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               Thursday, November 4, 1999, Vol. 1, No. 192


AUTO INSURANCE: Lawsuit Says 7 Insurers Create CAPA & Conspire In Fraud
CRAZY EDDIE'S: Ct Rejects Trying Former CFO Again Despite His Remarks
DIAL CORP: Soap Plant Sued Over Sex Harassment; Alleged Of Intimidation
FORT LAUDERDALE: Ct Backs Fla. Panhandling Ban On 5-Mile Strip Of Beach
HARLEY DEALERSHIP: Settles Claims Of Over-Charging On Motorcycles Sold

INMATES LITIGATION: Disability-Rights Law Applies To MI HIV+ Inmates
ISAAC L: Fla Lacks Least Sophisticated Consumer Rule; FCCPA Claim Oked
LEAD PAINT: The Gap Faces TX Suit Over Lead Wicks On Candles Sold
MAINE EMPLOYERS: Mexico's Attempt To Sue For Its Citizens Rejected
MATTEL INC: Beatie & Osborn File Securities Suit In Massachusetts

MCKESSON HBOC: City and State Battle Over Lead Plaintiff Status
MTBE: NYLJ Says New York May Become Forum For Water Contamination Suits
NASSAU COUNTY: 2nd Cir Finds Race-Neutral NY Police Exam Constitutional
OXFORD HEALTH: Acquires Additional Insurance For Securities Litigation
PACIFICARE HEALTH: Furth, Fahrner Sues Over Viol. Of CA Consumers Law

REVLON INC: Bernstein Liebhard Files Securities Suit In New York
U.S.: Class Action Filed On Behalf Of Aliens; Policy Change Sought
UNISYS CORP: Bernstein Liebhard Files Securities Suit In Pennsylvania
VITAMIN MAKERS: 7 Makers To Settle Price-Fixing Suit For $1B


AUTO INSURANCE: Lawsuit Says 7 Insurers Create CAPA & Conspire In Fraud
Insurers named in lawsuit: State Farm, CNA, Liberty Mutual, Allstate,
Geico, Safeco, USAA.

Insurance companies engaged in a "widespread and systematic conspiracy"
to defraud motorists by creating a puppet standards-setting agency to
make cheaper auto-body repair parts look better than they really were,
attorneys who won a $ 1.2 billion judgment over State Farm's use of the
parts claimed in a lawsuit filed Tuesday.

The lawsuit accuses State Farm and six other insurers -- CNA, Liberty
Mutual, Allstate, Geico, Safeco and USAA -- of creating the Certified
Automotive Parts Association, or CAPA, to conceal flaws with aftermarket
crash parts. The judge in the State Farm case found such parts are of
lower quality than those made for automakers.

The creation of CAPA allowed insurance companies to "facilitate the use
of lower quality parts in violation of their contracts while concealing
from their insureds that lower quality parts were used," according to
the lawsuit.

CAPA executive director Jack Gillis said the lawsuit was baseless. "The
bottom line is this is an absolute abuse of the legal system. It is
unconscionable that anybody would waste the time and the valuable
resources of our court system to pursue a case such as this," he said.
He said CAPA has not participated in fraud or conspiracy. The
organization is not named in the lawsuit.

Like the State Farm lawsuit, the new lawsuit accuses the insurance
companies and their subsidiaries of breach of contract for allegedly
failing to restore their customers' cars to the way they were before an
accident. Critics contend aftermarket crash-repair parts are too flimsy
and rust-prone to fix a car properly and argue some also pose safety

The lawsuit also accuses the companies of consumer fraud and conspiracy.
Attorneys are seeking class-action status for the lawsuit.

They claim the companies agreed to promote the use of aftermarket parts
and misrepresent their quality to consumers. In 1988, they decided to
form CAPA to "achieve their unlawful ends," according to the suit.

The lawsuit also claims the companies engaged in unfair or deceptive
practices in violation of Illinois' consumer fraud law by fraudulently
claiming that aftermarket parts were of the same quality as orig
inal-equipment parts when they really were made to a lower standard.

Steve Goldstein, a spokesman for the Insurance Information Institute -
the nonprofit communications arm of the insurance industry - called the
accusations "absolutely preposterous." "The insurance companies have
been working hard to try to keep prices down, and one of the ways we can
do that is by giving consumers the option of using generic parts," he

Many of the insurance companies are facing other lawsuits over use of
the parts in the aftermath of the State Farm decision. (St. Louis
Post-Dispatch 11-3-1999)

CRAZY EDDIE'S: Ct Rejects Trying Former CFO Again Despite His Remarks
Latest Move vs. Crazy Eddie's CFO? In-sane! Less-than-contrite remarks
form no basis for reopening SEC case against Antars. (157 N.J.L.J. 973)

At the dawn of the New Deal, who did President Franklin D. Roosevelt
choose to head the newly created Securities and Exchange Commission?
None other than his old pal Joseph Kennedy, who knew a thing or two
about manipulating the stock market.

And last summer, when the Association of Fraud Examiners was casting
about for an expert to lecture at its annual meeting on how to combat
phony financial statements, who better to invite than the accounting
architect of one of the biggest stock frauds in U.S. history?

Sam E. Antar, once the chief financial officer of Crazy Eddie's
electronics chain, was also the man who brought the Antar family down.
He turned state's evidence in criminal and civil cases and subsequently
walked, pleading guilty to obstruction of justice and conspiracy to
commit mail and securities fraud.

As a result of Antar's testimony, his cousin, "Crazy" Eddie Antar,
served time in federal prison along with Eddie's brother, Mitchell, in
the wake of their guilty pleas to stock fraud charges in 1996, after
their 1994 convictions were overturned.

So, when his relatives got wind of Sam E. Antar's less-than-contrite
comments before the group, published in the magazine Accounting Today,
they tried to use the information to reopen a case that cost them $28

No dice, U.S. District Judge Harold Ackerman ruled on Aug. 25 in SEC v.
Sam M. Antar et al., 93-3988. He found that the motion presented no new
evidence, and therefore no reason to revisit the issues.

Roughly 40,000 shareholders lost $146 million when the company's stock
collapsed in 1987, and the chase by the SEC, investors, customers and
vendors began in earnest when Eddie Antar was finally captured in Israel
in 1992.

After the SEC won its $72 million judgment, and after the shareholders
won a $60.5 million class-action settlement in U.S. Bankruptcy Court in
Brooklyn, the government went after the Antars for stock profits gained
on the strength of inflated sales, earnings and asset reports. Eddie
Antar repatriated about $54 million as part of his plea bargain for a
reduced jail term.

All told, a court-appointed trustee-receiver has marshaled about $120

The SEC then went after others in the family. After a trial in Newark in
July 1998 -- around the time Sam E. Antar was conducting his
how-to-catch-a-thief lecture in New Orleans -- Ackerman ruled that three
relatives had engaged in insider trading and that they, plus six others,
must disgorge almost $28 million in stock profits.

However, the trio found guilty of insider trading - Eddie Antar's
father, Sam M. Antar; Eddie's brother, Allen; and a brother-in-law of
Eddie Antar, Benjamin Kuszer -- learned last fall about Sam E. Antar's
speech. They read about it in the October-November edition of Accounting

Based on the article, their attorneys, Bruce Goldstein, who represented
the father and brother, and Marvin Gersten, who represented the
brother-in-law, returned to Ackerman asking him to reconsider his
findings or reopen the trial to take more testimony as allowed under
Federal Rule of Civil Procedure 59.

Goldstein, a name partner with Newark's Saiber Schlesinger Satz &
Goldstein, and Gersten, a name partner with New York's Gersten, Savage,
Kaplowitz, Fredericks & Curtin before he died last month, contended that
the Accounting Today article represents newly discovered evidence of the
possible commission of fraud on the court by SEC witness Antar.

They pegged their motion on one paragraph in the article: "Sam E. Antar
denies that he feels any regret, but he reports that his sentencing was
a sham. He suffered six months of house arrest, which merely meant he
couldn't go out after 8 o'clock p.m. He had to give 1,200 hours of
community service. He paid a fine and disgorged only $20,000 to cover
the tens of millions that investors lost."

In his Aug. 25 opinion, Ackerman not only denied the motion, he
belittled the arguments at every turn. He specifically rejected the
defense claim that Sam E. Antar was bragging about his central role in
pulling off the massive scheme, finding that he was in fact offering
solid tips on how to detect and root out fraudulent practices.

In the end, the judge concluded that even if Sam E. Antar did deny
having regrets, and even if he did thumb his nose at the court by
characterizing his sentence as a sham, none of that amounted to newly
discovered evidence as required by Rule 59.

Moreover, Ackerman wrote that based on a videotape of the lecture, Antar
never denied having regrets and never called the sentence, imposed in
1994 by U.S. District Judge Nicholas Politan, a sham.

Goldstein declines to comment on Ackerman's ruling. Gersten, Savage
partner Leslie Case, who worked on the case, did not return a telephone
call seeking comment, nor did Richard Simpson, the SEC attorney in
Washington, D.C., handling the case.

