/raid1/www/Hosts/bankrupt/CAR_Public/991126.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Friday, November 26, 1999, Vol. 1, No. 208


AT&T: Files with FCC; Defends Proposed $58 Bil MediaOne Purchase Plans
BELL ATLANTIC: May Be Sued for Denying Benefits to Staff of Spinoff Co.
BHP: Can't Halt Aussi Case on Esso Negligence in Longford Gas Disaster
CALIFORNIA AMPLIFIER: 9th Cir. Upholds Dismissal of Securities Suit
CUSTOM SERVICE: O'hare Installs Scanner Hoping To Replace Body Searches

ECO SOIL: Wolf Haldenstein Announces Filing of Securities Suit in CA
HIGHWAY IMPACT FEES: Il. Ap. Ct Declines Refunds; Sundance Will Appeal
HMO: Lawyers in Big Tobacco Have Teamed up in Case v. 5 Giant Operators
HMO: President of Association of Health Plans Issues Statement on Suits
HOLOCAUST VICTIMS: German Negotiator Says Talks At 'Decisive Moment'

HORIZON PHARMACIES: Vigorously Defending Securities Suit in Texas
I.C. ISAACS: Wolf Haldenstein Files Securities Suit in Maryland
IKON OFFICE: Announces Settlement of Shareholder Litigation
INMATES LITIGATION: What Happened in Dekalb and in Case v. Dorsey?
LADY LUCK: Securities Suit over IPO Partly Dismissed & Partly Amended

LIFETEK CORP: Consumers Sue over LifeTek GO, Krause & Kalfayan Announce
MICROSOFT CORP: Law Firms Announce Antitrust Suits in CA and Florida
MICROSOFT CORP: First Talks on Antitrust to Take Place in Chicago
MILBANK, TWEED: Not Liable for Punitive Damages in NY Fraud Claim
PHILLIPS PETROLEUM: Settles for 1987 Rail-Car Fire in New Orleans

PHOENIX INT'L: Issues Statement Regarding Securities Lawsuit in Florida
PRUDENTIAL INSURANCE: Ex-Employee Claims Settlement Money Was Held Back
SPECTRAN CORP: Will Contest Delaware Suits over Merger with Lucent
SPECTRAN CORP: Will Vigorously Defend Securities Suit in Boston, MA
TAKOMA PARK: Black, Latino Police Officers Claim Bias in Promotions

* Life Insurance Industry Is Settling Lawsuits on Massive Basis


AT&T: Files with FCC; Defends Proposed $58 Bil MediaOne Purchase Plans
In a filing Wednesday with the Federal Communications Commission, AT&T
defended its proposed $58 billion purchase of MediaOne, a deal which
would create the nation's largest cable TV company and provider of
high-speed cable Internet services. AT&T laid out for the FCC how the
merger would comply with a cap limiting a company's share of cable
households. A single cable company cannot control more than 30 percent
of the multichannel video market. According to AT&T, the post-merger
operation would only have 27 percent of the multichannel subscribers.
(AP Online Nov-25-1999)

BELL ATLANTIC: May Be Sued for Denying Benefits to Staff of Spinoff Co.
Bell Atlantic may be sued for denying benefits to employees of a spinoff
company, a federal judge has ruled.

The ruling arises from a lawsuit brought by former employees of Nynex
Corporation who transferred in 1991 to a Nynex research and development
spinoff. Nynex merged with Bell Atlantic in 1997.

The eight employees contend they were not told when they transferred
that they would lose pension, health and other benefits that had accrued
with Nynex. Their class action lawsuit seeks to recover the benefits,
although the class has yet to be certified.

At issue is whether a communications common carrier such as Nynex may,
by converting an existing division into a subsidiary, "drastically
affect" employee benefits, said Judge Alvin Hellerstein of United States
District Court in Manhattan .

Judge Hellerstein on Tuesday rejected Bell Atlantic's request to dismiss
the case, although he did dismiss claims by five of the eight employees
who received full benefits.

Eric Chaiken, a New York lawyer for the plaintiffs, said the ruling
would set a precedent for employees of the other regional Bell operating
companies. A Bell Atlantic spokesman said the company could not
immediately comment without reviewing the decision. (The New York Times

BHP: Can't Halt Aussi Case on Esso Negligence in Longford Gas Disaster
BHP failed in its bid made November 25 to halt the billion-dollar Esso
class action, which is seeking damages in the wake of last year's
Longford gas disaster. However, the Federal Court did struck out Trade
Practices claims made in the class action, brought against Esso, which
operates the Longford plant with BHP.

