden's three-person police force. He had married into a politically
active Democratic family in Union County.

Thornburg said he was stunned to learn Tweedy was the only person
interviewed for the job at the Clyde Choate Mental Health Center in
Anna. "There is no way this can be a political job," said Thornburg, now
34. "If there's any job in the state that should be protected, it's the
investigators."

Attorneys for the state want Thornburg's lawsuit thrown out of federal
court for lack of jurisdiction, but they also said in a court filing
that "Thornburg has no right to be considered for the security
investigator position without regard to political affiliation."

Rep. Lou Lang (D-Skokie), chairman of the House Mental Health & Patient
Abuse Committee, said the state, even under GOP Gov. George Ryan,
appears to be using technical explanations as a cover for shoddy hiring
practices involving investigators. "Why should it be a Rutan-exempt
position?" Lang said. "They don't make policy."

Some mental health advocates also question why investigators should be
hired with politics in mind.

"You're talking about investigating the operations of a state facility
and there's a chance your findings would be an indictment of how it is
run," said Phil Milsk, an attorney for families with developmentally
disabled children. "There may be a perception you'd come down less hard
on that facility."

Investigators' duties include looking into conflicts of interest and
employee malfeasance within agencies, and preparing reports for
prosecutors.

Some Human Services investigators said they thought they were covered by
the Rutan ruling, or at least were unsure. One was troubled to learn
such jobs were subject to political hiring. "As an investigator, my
integrity is the primary thing," said James Schiltz, a Chicago-based
investigator. "If my findings are to have any merit there has to be an
understanding my findings are not politically motivated."

Corrections Department spokesman Nic Howell said his agency's
investigators could not be fired on political grounds. The department
says 15 of its 18 internal security investigators are exempt from Rutan.

In court filings the state acknowledged that for years the mental health
investigator position sought by Thornburg was covered by the Rutan
ruling. It was reclassified as exempt on Oct. 1, 1996.

"The director wanted the authority or freedom to hire his own
investigators," explained Tom Green, a spokesman for Human Services
Department Director Howard Peters, a defendant in the lawsuit. His
agency oversees mental health programs.

The state's lawyers say the Human Services investigators were exempted
when their job description changed. Before 1996, they had to follow a
checklist of policies and procedures. Later, they were simply given
"guidelines" and had the discretion to act without direct oversight or
approval. Peters and a spokesman for Ryan declined to comment on the
pending lawsuit. (Chicago Tribune 9-7-1999)


UNISYS CORP.: Union Included in Suit In N.Y. Over Age For Layoff
----------------------------------------------------------------
A labor union is being pulled in as a defendant in a class action age
discrimination suit brought by some of its own members over a 1993 round
of layoffs at the Great Neck, N.Y., headquarters of Unisys Corp.

In a case of first impression in the Second Circuit, Eastern District
Judge Arthur D. Spatt said that a labor union may be responsible for age
discrimination when the employer carries out a discriminatory policy
included in a negotiated contract. Spatt said that the New York Human
Rights Law provides a basis for contribution when the union has
participated in the underlying conduct that resulted in discrimination.

In Rodolico v. Unisys Corp., the employer was sued over the layoff of
232 unionized engineers. The plaintiffs allege that there was age
discrimination in the selection of engineers to be laid off. The
collective bargaining agreement between Unisys and its engineers was
negotiated by the company and Local 444 of the Engineers Union. The
bargaining agreement created a seniority system within Unisys and called
for a distribution of layoffs between three tiers of seniority, with one
senior engineer being laid off for every two middle-level engineers and
every three junior engineers. The laid-off engineers say that
decision-making in connection with the forced reduction violated the Age
Discrimination in Employment Act (ADEA) and the state Human Rights Law.

Unisys claims that its decision-making was consistent with and governed
by the collective bargaining agreement, which it entered into with Local
444. The company said that Local 444 is a necessary party to the action,
since it was an equal partner in setting the policy that the engineers
say caused their legal injury. If the layoff contingency plans or
performance reviews agreed to by the local are discriminatory, Unisys
pointed out, they were not formulated by management unilaterally. The
union, Unisys argued, should be jointly and severally liable if
plaintiffs prevail.

Violations of the state Human Rights Law are akin to torts, Spatt
observed, and New York common law is clear that a tortfeasor can be
obliged to contribute to a fellow tortfeasor who is found liable. Unlike
the ADEA, the New York Human Rights Law contemplates liability for
"aiding and abetting" discriminatory conduct, meaning that the state
anti-discrimination law provides a broader basis for liability. "If
Local 444 breached its duty of fair representation and was intentionally
involved in the procedures which Unisys used to discriminate against its
employees on the basis of their age, then they are both culpable," Spatt
said.

The plaintiffs were represented by Julian R. Birnbaum and James
Wasserman, of Vladeck Waldman Elias & Engelhard. Spatt, later in his
opinion, disqualified the Vladeck firm from the case, finding that it
was the lawyer for Local 444 at the time it negotiated the agreement on
performance reviews that is part of the case. The firm is still counsel
to the union local, and Spatt ruled that it "cannot adequately represent
the interests of both Local 444 and the putative plaintiffs." The judge
delayed a decision on class certification until new counsel can be hired
by the class members. Dean L. Silverberg, Matthew T, Miklave, Michael A.
Kalish and A. Jonathan Trafimow, of Epstein Becker & Green, represented
Unisys. This story originally appeared in the New York Law Journal. (The
Legal Intelligencer 9-1-1999)


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