For his part, Sam E. Antar, now in the real estate business, says he is
delighted with Ackerman's ruling. "I never said anything of the kind
about my sentence," he says. "What I said in my talk was that any
witness, once he starts telling the truth, you can be redeemed."

Antar also says that he would never mock his admittedly sweet sentence.
"I wouldn't treat Politan that way. He could have slammed me, given me
three to four years, but he didn't. It hurts me on a personal level that
someone would say I said something about Politan that wasn't true."

When Politan sentenced Antar, he took note of the fact that he had
cooperated with the government in 1989 and testified at trials and
numerous depositions for 29 months without any deal. He was represented
by Anthony Mautone of the West Orange firm of Mautone & Horan.

As for whether Antar has regrets for his crucial role in cooking the
books, Ackerman noted that the defense never asked Antar that question
during four days of depositions nor during Antar's cross-examination at
trial. Antar agrees. "I was on the stand 10 days, and I must have been
deposed 45 times all together, but nobody ever asked. I am sorry."

According to Ackerman's opinion, Antar listed five lessons, or warnings,
to his audience in New Orleans, all reported in Accounting Today
magazine :

"Give extra audit scrutiny to family-owned businesses." "Don't believe a
CPA firm that depends on a single client." "Before a first public
offering, look for big raises." "In conducting test counts during a
physical inventory, count the boxes yourself, and look in the boxes to
make sure they aren't empty." "In detecting inflation of comparable
store sales, look for huge sales at the end of the year and right before
a public- offering."

One aspect of the Crazy Eddie fraud, perpetrated on the company's
outside auditors from what is now KPMG Peat Marwick, was to truck
inventory from one store to another, ahead of the auditors, so that
televisions and VCRs were counted two or three times.

Ackerman found that the motion by the Antar relatives failed every
requirement under Rule 59. Not only was there no newly discovered
evidence, but what was presented could have been discovered in time for
the trial by reasonable due diligence.

Moreover, the judge concluded that the so-called new evidence was merely
an attack on Antar's credibility, which is not grounds for a
reconsideration under the rule. Besides, Ackerman added, the defense did
attack Antar's credibility on cross, but he found Antar to be truthful
at the trial.

In fact, Ackerman said he found Antar's lecture consistent with his
testimony, noting that Antar laid out, again, many details of how the
company officials skimmed millions and juggled accounts to paint
favorable financial statements and year-to-year comparisons during three

Says Sam E. Antar today: "They the defense called it bragging, but all I
said was that from 1979 through 1987 I was a cold-blooded thug, but I'm
not a thug now. I gave a 45-minute speech, to help people like FBI
agents, investigators and auditors. And I wasn't paid a cent either."

He terms the motion a stall tactic by his uncle, Sam M. Antar. Sam M.
Antar, Eddie Antar's father who was found liable for $19.5 million of
the $28 million in ill-gotten profits, denies his nephew's charge and
calls him "a liar who is part of the government's railroad conspiracy."
(New Jersey Law Journal 9-6-1999)

DIAL CORP: Soap Plant Sued Over Sex Harassment; Alleged Of Intimidation
It might sound like an open-and-shut case of sexual harassment. Guess
again. From the minute the man entered the control room at Dial Corp.'s
soap plant, the woman knew he was trouble. Just a few minutes earlier,
near the cafeteria, he had talked about dirty movies, pointed at her and
said, "You'd better watch out."

In the control room, he came after her. He cornered her, repeatedly
brushing his hand across her chest, apparently trying to kiss her. A
handful of co-workers looked on, shocked. "I was waving my hands at him
and turning my face, and he was grabbing me and brushing my (breast)
while I am trying to push him away," the woman told a Dial doctor the
day after the 1992 incident at the plant in Montgomery, near Aurora.

Chaos struck the control room. Co-workers told the man to stop. At least
one ran out, apparently seeking help. A manager told the man he would
lose his job if he persisted. The manager threatened to file a
disciplinary notice. This caught the man's attention, and he stopped.

The attack, as described in internal Dial Corp. documents filed Monday
in federal court, might sound like an open-and-shut case of sexual
harassment. But if that's what you think, guess again.

Until last week, the control-room woman was one of 97 the Equal
Employment Opportunity Commission identified as alleged victims in a
class-action case against the $1.5 billion soap-and-food conglomerate.

When the EEOC filed suit last May, it knew of only six women with
harassment complaints. Five months later, the EEOC believes roughly one
in three women at the plant may have been sexually harassed.

But suddenly last week, the control-room woman decided she wouldn't be
one of them. Without notice, and without contacting the EEOC, she pulled
out of the case.

The feds are crying foul. In an emergency hearing in a federal
courtroom, EEOC lawyers are expected to argue that Dial has improperly
communicated with the woman, part of a pattern of aggressive,
intimidating conduct since the EEOC filed its harassment suit. A Dial
lawyer would not comment on the case.

At the root of the dispute is the sometimes subtle, sometimes rough
intimidation that some companies levy against women who bring harassment
complaints against them.

Women at Ford Motor Co.'s two Chicago plants say they were singled out
publicly by managers on the production line after they "confidentially"
complained about alleged harassment. Mitsubishi Motors outraged the EEOC
several years ago by meeting secretly with victims and exhorting them to
sign statements designed to weaken a sexual harassment case.

Dial's alleged effort to cleanse its image is smoother, perhaps, but
just as obvious, court documents show.

First, the company sent a letter to all women employees. It advised
them--in bold type--that the company's business was none of the
government's business. "You are under no obligation to speak to anyone
from the EEOC unless you are subpoenaed to do so," the letter said.

Next, Dial subpoenaed eight of the women for depositions with company
lawyers. The EEOC already had agreed to schedule interviews, but that's
not what Dial wanted. Subpoena servers tracked down the would-be
plaintiffs and delivered formal summonses.

Nice, unsubtle touch. The control-room woman apparently got the message
and dropped out of the suit.

The third not-so-charming ploy by Dial: It wants to see as many of the
EEOC sexual harassment questionnaires as it can, before all of the 97
women have a chance to decide whether to join the lawsuit. It's
intimidation by prying.

Dial and the EEOC will square off in federal court before U.S.
Magistrate Judge Ian H. Levin. The judge should tell Dial its tactics
smell so strong, even deodorant soap can't wash the odor away.
(Chicago Tribune 11-3-1999)

FORT LAUDERDALE: Ct Backs Fla. Panhandling Ban On 5-Mile Strip Of Beach
Homeless people who say they have a free-speech right to beg for
handouts at the city beach in Fort Lauderdale, Fla., lost a Supreme
Court appeal. The court, without comment, turned away arguments that
said the city's panhandling ban is too broad.

A 1993 regulation prohibits ''soliciting, begging or panhandling'' on a
five-mile strip of Fort Lauderdale's city beach and the sidewalks on
each side of an adjacent street. The regulation states that it is
intended to ''eliminate nuisance activity on the beach and provide
patrons with a pleasant environment.''

A group of homeless people challenged the regulation in a federal
class-action lawsuit, saying it violated the Constitution's First
Amendment guarantee of free speech.

The city could have imposed a narrower rule that barred only hostile or
aggressive panhandling, or restricted begging to specific areas of the
beach, the lawsuit contended.

A federal judge and the 11th U.S. Circuit Court of Appeals upheld the
regulation. Governments can restrict expression in public areas to serve
a legitimate interest as long as they leave open other avenues of
expression, the appeals court ruled, noting that panhandling still is
allowed in other parts of Fort Lauderdale.

In the appeal, the homeless people's lawyers said there was no evidence
of complaints from tourists or business owners that begging had created
a nuisance at the beach.

''This court has never upheld a law completely precluding speech in a
public forum based upon the bare assertion that the speech is a nuisance
and that the environment would be more pleasant if the speech were
banned,'' the appeal said.

The city's lawyers urged the justices to reject the appeal. ''The First
Amendment does not guarantee the right to communicate one's views at all
times and places or in any manner that may be desired,'' they said.

The case is Smith vs. Fort Lauderdale, 99-377. (AP Online 11-1-1999)

HARLEY DEALERSHIP: Settles Claims Of Over-Charging On Motorcycles Sold
A judge Tuesday gave final approval to a $660,000 class-action
settlement in a lawsuit that accused Scott Smith's Harley-Davidson of
Seminole County of overcharging customers during the past five years.
The lawsuit alleged the dealership added an illegal $250 surcharge on
motorcycles sold between March 12, 1994, and July 23, 1999. That
includes 2,634 buyers, according to attorneys. The disputed charge was a
"pre-delivery inspection fee," one of the closing costs added on to the
price of the bike.

Customer Donald A. Leach Jr. sued the motorcycle dealership after buying
a 1990 Harley FXR there in 1995 and paying $12,700. He accused the
dealer of violating the state's Deceptive and Unfair Trade Practices
Act. His attorneys, J. Gordon Blau and Douglas Lyons, argued in written
pleadings that the fee violated the law because it was applied uniformly
and the dealership did not adequately disclose what it covered.

The dealership agreed to settle the lawsuit without admitting any
wrongdoing. It will give each of the affected customers a $250 coupon
good for future purchases. If each affected customer redeems the coupon,
that would cost the dealership about $660,000.