The case falls into two loose categories - allegations Esso was
negligent, and allegations it breached section 52 of the Trade Practices
Act, which relates to misleading or deceptive conduct.

BHP teamed up with fellow cross-claimants including state Government
entities Vencorp and the State Electricity Commission to have the class
action struck out altogether.

Justice Merkel rejected claims by BHP and the government entities that
the court did not have jurisdiction to hear the class action, but agreed
to strike out the Trade Practices claims. Justice Merkel said the
negligence action would proceed on November 26. He has also given the
four law firms seeking the damages 21 days to re-submit the Trade
Practices claims.

The class action is being run by the law firms Lander & Rogers, Maurice
Blackburn Cashman, Phillips Fox, and Slater & Gordon. Phillips Fox
spokesman Michael Proud said the decision had cleared the way for the
trial against Esso to proceed in the new year. Nick Styant-Browne, from
Slater & Gordon, said the judgement was a major setback for Esso and
other parties seeking to frustrate the class action. "This is a huge
step forward for those still seeking to recover losses from last year's
disaster," said Mr Styant-Browne. "The trial in negligence against Esso
will now go ahead despite whatever delaying tactics and tricks they may
try." (AAP Newsfeed Nov-25-1999)

CALIFORNIA AMPLIFIER: 9th Cir. Upholds Dismissal of Securities Suit
The Ninth Circuit U. S. Court of Appeals upheld a California federal
judge's decision to dismiss a securities class action brought against
the officers of California Amplifier Inc. (Cal Amp) over representations
made concerning various product lines and overseas sales. Yourish et al.
v. California Amplifier Inc. et al., No. 98-56932 (9th Cir., Oct. 8,

The panel concluded that that the plaintiffs had failed to allege fraud
with the requisite Federal Rule of Civil Procedure 9(b) particularity
established by its 1994 opinion in In re Glenfed Securities Litigation;
see Corporate Officers & Directors LR , Aug. 10, 1998. P. 3,

The suit had been brought in the Central District of California on
behalf of a class of investors that had purchased Cal Amp stock between
September 1995 and August 1996. Much of the Ninth Circuit's analysis on
appeal concerned the case's unusual procedural posture. Inclement
weather left the district judge unable to hold a scheduled February 1998
hearing on the defense's dismissal motion; her clerk informed the
parties that her tentative decision was to grant the motion with 10
days' leave to amend. The parties conferred, and the plaintiffs agreed
to submit to the tentative ruling if they were given 60 days to amend.

The judge agreed to the stipulation, and a minute order granting the 60
days' leave was entered into the record; no written order explaining the
reason for dismissal was ever entered. The plaintiffs never submitted an
amended complaint, and in May 1998, they filed a motion to have a
written order entered. In response, the defense sought an order of final
dismissal with prejudice based on the failure to submit an amended
complaint. The trial court denied the plaintiffs' motion, and granted
the defense's motion without oral argument.

In beginning its review, the Ninth Circuit concluded that the judge's
minute order granting leave to amend was an "order" for the purposes of
Fed.R.Civ.P. 41(b), and that the judge was within her discretion in
dismissing for noncompliance. "Just as an oral order is an 'order,' the
noncompliance with which justifies Rule 37(b)(2) sanctions, Judge
Marshall's minute order was an 'order,' the disobedience of which
justified dismissal under Rule 41(b)," the panel found.

In considering whether the judge's dismissal was proper in light of the
failure to inform the shareholders of her reasoning, the panel found no
abuse of discretion "because Plaintiffs had consented to the tentative
ruling, which they now attack.... W e do not believe that Judge Marshall
was required to provide an explanation of her reasons for dismissal in
this case because Plaintiffs consented to the dismissal without an
explanation of the tentative ruling."

Nor did the panel find the dismissal to be an excessive sanction for the
plaintiffs' failure to timely amend. While the plaintiffs asserted that
the resultant delay was not so great as to favor the public's interest
in expeditious resolution of litigation, the Ninth Circuit found the
district judge to have the "superior position" in evaluating such public
interest. The panel also found the judge to have the superior position
in determining the delay on her docket.

"Instead of complying with that sixty day deadline, or if they
determined that they needed a written order, filing their motion within
the sixty day deadline, Plaintiffs tardily filed their motion for a
written order, requiring the district court to devote further time and
resources to this matter rather than to the merits of an amended
complaint," the panel observed.