Defense attorney Brian DeGailler said the suit was a dispute over
technical language in the dealership's sales contracts. He said it no
longer uses the same contract. Manager Jamie Daniels said Tuesday the
dealership no longer charges that fee. He said he had no information
about the settlement. "That's between the insurance company and the
lawyers," he said.

Tuesday's hearing was to allow anyone opposed to the settlement to voice
objections to it. No one did, so Circuit Judge Seymour Benson gave it
his final approval. (The Orlando Sentinel 11-3-1999)

INMATES LITIGATION: Disability-Rights Law Applies To MI HIV+ Inmates
The Michigan Court of Appeals has revived a class-action lawsuit
alleging that the state Department of Corrections broke the law by
barring HIV-positive inmates from participating in certain programs.

Ruling in a case of first impression, a three-judge panel concluded that
the inmates have standing to sue because the state's disability-rights
law covers discrimination against prison inmates.

In the late 1980s, the DOC began excluding inmates from placement in
community residential programs, camps and farms if they have HIV. The
policy was amended in 1990, allowing inmates to participate if they are
physically able and their treatment does not pose a financial burden to
the community.

The inmates sued, raising constitutional claims of equal protection, due
process and imposition of cruel and unusual punishment. The suit also
alleged that the state violated the Michigan Handicappers' Civil Rights
Act. Prior to trial, the inmates tried to amend their complaint to add
claims under the federal Rehabilitation Act and the Americans with
Disabilities Act.

An Ingram County Circuit Court judge refused to permit the addition of
the federal claims, saying the plaintiffs filed too late and, besides,
the action would be futile because neither the Rehabilitation Act nor
the ADA applied to prisons. In fact, the state of the law at that point
was unsettled.

The judge granted summary judgment in favor of the DOC on all remaining
claims, except that involving the right to equal protection. That claim
was reserved for a bench trial. After hearing the evidence, the judge
decided that the plaintiffs had failed to prove that the inmates were
denied equal protection. The inmates then appealed.

Two of the three judges on the appeals panel, Richard Allen Griffin and
Gary R. McDonald, said they would have liked to have upheld the trial
judge on the disability-rights issue, but they were constrained by two
rulings handed down in 1998 - one of them by their own state Court of

In Neal v. Department of Corrections, the appeals court initially
decided that the Michigan Civil Rights Act did not apply to prisoners.
On a motion for reconsideration, the court reversed itself.

Griffin and McDonald said they preferred the first decision in Neal, but
they were bound by law to follow the second. Because the language in the
state disability-rights statute parallels that of the civil rights law,
the judges said they "reluctantly" had to conclude that the HIV-positive
inmates had a statutory basis for their suit.

This is the first time a Michigan court has held that the Handicappers'
Civil Rights Act applies to prison programs.

The second ruling came from the U.S. Supreme Court. In Pennsylvania
Department of Corrections v. Yeskey, the high court said that the ADA
applies to inmates in state correctional facilities. The same wording in
the ADA also appears in the Rehabilitation Act.

Again, Griffin and McDonald said they had no choice but to defer to
precedent. The court reversed the trial judge's refusal to allow the
Michigan inmates to amend their complaint under federal law.

"While we follow Yeskey, we urge Congress to amend the ADA to exclude
prisoners from the class of persons entitled to protection under the
act," Griffin said.

The appeals panel had fewer qualms when it ruled that the trial judge
made a mistake in finding against the inmates' equal protection claim.
The panel said the trial judge incorrectly applied a "rational basis"
test to the plaintiffs' equal protection claims. Because the case
involved prison policy, not legislation, that analysis was

Instead, the judge should have made the determination based on the test
enunciated by the Supreme Court in Turner v. Safley. That test is
similar to the rational basis test, but it requires consideration of
four factors specifically tailored to penological settings.

The third judge, Helene N. White, concurred with the result, but not the
reasoning. She said the plain language of state law clearly supports a
conclusion that prison inmates are covered for purposes of civil rights
and disability rights.

The case now goes back to the trial judge for further proceedings.

Doe and Roe v. Michigan Department of Corrections, No. 200810 (Mich. Ct.
App., 6/25/99). (AIDS Policy and Law 8-6-1999)

ISAAC L: Fla Lacks Least Sophisticated Consumer Rule; FCCPA Claim Oked
In Gerou v. Isaac L. Levy P.A., et al., No. 98-1133-CIV-ORL-19B (M.D.
Fla. 8/17/99), the U.S. District Court for the Middle District of
Florida applied the "least sophisticated consumer" standard to the
debtor's Fair Debt Collection Practices Act claims but not to her
Florida Consumer Collection Practices Act claims.

Sears, Roebuck & Co. retained Isaac L. Levy and Phillip S. Kinney to
collect a debt owed by Nadine Gerou. Gerou received several debt
collection letters and then filed a class action under the FDCPA and the
FCCPA. In her motion for partial summary judgment, Gerou claimed the
dunning letters violated Section 1692g(a)(4) of the FDCPA because they
lacked the required validation notice. The court agreed and ruled
summary judgment was warranted on this claim.

Next, Gerou argued that the collection letters violated Section 1962g(a)
by demanding immediate payment. The letters read, "[W]e now make demand
upon you to pay ... directly to the firm immediately." She claimed that
the demand violated her right to dispute the debt within 30 days of the
notice. The District Court applied the "least sophisticated consumer"
standard in considering whether the demand for immediate payment
overshadowed the letters' statement, "Unless you dispute the validity of
this debt ... within 30 days after receipt of this notice, we will
assume the debt to be valid." The court concluded that summary judgment
was not warranted on this claim because an issue of material fact
existed. The court explained that a jury could find that the least
sophisticated consumer would not believe that the demand overshadowed
the 30-day language, which appeared in the same size print and on the
same page.

The letters also contained the caption "Sears, Roebuck & Company vs.
Nadine Gerou" and included the term "Stipulations." Gerou claimed the
caption violated Section 1692e of the FDCPA, which prohibits a debt
collector from using any false or deceptive means to collect a debt.
Judge Patricia C. Fawsett, however, pointed out that the body of the
letters explained that a lawsuit had not yet been filed. When a
reasonable jury considered the letters as a whole, said the court, it
could find the defendants did not misrepresent the legal status of the
debt. The court denied the plaintiff's motion on this claim. However,
the court found that the letters, which contained the term
"stipulations," did not explain that a lawsuit had not yet been filed.
Therefore, with regard to these notices, the court ruled that summary
judgment was warranted under Section 1692e.

Lastly, Gerou argued that the letters violated both the FDCPA and the
FCCPA with their threats to encumber property. The notices read, "If a
judgment is obtained against you, it may encumber any real property,
which you now own, or acquire until the judgment is paid in full." Gerou
contended that this threat was misleading because in Florida, a judgment
does not always encumber one's homestead property. The court ruled, in
regard to the FDCPA claim, that a genuine issue of material fact existed
as to whether the defendants violated the act by including the sentence
referencing real property. It explained that the word "may" created a
question of fact as to whether the defendants were representing that
they had the right to attach, garnish or encumber property for which
they did not possess such right.

Regarding the FCCPA claims, the court ruled in favor of the defendants
because it was not forced to apply the "least sophisticated consumer"
standard. To the court, the word "may" indicated that the remedies
referenced in the letter could apply in some circumstances and not

O. Randolph Bragg of Horwitz, Horwitz & Associates Ltd. in Chicago and
Christopher N. Giuliana of Giuliana Associates in Clearwater, Fla.,
represented the plaintiffs. Susan D. Duff of Rumberger, Kirk & Caldwell
in Tampa, Fla., represented the defendants. (Consumer Financial Services
Law Report 9-7-1999)

LEAD PAINT: The Gap Faces TX Suit Over Lead Wicks On Candles Sold
Candles sold by The Gap have lead wicks which emit more than 100,000
times the lead permissible by state standards when burned, according to
a Texas suit seeking class status for the candle purchasers. The suit
accuses The Gap and its supplier of knowingly selling an unsafe product
and not placing warning labels on the candles (Kip Flanders, et al. v.
The Gap Inc., et al., No. 97-10415-K, Texas Dist., 192nd Jud. Dist.).

(Text of Amended Petition in Section A. Mealey's Document #

Kip and Cathy Flanders filed a third amended class action petition Sept.
14 in the Texas 192nd Judicial District Court against the The Gap and
its supplier, Ceres L.L.C. They allege breach of implied warranty for
marketing, selling and distributing a defective and unsafe product. The
suit also seeks to enjoin the defendants from selling the remaining
candles and require the defendants to publish warning notices about the
candles' lead content and the hazards associated with lead exposure.

A source told Mealey Publications that an initial bid for class
certification was denied by the court without explanation but that a
motion to reconsider is pending. The proposed class is defined as all
individuals in the United States who purchased the candles and damages
are sought to recover the cost of the purchase. The Flanderses filed the
original complaint in February 1999.

                         39 Different Candles

The Flanderses allege that The Gap knowingly sold 39 different candles
with wicks containing a hazardous amount of lead, primarily through the
company's Gap and Banana Republic chains. The amount of lead exceeds The
Gap's own safety standards and the amount set by California law "by a
factor in excess of over one hundred thousand times and in some
instances . . . by as much as one half million times," maintain the

The California-based Gap's self-imposed safety standard is half a
microgram of lead per day, which is the same level permissible under
California's Proposition 65, the petition notes.

According to the Flanderses, the candles in question have a wick made
almost completely of lead, with the remaining part of the wick made of
antimony, another toxic metal. Once the candles are burned, poisonous
gases are created that could be inhaled by anyone coming into contact
with the candles, says the petition. Airborne lead will circulate
through a home and be deposited on surfaces, such as kitchen fixtures,
furniture and children's toys.

"It is a scientific fact that it is far more dangerous to inhale lead
than to swallow an equal amount. In fact, according to the U.S. Health
and Human Services Administration, lead is 'completely absorbed' when
'deposited in the lower respiratory tract' but is partially absorbed
('10% to 15%') when ingested or swallowed," the petition states.

No warning labels were placed on any of the candles or their packaging
about the lead content or the dangers of lead exposure, argue the
Flanderses. The candles were distributed for sale from November 1994
through November 1997, "and it is a matter of near certainty that
hundreds if not tens of thousands of these candles remain in residences
across America waiting to be burned," say the Flanderses.

Representing the Flanderses are Keith M. Jensen of the Law Office of
Keith M. Jensen in Forth Worth, Texas, and John W. MacPete of Dallas.
(Mealey's Litigation Report: Lead 9-24-1999)

MAINE EMPLOYERS: Mexico's Attempt To Sue For Its Citizens Rejected
Citizens of foreign nations are permitted to seek damages or other
remedies against U.S. citizens or entities by bringing lawsuits in
courts of the United States. This principle also permits foreign
nationals employed in the United States to sue their employers for
alleged employment discrimination or violation of other
employment-related laws. But what happens when a foreign nation itself
seeks to sue a United States employer to vindicate the civil rights of
its citizens in courts of the United States? The federal court in Maine
recently had an opportunity to address this question when the nation of
Mexico tried to join an employment discrimination case on behalf of its
citizens working in Maine.

                    Mexico Tries To Join Lawsuit

Several Mexican migrant farm workers sued various Maine companies and
individuals in federal court in Maine for alleged unlawful
discrimination and other employment practices. In the lawsuit, which is
still ongoing, the Mexican employees are seeking damages and other forms
of relief against their respective employers. Presumably, if successful
in their lawsuit, these employees will be able to seek full compensation
for their employers' various alleged transgressions.

In an interesting twist, however, the nation of Mexico tried to join the
lawsuit and its citizens in their fight against the Maine employers.
Mexico wanted to sue for a court- ordered injunction against the
employers to put an end to the alleged discrimination against migrant
workers "of Mexican race and descent."

         Can Mexico Sue To Protect Rights Of Its Citizens?

At the outset, the federal court had to decide whether to let Mexico
into the lawsuit. Typically, for a person or entity to be entitled to
bring a lawsuit, the party must have "standing," which means the party
must have been injured in some way the court can address. In this case,
it was Mexico's citizens -- the migrant workers working in Maine -- who
were allegedly injured by the employers' conduct. So, what right or
"standing" did Mexico have to join in the case?

Mexico tried to join the case under a fairly obscure legal doctrine
known as parens patriae (i.e., parent of the country). Mexico argued
that it had a "sovereign" interest in joining the lawsuit -- that is, it
wanted to join the lawsuit to enforce its natural interest in the
well-being of its citizens. In this case, it argued that it had a
sovereign interest in making sure that its citizens would not suffer
employment discrimination at the hands of certain Maine employers.

The employers, on the other hand, already had their hands full with the
lawsuit brought by the individual migrant workers -- who were also
pursuing a class action against the employers on behalf of all similarly
situated migrant workers. Not surprisingly, the employers, in effect,
told the court, "Wait a second, we already have a dispute with the
migrant workers themselves. We don't need to take on the nation of
Mexico, too." The employers argued that Mexico had no right to enter the
lawsuit as parens patriae.

         Court Says No To Mexico: You Can Always Wage War

We won't thrill you with the legal analysis surrounding the history and
effect of the doctrine of parens patriae. Suffice it to say that in some
rare cases, a domestic state may sue to protect its citizens from the
"universal sting" of discrimination directed at some portion of the

For example, if a group of Maine citizens applying to colleges in
Massachusetts all got rejected because they were from Maine, the state
of Maine might be able to step in and sue the colleges on behalf of all
Maine citizens to protect against the sting of Massachusetts' prejudice.

But the problem in this case was that the doctrine had never been
applied to a foreign nation such as Mexico. The court therefore had to
consider some interesting practical consequences in deciding whether to
let Mexico into the case.

First, the court recognized that Mexico, unlike states of the union, had
the sovereign right to negotiate treaties with the United States. The
court also noted that Mexico, unlike the individual states, had the
power to elect to wage war.

Now, we have seen courts encourage parties to pursue alternative dispute
resolution (ADR), but we don't think the court in this case was
suggesting that Mexico drop its lawsuit and invade Maine as a form of
ADR. Instead, the court was saying that since Mexico has these other
rights and Maine doesn't, for example, have the right to invade
Massachusetts or enter into a treaty with Massachusetts, it just didn't
make sense to extend the doctrine of parens patriae to foreign nations.

The court also noted the sticky constitutional problems that would arise
if it allowed Mexico to enter the lawsuit. It would be in the difficult
position of dealing with Mexico in formulating injunctive relief against
Maine employers, a treaty-like negotiation reserved by the U.S.
Constitution to the executive branch of government, not the judicial

In the end, the court said the laws were sufficient to protect the
interests of the Mexican migrant workers without involving Mexico, which
was free, the court added, to finance the lawsuit on behalf of the
workers if it so chooses. Otherwise, the court concluded, if Mexico did
not believe that its sovereign interests were being protected, it was
free to negotiate a treaty with the United States. Estados Unidos
Mexicados, et al. v. Austin J. DeCoster, et al., Civil No. 98-186-PH
(D.Me. 8-9-99).

                            Bottom Line

We thought this case presented an interesting story about how employees
and their lawyers continue to find new ways to sue employers, even
though chances are you won't face similar circumstances. Unlawful and
systematic employment discrimination, of course, is a matter that should
be taken seriously and should not be tolerated in the workplace.

However, you already have a lot of laws, regulations, and protected
classes to worry about. You don't also need to be concerned about a
lawsuit by a foreign nation. Unless, of course, the alternative is an
invasion. (Maine Employment Law Letter, November, 1999)

MATTEL INC: Beatie & Osborn File Securities Suit In Massachusetts
Beatie and Osborn LLP has announced the following:

If you were a shareholder of record of Mattel, Inc. (NYSE: MAT) common
stock as of March 15, 1999, we are required, by federal law (Section
21D(a)(3)(A) of the Private Securities Litigation Reform Act of 1995) to
inform you of the following: On October 29, 1999, a lawsuit was filed on
behalf of Mattel shareholders in the United States District Court for
the District of Massachusetts against Mattel, The Learning Company
("TLC") and several of the off icers and directors of those companies.
The lawsuit seeks nationwide class action status.

If you owned Mattel stock on March 15, 1999, your rights may be affected
by this lawsuit. The lawsuit alleges that on March 26, 1999, Mattel and
TLC issued a Joint Proxy Statement/Prospectus in connection with
Mattel's acquisition of TLC that was materially false and misleading.
Among other things, the Joint Proxy failed to disclose that: (1) TLC's
financial results for the third and fourth quarter of 1998 contained
revenue manipulations; (2) TLC's software had not performed as well as
had been publicly represented; (3) Mattel's acquisition of TLC would not
add to Mattel's profits in 1999; and (4) TLC's business would not be a
good strategic fit with Mattel's business. In addition, the Joint Proxy
incorporated TLC's historical financial and operating results that had
been prepared in violation of generally accepted accounting principles.
Unaware of the materially false and misleading statements and omissions
in the Joint Proxy materials, shareholders of Mattel and TLC approved
the merger.

The lawsuit seeks to set aside the wrongfully consummated merger between
the companies, rescind the common stock issued to shareholders, and
provide monetary relief to the Mattel shareholders who suffered damages.
If you wish to learn more about this lawsuit or join as one of the class
representatives, you may contact:

Eduard Korsinsky or Ben Coleman, Beatie and Osborn LLP 599 Lexington
Avenue, New York, New York 10022 Telephone: 212-888-9000 Toll Free:
800-891-6305 Facsimile: 212-888-9664 E-mail: bandolaw@aol.com

Please note that in order to join this lawsuit as a class
representative, you must make an application to the court no later than
December 6, 1999.

MCKESSON HBOC: City and State Battle Over Lead Plaintiff Status
In the latest volley in the battle between New York City and State to
control the $ 3 billion McKesson HBOC Inc. securities fraud litigation,
the City's pension system has attempted to disqualify the State pension
system's major partner from becoming lead plaintiff.

The New York City pension system has asked a federal judge in San Jose
to debar the Florida pension system from aligning itself with the New
York State pension system in seeking to become lead plaintiff. The City
claims that Florida is disqualified because it has been lead counsel in
securities class actions more than the five times within three years
that is allowed by federal statute.