The court also found the risk of prejudice to the defendants to warrant
dismissal. "Plaintiffs have a very poor reason for their default," the
panel stated. "They claim that they expected a written order explaining
why their complaint was dismissed. But when a written order was not
forthcoming, they did nothing."

Noting that the plaintiffs' failure to comply with the minute order
would be deemed reasonable if the grounds for dismissal had been
erroneous, the Ninth Circuit then turned to the merits of the finding of
failure to comply with Rule 9(b). The plaintiffs contended that the
defendants knew the alleged misrepresentations were false when made
"solely because of the existence of 'true facts, which were known only
to defendants due to their access to confidential nonpublic information
about California Amplifier and which they concealed from the public.'"

The panel concluded that the shareholders failed to plead the existence
of the alleged "confidential non-public information" with the required
9(b) particularity. "They allege none of the particulars regarding the
non-public information, such as: what medium contained the information
(e.g., internal reports); when the information was made available to
people inside the company; which of the Defendants the information would
have been available to; or when they were aware of the information," the
court observed.

The Ninth Circuit found Glenfed to indicate that "general claims of
'confidential nonpublic information' that revealed 'true facts'
inconsistent with various statements are clearly insufficient." The
panel found the shareholders' complaint "merely pleads sufficient facts
to identify various transactions, a reading of Rule 9(b) that we
rejected in Glenfed."

The Ninth Circuit then addressed the plaintiffs' attempt to establish
the falsity of representations made by Cal Amp about the sales of its
MultiCipher product line in Asia with the use of a later statement by
Cal Amp CEO Ira Coron that "we ended last fiscal year and through the
first quarter with some very heavy shipments to Southeast Asia on new
systems that were being launched; and we knew that was not going to

The panel found this declaration by Coron to be "nothing like the
incriminating statement we envisioned in Glenfed. All that Coron's
statement reveals is that Defendants did not expect to repeat the $7
million order associated with the launch and could only expect a more
modest $1 to $2 million in follow-on sales per year. Therefore, the
complaint's allegations regarding Cal Amp's international business do
not satisfy Rule 9(b)'s particularity requirements."

The plaintiffs had lastly attempted to establish the falsity of Cal
Amp's optimistic statements about its MultiCipher Plus line over
June-July 1996 by showing the temporal proximity of those statements to
the company's August 1996 disclosure that shipments of MultiCipher Plus
would be delayed indefinitely. The Ninth Circuit declared that the
temporal proxi mity, without more, would not satisfy Rule 9(b)'s
requirements. " T here are no other adequately pleaded allegations for
the temporal proximity to bolster," the panel concluded.

Eric A. Isaacson of Milberg, Weiss, Bershad, Hynes & Lerach in San
Diego, CA, represents the appellants. Daniel S. Floyd of Gibson, Dunn &
Crutcher in Los Angeles represents the appellees. (Corporate Officers
and Directors Liability Litigation Reporter, Vol. 14; No. 24; Pg. 10,

CUSTOM SERVICE: O'hare Installs Scanner Hoping To Replace Body Searches
U.S. Customs Service officials have installed a scanner at O'Hare
International Airport that allows passengers to be electronically
searched without being frisked.

The BodySearch scanner uses a low beam X-ray to produce an image of
items that might be under a passenger's clothing, including narcotics,
currency, plastic explosives and plastic weapons, officials said.

Rep Danny Davis, D-Ill., applauded the Customs Service's decision to use
the scanner, which he called "less invasive." "People don't want to feel
violated, and yet we are very strong on law enforcement," Davis said.

The Custom Service has been hit with several lawsuits over body
searches, including an effort by almost 100 black women to file a
class-action lawsuit in Chicago alleging they were singled out because
of their race and gender.

"Sure, we were getting complaints, and we took those complaints very
seriously," Cherise Miles, a spokeswoman for the Customs Service, said
after a scanner demonstration Monday. But she said the decision to
install the BodySearch scanners was just one of many changes to improve
overall search procedures.