The State and City pension systems are among 12 groups of plaintiffs
vying to become leaders of the McKesson class action. The two New York
groups have aligned themselves with pension funds in other states and
cities to take advantage of the presumption created in the 1995 Private
Securities Litigation Reform Act (PSLRA) that the mantle of lead
plaintiff should go to the group with the "largest financial interest"
in the litigation. By aligning itself with the Florida pension system,
the New York State has been able to claim that its group has greater
damages than the other groups.

At stake in the motion to become lead plaintiff are millions of dollars
in fees for the teams of lawyers assembled by the State and City pension

In a recent securities class action involving the Cendant Corp., the
court was unusually parsimonious in setting fees at 5.7 percent of the
recovery for the class. Assuming that level of recovery, the attorneys
in the McKesson litigation would receive $ 171 million as their fee.
More typically, according to figures quoted in both the City's and
State's briefs in the McKesson litigation, fees in securities class
actions run in a range of 25 to 30 percent of the total recovery for
injured investors.


The competing motions to be recognized as lead counsel are scheduled to
be argued before U.S. District Judge Ronald M. Whyte in San Jose. The
City system is represented by Richard M. Heimann of Lieff, Cabraser,
Heimann & Bernstein, a California firm with an office in New York City,
and Steven Lowey of Lowey, Dannenberg, Bemporad & Selinger in White
Plains. The State system is represented by Barrack, Rodos & Bacine, a
Philadelphia firm, and Bernstein Litowitz Berger & Grossman, based in
New York City.

Both the State and City systems have offered to submit their fee
arrangements to Judge Whyte for his review in camera. While neither side
has publicly disclosed the nature of its fee arrangements, a lawyer for
New York City has stated that its agreement with its two firms provides
for payment at less than 10 percent of recovery (New York Law Journal,
July 6, 1999). The State system, according to its brief, has an
agreement with its firms that provides for payment at "substantially
less" than 25 percent.

The attorney fees paid by Cendant, the parent of Avis car rentals and
Century 21 real estate, came to $ 19.3 million on a recovery for
investors of $ 341.5 million. Unlike McKesson, both the City and State
teamed up to form the lead plaintiff group in Cendant, and agreed to
hire Bernstein Litowitz. The State had also hired the Barrack Rodos firm
in Cendant.

                             Damage Claims

The stock of McKesson HBOC nose-dived last April by 48 percent after it
was disclosed that the company had overstated its revenues by $ 42
million. The plaintiffs are claiming total losses in excess of $ 3

The State system is a part of a group that includes the Florida pension
system, the retirement system for teachers in Chicago and the pension
fund for police and fire officers in Anchorage, Alaska. All told, the
group claims McKesson-related losses of $ 246 million.

The City system originally aligned itself with the state retirement
systems in Utah and Colorado and the fund for teachers and judges in
Alabama, claiming losses of $ 122 million (NYLJ, July 6, 1999). But in
the latest application, New York City has decided to go it alone.

Going head-to-head with the State system, the City is claiming losses of
$ 71 million compared with the State's losses of $ 56 million.

                           Crux of Argument

The crux of the City system's argument is that the Florida system's
claimed losses of $ 185 million should not be counted as a part of the
State group's total of $ 246 million because Florida has already been
selected as lead counsel in six securities class actions in violation of
@ 21D(a)(3)(B)(vi) of the 1995 PSLRA, which sets a limit of five as the
number of times that "a person" may be designated as lead counsel in a
securities class action within a three-year period.

The City also argues that the State group failed to disclose in a
certification to the court, as required by the PSLRA, that Florida had
been engaged as class counsel in six cases.

Assuming Florida were to be disqualified, the State group would be left
with losses totaling $ 61 million, $ 10 million less than the losses
claimed by the City system, leaving the City in a position to claim the
prize of lead plaintiff.

However, the State fires back that the restriction on the number of
times that "a person" may be designated as lead counsel is limited to
"professional plaintiffs," because the limitation is contained in a
subparagraph entitled, "Restrictions on professional plaintiffs."
Florida, as an institutional investor, is exempt from the limitation,
the State's group argues.

Similarly, the State group contends that Florida, because it was a class
member, as opposed to a named plaintiff in one of the 53 actions filed
stemming from the collapse in McKesson's stock price, is exempt from the
certification requirement in PSLRA @ 21D(a)(2).

Both sides claim that their position is backed by precedent. The City
system's lawyers point out that as recently as Aug. 25, a federal judge
in Ohio rejected Florida's application to be appointed lead plaintiff in
a seventh case because of the rule creating a presumptive bar after a
plaintiff has been appointed in five cases. That ruling came in Bragdon
v. Telxon Corp., 5:98 Civ. 2876 (N.D. Ohio).

But the State group relies on a 1997 ruling from a U.S. judge in
Arizona, who said in Blaich v Employee Solutions Inc., 1997 WL 84217
that the "general restriction" on serving as lead counsel in more than
five cases over three years "was not intended to apply to institutional
investors." (New York Law Journal 10-25-1999)

MTBE: NYLJ Says New York May Become Forum For Water Contamination Suits
Based on recent regulatory and litigation developments, New York is
likely to become a forum for lawsuits over water supplies allegedly
contaminated with the substance methyl tertiary butyl ether or "MTBE."
Depending on how the complaints are styled, MTBE litigation could
present the New York courts with new opportunities to address vexing
questions in the mass tort field involving, among other things, the
appropriateness of class actions and medical monitoring of claimants who
do not display symptoms of disease.

Although ozone and air toxic levels around the country have decreased
since implementation of the federal Clean Air Act, numerous areas,
including several in New York and elsewhere in the Northeast, have not
attained national ambient air quality standards. In response, Congress
enacted the Clean Air Act Amendments of 1990, which established the
reformulated gasoline ("RFG") program. That program mandated changes in
motor fuel formulation by requiring RFG used in nonattainment areas to
contain increased oxygen levels to allow for cleaner fuel consumption
and lower noxious motor vehicle emissions.

                            Fuel Additives

To meet this requirement, various oxygen-rich compounds, called
oxygenates, have been developed and marketed as fuel additives. The
leading oxygenate is MTBE, which is found in over 85 percent of RFG.
Although there is disagreement regarding the precise role played by MTBE
in attaining air quality standards, the evidence indicates that the use
of MTBE has reduced emissions of carbon monoxide and other toxics to
below those standards.

At the same time, however, MTBE is being detected in drinking water
supplies with greater frequency. Between 5 and 10 percent of community
drinking water supplies in areas using RFG contain MTBE, although
usually at concentrations well below the Drinking Water Advisory of 20
to 40 parts per billion ("ppb") set by the U.S. Environmental Protection
Agency ("EPA"). At even low levels, however, consumers have voiced taste
and odor complaints, causing some public water suppliers to stop using
water supplies and to incur treatment and remediation costs. MTBE has
also been detected in private wells, which are less protected than
public drinking water supplies and not monitored regularly for
contamination. Surface waters too have been impacted with MTBE,
particularly during the summer boating season.

The major source of MTBE in groundwater appears to be leaking
underground gasoline storage tanks ("USTs"). Although USTs have been
upgraded within the past several years, many have not been, and even
upgraded USTs purportedly may release RFG due to inadequate design,
installation, maintenance, and operation. Beyond that, gasoline spills
to ground and surface waters account for an additional source of MTBE in
drinking water supplies.

                           List Publicized

Just a few weeks ago, attorneys for plaintiffs involved in MTBE
litigation outside of New York obtained and publicized a list compiled
in 1998 by the New York State Department of Environmental Conservation
("NYSDEC") that identifies over 1,500 soil and groundwater sites within
the State that contain MTBE. According to the NYSDEC list, MTBE was
detected in all 62 counties in the State, with most sites located in
Nassau (198), Suffolk (183), and Westchester (96). More than 90 percent
of the MTBE spills reported by NYSDEC allegedly require remediation.

Soon after the NYSDEC data were publicized, on Sept. 15, a panel
appointed by U.S. EPA Administrator Carol Browner to investigate the
benefits and risks of MTBE issued its long awaited report, "Achieving
Clean Air and Clean Water: The Report of the Blue Ribbon Panel on
Oxygenates in Gasoline." The report may further encourage MTBE
litigation in New York by those equipped with the NYSDEC data.

For example, the blue ribbon report underscores that MTBE is more
water-soluble than other gasoline components - moving at nearly the same
speed through soils as groundwater itself - and appears resistant to
biodegradation relative to those other components. According to the
report, "Given sufficient time and distance, MTBE would be expected to
be at the leading edge of a gasoline contamination plume or could become
completely separated from the rest of the plume if the original source
of oxygenate were eliminated."

Although more even-handed in its discussion of the human health effects
associated with MTBE exposure, the report could provide fodder to those
contemplating suit against industry. On the one hand, the report notes
that both the International Agency for Research on Cancer (IARC) and the
National Institute of Environmental Health Sciences (NIEHS) have
concluded that the data do not allow them to classify MTBE as a probable
or known human carcinogen. And the report advises that drinking water
containing MTBE below the taste and odor levels identified in EPA's
Drinking Water Advisory is "not expected to cause adverse health
concerns for the majority of the population."

                             Data Is Limited

On the other hand, the report notes that there are only limited data on
human populations that may be sensitive to MTBE. The report also
observes that at high doses, MTBE and its metabolites have caused cancer
in rats and mice. Although it cautions against extrapolating such
effects to humans, the report suggests that significant health effects
may be beside the point, because even at very low levels, MTBE takes on
the taste and odor of turpentine and can make drinking water
unacceptable to consumers.

Finally, the blue ribbon report portrays as difficult and expensive the
treatment of water containing MTBE. According to the report,
conventional treatment technology such as air stripping and carbon
adsorption are ineffective and costly for MTBE removal. The report
further notes that other treatment technologies, like advanced
oxidation, may generate byproducts of MTBE that could be of health and
environmental concern, thus limiting their usefulness and increasing
treatment costs.

Having raised those concerns, the blue ribbon panel concluded that MTBE
poses a risk to the environment and public health, and its
"occurrence... in drinking water supplies can and should be
substantially reduced." Toward that end, the report recommended that
federal and state authorities be authorized to regulate and/or eliminate
the use of MTBE in gasoline.

In light of the NYSDEC listing of State MTBE sites and the panel's
report on the threat allegedly posed by MTBE, a new wave of MTBE
litigation should be expected to break in New York. How will those
lawsuits be framed? Three recent cases filed elsewhere may provide a

                        Cases Filed Elsewhere

Earlier this year, in Maynard, et al. v. Amerada Hess Corp., et al.,
C.A. No. 99-CVS-00068 (North Carolina Super. Ct., New Hanover Co.), the
same attorneys who publicized the NYSDEC MTBE listings brought a
putative state class action, on behalf of individuals whose water
supplies are or may be contaminated by MTBE, against manufacturers and
distributors of RFG. The suit alleges that the defendants marketed MTBE
without adequate warnings or toxicological studies and with knowledge
that MTBE passes through soil and groundwater and ultimately
contaminates drinking water supplies.

Although the Maynard complaint is replete with suggestions of some
toxicological threat posed by MTBE, it does not include any claim for
personal injury, and specifically excludes from the putative class any
such claimant. Nor does it allege the presence of MTBE above applicable
state drinking water standards. Instead, plaintiffs merely suggest that
MTBE at any concentration leaves water with a foul taste and odor
distasteful to consumers. Based on that, plaintiffs then break their
proposed class into three subclasses: (1) all well owners who have had
or wish to have their wells tested for MTBE; (2) all well owners whose
wells contain MTBE at or above 5 ppb; and (3) all owners of land above
groundwater that contains MTBE at or above 5 ppb.

Because the defendants allegedly chose to market MTBE in spite of its
known propensity to leach into groundwater, the Maynard plaintiffs claim
that the defendants are liable under several theories, including
negligence, gross negligence, product liability for defective design and
failure to warn, trespass, nuisance, conspiracy, and fraud. In addition
to an order certifying their case as a class action, plaintiffs seek: an
order compelling defendants to establish a fund for sampling and
analysis of all North Carolina drinking water wells for MTBE, and
reimbursement for all wells already sampled; the costs of remediating
all wells containing MTBE at or above 5 ppb or providing alternative
water sources; damages for diminution in property value and stigma for
plaintiffs whose property is above groundwater containing MTBE at or
above 5 ppb; an order directing defendants to issue warnings and fund a
public education program regarding the threat that MTBE allegedly poses
to groundwater; and punitive damages.

Maynard was preceded by a similar putative class action filed in Maine
Superior Court by the same plaintiffs' attorneys. In that case, Millet,
et al. v. Atlantic Richfield Co., et al., C.A. No. CV-98-555 (Maine
Super. Ct., Cumberland Co.), plaintiffs also allege that although MTBE
manufacturers, distributors, and promoters knew that MTBE readily
leaches into groundwater, they provided no warnings of that, and
marketed the compound as environmentally safe and beneficial. And again,
while plaintiffs suggest that MTBE poses a health risk, and assert that
thousands of private wells in Maine contain the chemical above Maine's
health-based maximum contaminant level of 35 ppb, the complaint does not
allege any claim for personal injury, and specifically excludes any such
claim from the putative class. Rather, plaintiffs assert that even trace
levels of MTBE can render water unfit for consumption. Given that, they
seek certification of two subclasses: (1) all persons whose wells have
been tested and found to contain MTBE in "unacceptable concentrations;"
and (2) all persons whose wells have not been tested for MTBE.

As in Maynard, the plaintiffs in Millet assert several theories of
liability, including strict liability for failure to warn and for
misrepresentation, unfair and deceptive trade practices, negligence,
negligent misrepresentation, conspiracy, and fraud. And in addition to
an order certifying their suit as a class action, the Millet plaintiffs
seek: an order requiring defendants to pay for court-approved sampling
and analysis of all Maine private water supplies for MTBE; damages for
lost property value and the cost of cleaning up class members'
groundwater containing MTBE levels above 2 ppb; an order compelling
defendants to issue warnings and fund a public education program
regarding the threat that MTBE allegedly presents to groundwater;
imposition of a constructive trust and asset freeze upon defendants'
MTBE-related profits; and punitive damages.

                         Class Action Issue

The Millet case sheds more light on plaintiffs' strategy to achieve
class action certification. Unlike the Maynard complaint, which does not
even mention North Carolina's Rule 23(b), the Millet complaint and
motion for class action certification assert that the lawsuit can be
certified as a class action under either Maine Rules 23(b)(1), 23(b)(2),
or 23(b)(3). Recognizing the clear trend against certifying nationwide
class actions for personal injury because individual issues of law and
fact usually predominate, the Millet plaintiffs attempt to satisfy rule
23(b)(3) by limiting their suit to a state action involving a uniform
claim defined by MTBE levels above 2 ppb. As they argue in their motion
papers, "This case... is not burdened with the management problems that
have impeded some other mass tort class actions, such as the necessity
to litigate injury and causation individually in each case and to apply
the laws of different states to different class members."

But even if individual issues preclude certification under Rule
23(b)(3), the Millet plaintiffs argue that certification is appropriate
under Rules 23(b)(1)(A) or 23(b)(2) because they purportedly seek
primarily "court-approved" injunctive relief. Most interestingly, taking
advantage of the recent trend allowing claims for medical monitoring to
be certified under Rule 23(b)(2), the Millet plaintiffs analogize their
claims for sampling and analysis of untested wells and for public
warnings and education outreach to claims for medical monitoring.
According to the plaintiffs, their claims should be certified under Rule
23(b)(2) for the same reasons a growing number of courts have certified
medical monitoring claims under that rule. n1

n1 For example, in In Re Diet Drugs: (Phentermine, fenfluramine,
   dexfenfluramine) Products Liability Litigation: Barbara Jeffers and
   Johanna Day v. American Home Products Corp, 1996 U.S. Dist LEXIS
   13228 (E.D. Pa., Aug. 26, 1999), Judge Bechtle of the U.S. District
   Court for the Eastern District of Pennsylvania conditionally
   certified a nationwide class action for medical monitoring on behalf
   of consumers who allegedly fear an increased risk of heart valve
   disease from using certain diet drugs. The court observed, among
   other things, that the ingestion of the drugs was "discrete and
   ascertainable" and, thus, individual issues of exposure could be
   managed in one class action.

Finally, in August 1999, the City of Dinuba, Calif. brought suit against
numerous MTBE manufacturers and distributors to recover the costs of
treating its water supply contaminated with MTBE, and securing
alternative water supplies. In City of Dinuba v. Unocal Corp., et al.,
C.A. No. 305450 (California Super Ct., San Francisco Co.), the plaintiff
makes the familiar charge that the defendants knew that MTBE would reach
groundwater, but failed to guard against that or issue appropriate
warnings to the public while continuing to market the chemical as
environmentally sound.

Like the plaintiffs in Maynard and Millet, the City of Dinuba makes
cryptic reference to MTBE's "link[ ] to a wide variety of threats to
human health." But its primary concern is not with public health, but
with MTBE levels as low as 2 ppb that allegedly make water distasteful
and odorous to some 15,000 residents.

Although California has promulgated an MTBE Secondary Drinking Water
Standard of 5 ppb for taste and odor concerns, the City of Dinuba
appears to have requested the remediation of any level of MTBE in its
water supply. Toward that end, its complaint alleges several counts,
including strict product liability, negligence, trespass, nuisance, and
unfair competition. In addition to the cost of remediating and/or
replacing its water supplies, the city seeks punitive damages and the
disgorgement of all MTBE-related profits earned by the defendants.

                        New York Suits Likely

NYSDEC's listing of MTBE sites, EPA's blue ribbon panel report
encouraging the elimination of MTBE in gasoline, and the recent parade
of MTBE lawsuits suggest strongly that mass tort litigation against the
MTBE industry will soon make its debut in the New York courts. Creative
plaintiffs' attorneys attempting to analogize their claims to medical
monitoring may be emboldened by New York County Supreme Court Justice
Helen E. Freedman's recent decision in In re: New York Diet Drug
Litigation, Index No. 70000/98 (Sup. Ct. N.Y. Co., Sept. 14, 1999), n2
finding that New York recognizes a cause of action for medical
monitoring of asymptomatic claimants. And although New York has
promulgated a generic "Unspecified Organic Contaminant" drinking water
standard of 50 ppb applicable to hundreds of thousands of chemicals,
including MTBE, plaintiffs' theories elsewhere indicate that litigation
will be brought even when MTBE is detected in drinking water at a small
fraction of that level. n3

n2 See New York Law Journal, Sept. 17, 1999, at 1.

n3 Even if plaintiffs' theories rely on an exceedance of the 50 ppb
   "Unspecified Organic Contaminant" standard for MTBE, that by itself
   may not establish liability. See State of New York v. Fermenta ASC
   Corp, 608 N.Y.S.2d 980, 986 (Suffolk Co. 1994) (contravention of
   "Unspecified Organic Contaminant" standard alone is insufficient to
   establish liability for public nuisance).

Companies named as defendants in any New York MTBE litigation should be
expected to oppose the claims vigorously. Would-be plaintiffs in New
York, like claimants in other jurisdictions, probably will not allege
any personal injury from MTBE. This, in combination with limited levels
of MTBE detected in drinking water supplies, could make it difficult for
them to sustain a medical monitoring-like cause of action.

Justice Freedman's opinion in the diet drug litigation, acknowledging
that the Court of Appeals has not yet addressed medical monitoring,
stressed that such a claim might be cognizable "under the right
circumstances." The test she adopted requires sufficient evidence of
significant exposure to a harmful agent resulting from a defendant's
negligence and an increased risk of contracting serious disease, among
other elements. Based on currently available information about MTBE, and
particularly the lack of any scientific consensus on its propensity to
cause harm, these criteria could prove insurmountable to MTBE plaintiffs
in New York.

All indications are that the wave of MTBE litigation is rising and will
break in New York. This litigation will present new challenges for the
courts and litigants in the hardscrabble arena of alleged mass torts.
(New York Law Journal 10-25-1999)

NASSAU COUNTY: 2nd Cir Finds Race-Neutral NY Police Exam Constitutional
A New York county did not disturb equal protection principles by
designing and administering a race-neutral entrance examination for
police officer candidates, the 2d U.S. Circuit Court of Appeals ruled.
Hayden v. County of Nassau, No. 98-6113 (2d Cir. 6/9/99).

In 1982, Nassau County settled a lawsuit brought by the federal
government for alleged discrimination against minority and female
applicants. Although the county expressly denied that it engaged in such
discrimination, it acknowledged that the "underrepresentation" of
certain groups in the county police department could support an
inference that discrimination had occurred.

The county attempted to comply with consent decree provisions by
implementing entrance exams that had no discriminatory impact on
minority applicants. However, entrance exams administered in 1983 and
1987 had just such an impact.

The county worked with federal agencies in appointing a "Technical
Design and Advisory Committee" to develop the 1994 examination. A
committee-endorsed "test battery" was eventually approved by the
district court.

A group consisting of white, Latino and female applicants brought a
class action suit under Title VII, challenging the validity of the 1994
exam. They asserted that the county discriminated against them by
deliberately designing an entrance exam intended to minimize the adverse
impact on black candidates.

In upholding the district court's dismissal of the suit, the 2d U.S.
Circuit Court of Appeals held that "designing and administering a
race-neutral entrance examination with the purpose of eliminating or
reducing the differential effects suffered by minority candidates does
not violate equal protection," Title VII, or Civil Rights Act of 1991
provisions. The exam was not discriminatory on its face because it did
not differentiate between applicants based on race or gender, the court
initially determined.

Because the applicants misinterpreted the county's race-conscious
efforts to redesign its entrance examination as a "racial
classification," they unpersuasively relied on numerous "reverse
discrimination" cases to support their claim. The court also rejected
the applicants' claims of intentional discrimination. "A desire to
reduce the adverse impact on black applicants and rectify prior hiring
practices with the County admitted in the1982 consent order might
support an inference of discrimination but is not analogous to an intent
to discriminate against non-minority candidates."

Similarly, the applicants' discriminatory impact claims had no merit. In
conclusion, the court reaffirmed its holding that "race-neutral efforts
to address and rectify the racially disproportionate effects of an
entrance examination do not discriminate against non-minorities."
(National Public Employment Reporter 8-3-1999)

OXFORD HEALTH: Acquires Additional Insurance For Securities Litigation
Oxford Health Plans, Inc. on Nov. 2 announces third quarter results;
earnings per share of $0.34. Oxford also announced that it has acquired
new insurance policies providing $200 million in additional coverage for
certain future defense costs, judgments and settlements, if any,
incurred by the Company and individual defendants in certain pending
lawsuits and investigations, including, among others, the securities
class action pending against the Company and certain of its directors
and officers and the pending stockholder derivative actions.

Subject to the terms of the policies, the insurers have agreed to pay
90% of the amount, if any, by which covered losses exceed $175 million,
inclusive of approximately $40 million of coverage remaining under
preexisting insurance. The aggregate amount of insurance under these new
policies is limited to $200 million and the aggregate amount of new
insurance in respect of defense costs other than judgments and
settlements, if any, is limited to $10 million. The policies do not
cover taxes, fines or penalties imposed by law or the cost to comply
with any injunctive or other non-monetary relief. A non-recurring charge
of $24 million for premiums and other costs will be included in Oxford's
results of operations for the fourth quarter of 1999.

"Part of the Company's turnaround plan involved eliminating or
mitigating the problems of the past," said Dr. Payson, the Company's
Chairman and Chief Executive Officer.

PACIFICARE HEALTH: Furth, Fahrner Sues Over Viol. Of CA Consumers Law
Fred Furth, the senior partner in the San Francisco law firm of Furth,
Fahrner & Mason, announced that the REPAIR team, consisting of law firms
across the country, has filed a class action suit against PacifiCare
Health Systems, Inc.

The suit, brought on behalf of enrollees in that plan over the last four
years who paid (or had their employers pay) premiums, alleges unfair
business practices and false, deceptive advertising and violations of
the California Consumers Legal Remedies Act.

The REPAIR team includes: Scruggs, Millette, Bozeman & Dent, P.A.; Ness,
Motley, Loadholt, Richardson & Poole, P.A.; Provost Umphrey Law Firm,
L.L.P.; Minor & Associates; Williams Bailey Law Firm, L.L.P.; Langston,
Langston, Michael, Bowen & Tucker; Wayne D. Blackmon, Esq.; Eastland Law
Offices; George Chandler, Attorney at Law; Furth, Fahrner & Mason; Harry
Potter; David O. McCormick, P.A.; Nix, Patterson & Roach, L.L.P.,
Langston Frazer Sweet & Freese, P.A. Contact: Furth, Fahrner & Mason
Bruce Wecker, 415/433-2070

Prudential Securities Inc. and Everen Securities Inc. allegedly engaged
in yield burning on dozens of advance refundings sold by various issuers
during the early 1990s, according to attorneys who have filed a
yield-burning lawsuit on behalf of Chicago.

The claims were made in recent federal court fillings, which also reveal
for the first time the identity of the "expert" bond professional who is
aiding the law firm Krislov & Associates with its lawsuit. The
professional was hired to assist in litigation prompted by a probe of
advance refundings by Illinois issuers during the early 1990s.

The consultant listed in the documents is J.B. Kurish, a former public
finance banker with First Boston Corp., who is now director of the
Municipal Issuer Research and Analysis Center at the University of
Illinois at Chicago. In an affidavit filed with the court, Kurish said
he was "engaged" by the firm to "analyze documents in connection with
this litigation."

The lawsuit against Prudential and Everen accuses the firms of yield
burning which occurs when a dealer of Treasuries overcharges municipal
issuers for securities used to build an escrow account -- on two
separate Chicago deals.

Documents on additional bond transactions managed by the two firms --
many of which were outside Illinois -- were sought by attorney Clint
Krislov as part of his attempt to justify class certification on the
case. In August, U.S. Magistrate Judge Martin C. Ashman ordered the
firms to produce documents on more than 300 refundings.

Everen, which was known as Kemper Securities when the deals were placed,
produced information on 97 deals. Kurish claims yield burning occurred
on at least 24. Prudential produced documents on 71 refundings, and
Kurish says yield burning took place on at least 10. Based on the
sampling, the brief submitted to the court by Krislov late last week
estimates that if adequate information was supplied on all the deals
requested, another 50 instances of yield burning would be found.

"If half of the non- State and Local Government Series securities deals
were burned, that shows that there's a lot of damages out there,"
Krislov said in an interview, referring to deals that involved the
purchase of open-market Treasury securities.

Kurish based his findings on a formula that asserts markups above 1/64th
of 1% were excessive, but the legal brief does not clearly spell out how
that formula was developed. "We will support it by the time we get done
with this," Krislov said.

The firms' representatives and lawyers declined to comment on the latest

Additional issuers who were allegedly charged excessive markups were
located in Michigan, Florida, and some other states. But Krislov refused
to name specific issuers for fear that the firms would enter into
settlement agreements similar to ones negotiated by Illinois issuers,
whose deals were being scrutinized by Krislov.

Chicago signed the first such agreement this past summer with Merrill
Lynch & Co., after the city was notified that Krislov planned to file a
lawsuit against the company on a 1992 refunding. Under the agreement,
the underwriter maintains that it did nothing wrong, but agrees to
indemnify issuer against any future federal penalties.

The so-called "settlements" prevent Krislov from pursuing damages on
behalf on the issuers. (The Bond Buyer 11-3-1999)

REVLON INC: Bernstein Liebhard Files Securities Suit In New York
A securities class action lawsuit was commenced on behalf of purchasers
of the common stock of Revlon, Inc. (NYSE: REV), between October 30,
1997 and October 1, 1999, inclusive, in the United States District Court
for the Southern District of New York.

The complaint charges Revlon and certain of its directors and executive
officers with violations of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. The complaint alleges that the defendants
issued materially false and misleading statements about the Company's
business, finances and prospects and failed to disclose material
information throughout the Class Period in the Company's public filings
and public statements.

As a result of these misrepresentations and omissions, the price of
Revlon's common stock was artificially inflated throughout the Class
Period. Plaintiff seeks to recover damages on behalf of all those who
purchased or otherwise acquired Revlon common stock during the Class

If you purchased or otherwise acquired Revlon securities during the
Class Period, and either lost money on the transaction or still hold the
stock, you may wish to join in the action to serve as lead plaintiff.

In order to do so, you must meet certain requirements set forth in the
applicable law and file appropriate papers no later than December 3,
Plaintiff has selected Bernstein Liebhard & Lifshitz, LLP to represent
the Class. The attorneys at Bernstein Liebhard & Lifshitz, LLP have
extensive experience in securities class action cases, and have played
lead roles in major cases resulting in the recovery of hundreds of
millions of dollars to investors.

If you would like to discuss this action or if you have any questions
concerning this Notice or your rights as a potential class member or
lead plaintiff, you may contact Mr. Mark Punzalan, Director of
Shareholder Relations at Bernstein Liebhard & Lifshitz, LLP, 10 East
40th Street, New York, New York 10016, 800-217-1522 or 212-779-1414 or
by e-mail at Revlon@bernlieb.com

U.S.: Class Action Filed On Behalf Of Aliens; Policy Change Sought
With more than 100,000 immigrants facing possible deportation, President
Clinton and his allies on Capitol Hill hope to change an obscure policy
that bars courts from deciding the aliens' residency. Bills are
languishing in Congress to reverse a 1996 rule that courts cannot
consider appeals of immigrants who say that bureaucratic mix-ups cost
them their rights to work and live in America. ''If you are talking
about basic fairness, this is something I think deserves a look,'' said
Sen. Harry Reid, D-Nev.

A key House Republican indicated, however, that chances are slim for
pushing through a change this year. Speaking through a spokesman, Rep.
Lamar Smith, R-Texas, chairman of the House Judiciary immigration
subcommittee, noted that ''the subcommittee has not considered that
legislation this year.''

In 1986, President Reagan signed into law a measure granting amnesty to
illegal immigrants who had worked and lived in the country for several
years. The Immigration and Naturalization Service interpreted
restrictions in the measure, however, as barring anyone who had received
welfare or other public benefits.

Courts later held that the INS erred in its interpretation, but the
window of opportunity had closed for thousands of amnesty applicants.
The INS' position in effect was that even though the delay was caused by
the agency's error, they were out of luck.

A class-action suit was filed on behalf of 80,000 people whose
immigration status was in jeopardy, but before the litigation could be
resolved, Congress divested the courts of jurisdiction in 1996.

Members of the Congressional Hispanic Caucus brought the problem to
Clinton's attention at a White House meeting this month. In 1996, ''we
simply passed a law that said you can't go to court and appeal the
decision,'' Rep. Luis Guttierez, D-Ill., said. ''The president
understood that is fundamentally unfair.''

An INS official said the agency wants to help the aliens find a
permanent answer about their immigration status but can do nothing
without instructions from Congress.

The INS estimates about 80,000 people are caught in the immigration
limbo, a statistic drawn from the number of people who joined the
class-action suit. No one is keeping specific records, but the White
House estimates 200,000 are effected, the caucus as many as 400,000.
Most are Mexicans, but Guttierez said, ''this is an issue that impacts
all immigrants Polish, Ukrainians, Irish from all over the world who
went to take advantage of the 1986 amnesty law.'' ''The caucus believes
they should be given ... their day in court and let a judge decide,'' he

The lawmakers want to update what is known as immigration's ''registry
date,'' the yardstick by which amnesty claims are measured. The date has
not been updated since 1973. Legislation would move
it to 1984, effectively grand-fathering in immigrants left in the lurch
by the 1996 law.

Reid was drawn to the issue by Hispanics in his district who were sold
false residency documents. Victims of the scheme accosted him at a
community center. ''It was one of the most illuminating gatherings I
have ever been involved in,'' he said. ''They were there to plead with

Reid said many of his constituents had worked for years in the same jobs
and had families in Nevada when they found themselves without legal
standing to remain in the United States. (AP Online 11-2-1999)

UNISYS CORP: Bernstein Liebhard Files Securities Suit In Pennsylvania
A securities class action lawsuit was commenced on behalf of purchasers
of the common stock of Unisys Corporation (NYSE: UIS), between May 4,
1999 and October 14, 1999, inclusive, in the United States District
Court for the Eastern District of Pennsylvania.

The complaint charges Unisys and certain of its directors and executive
officers with violations of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. The complaint alleges that the defendants
issued materially false and misleading statements about the Company's
business, finances and prospects and failed to disclose material
information throughout the Class Period in the Company's public filings
and public statements. The Company and a number of its insiders took
advantage of the inflated stock price to sell tens of thousands of their
own shares and to complete acquisitions on terms that were less dilutive
to Unisys.

As a result of these misrepresentations and omissions, the price of
Unisys's common stock was artificially inflated throughout the Class

If you purchased or otherwise acquired Unisys securities during the
Class Period, and either lost money on the transaction or still hold the
stock, you may wish to join in the action to serve as lead plaintiff. In
order to do so, you must meet certain requirements set forth in the
applicable law and file appropriate papers no later than 60 days from
October 28, 1999.

Plaintiff has selected Bernstein Liebhard & Lifshitz, LLP to represent
the Class. If you would like to discuss this action or if you have any
questions concerning this Notice or your rights as a potential class
member or lead plaintiff, you may contact Mr. Mark Punzalan, Director of
Shareholder Relations at Bernstein Liebhard & Lifshitz, LLP, 10 East
40th Street, New York, New York 10016, 800-217-1522 or 212-779-1414 or
by e-mail at Unisys@bernlieb.com. SOURCE Bernstein Liebhard & Lifshitz,
LLP CONTACT: Mark Punzalan, Director of Shareholder Relations of
Bernstein Liebhard & Lifshitz, 800-217-1522, 212-779-1414 or

VITAMIN MAKERS: 7 Makers To Settle Price-Fixing Suit For $1B
Seven vitamin makers who sold almost all of the most popular vitamins in
the USA from 1990 to 1998 are expected to settle a price-fixing
class-action lawsuit on Nov 3 for $ 1.05 billion. The settlement, the
largest ever in an antitrust class-action lawsuit, follows 14
prosecutions by the Justice Department's antitrust division that led to
$ 875 million in criminal fines. Companies involved in the expected
settlement are: Hoffmann-La Roche, BASF, Rhone-Poulenc, Hoechst Marion
Roussel, Daiichi, Eisai and Takeda.

People involved in negotiations say the drugmakers will settle claims
they fixed prices on bulk vitamins they sold to such firms as Land
O'Lakes and Kraft Foods. About 40% of the vitamins were used in vitamin
products or other foods for consumers; the rest were used in animal

Justice and private attorneys charged that the companies participated in
a worldwide conspiracy to raise and fix prices and allocate market
shares for bulk vitamins, including A, E and C, sold in the USA and

Class members will all receive about 20% of the cost of the vitamins
they purchased from 1990-98. That's more than the drug firms overcharged
the companies, but less than the triple damages lawyers would have
sought in court.

It is not clear how much of the overcharges were passed on to consumers.
But separate class-action lawsuits pending around the country are
seeking damages for individual vitamin buyers. The cases have been
consolidated in Superior Court in the District of Columbia.

The Justice Department is still investigating other small firms
allegedly involved in the conspiracy, and the lawyers settling the case
have two other lawsuits pending.

"We can't comment on the settlement, but it will reflect the efficacy of
the antitrust laws and private enforcement in the U.S.," says Jonathan
Schiller of Boies & Schiller, which led the talks. "It was an enormous
antitrust conspiracy that reached into every household and affected many
farmers and food producers."

The nearly 50 law firms involved in the lawsuit will share legal fees of
about $ 122 million -- about half the 20% to 30% lawyers typically earn
in class-action settlements.

Attorneys say they took a lower fee in exchange for agreement by the
drug firms to pay class-action members any additional amount of money
they may agree to pay later to companies not in the class. (USA Today


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

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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Washington, DC.  Theresa Cheuk and Peter A. Chapman, editors.

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

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