O'Hare is the fourth of 13 major U.S. airports that will all eventually
have the scanners. John F. Kennedy International Airport in New York was
the first to get the scanners in March. The international airports in
Los Angeles and Miami also have them, Miles said. (St. Louis
Post-Dispatch Nov-23-1999)

ECO SOIL: Wolf Haldenstein Announces Filing of Securities Suit in CA
On November 24, 1999, Wolf Haldenstein announced that it is filing a
class action lawsuit in the United States District Court for the
Southern District of California on behalf of investors who bought Eco
Soil Systems, Inc. (Nasdaq: ESSI) ("Eco Soil" or the "Company") stock
between April 13, 1999 and November 3, 1999 (the "Class Period").

The Complaint charges Eco Soil and several of its top officers with
violations of the securities laws and regulations of the United States.
The Complaint alleges that defendants issued a series of false and
misleading statements and omissions concerning the Company's revenue and
operations. Specifically, the Complaint alleges that the Company
presented itself as one whose business was primarily focused on the golf
course industry and completely failed to disclose its reliance on and
risks involved with its Mexican agricultural operations. Upon the
announcement that it anticipated a $3 million shortfall in revenue due
to problems in the Mexican tomato industry, the Company's stock price
dropped approximately 41% on extraordinarily heavy trading volume.

If you purchased Eco Soil stock during the Class Period, you have until
January 24, 2000 to participate in the case and ask the Court to appoint
you as one of the lead plaintiffs for the Class. In order to serve as
lead plaintiff, you must meet certain legal requirements. If you wish to
discuss this action or have any questions, please contact Wolf
Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York,
New York 10016, by telephone at 800-575-0735 ( Michael Miske, Gregory
Nespole, Esq., Fred Taylor Isquith, Esq. or Shane T. Rowley, Esq.), via
e-mail at classmember@whafh.com or whafh@aol.com or visit the firm's
website at http://www.whafh.comand all e-mail correspondence should
make reference to Eco Soil.

HIGHWAY IMPACT FEES: Il. Ap. Ct Declines Refunds; Sundance Will Appeal
DuPage County could gain millions of dollars in road-building funds as a
result of an Illinois Appellate Court decision that may block efforts by
home builders and developers to collect highway impact-fee refunds.

In a ruling this week, the Appellate Court sided with lawyers for DuPage
in a dispute over $6.2 million in impact fees paid by Schaumburg-based
Sundance Homes Inc. and others in 1989 and 1990. The court said that
Sundance Homes waited too long to file a lawsuit seeking the refunds.

Joseph Laraia, the lawyer for Sundance Homes, said he will seek to file
an appeal with the Illinois Supreme Court. "Are we going to stop?" he
said. "The answer is no."

County Administrator Donald Zeilenga said the ruling was good news for
DuPage because it could make available more than $7 million, with
interest, that has been held in escrow since March 1998. "This money
could be put to good use, which is the use it should have been put to,
in our highway department road program," Zeilenga said. Zeilenga said
that highway planners have identified more than $40 million in potential
road-construction projects for next year, though only $31 million is
available in the county's highway construction budget. "This would help
us bridge that gap," he said.

At issue before a three-judge appellate panel in Elgin were rulings by
DuPage County Circuit Judge Robert E. Byrne in an unusual class-action
lawsuit filed in 1996 on behalf of Sundance Homes and others. Byrne
ruled against the county in 1998 and in January ordered officials to
refund about $2.7 million to builders, developers, homeowners and others
whose impact-fee payments were documented.

DuPage imposes transportation impact fees on builders and developers to
help finance road improvements needed to accommodate additional traffic
generated by new homes and businesses. The impact fees paid on typical
homes in 1989 and 1990 were in the range of $480 to $510, according to
Anna B. Harkins, an assistant state's attorney who argued on behalf of
the county before the Appellate Court.

Ruling in 1995 in a separate lawsuit brought by the Northern Illinois
Home Builders Association and several developers, the state Supreme
Court upheld a 1989 Illinois law that allows DuPage and other large
counties to impose impact fees. But in the same decision, the high court
said an earlier version of the law was invalid and indicated the fees
collected under that law should be refunded. In keeping with the Supreme
Court's decision, the county made refunds amounting to less than
$100,000, according to lawyers.

Laraia had argued that the Supreme Court intended in its decision to
order the repayment of all impact fees collected in 1989 and 1990, not
just those paid by the parties to the lawsuit filed by the Northern
Illinois Home Builders Association.

Before Byrne and in written arguments filed with the Appellate Court,
Laraia contended that Sundance Homes and others could not have sought
refunds until after the Supreme Court ruled that the earlier version of
the impact-fee law was constitutionally flawed.

The Appellate Court disagreed, noting that Sundance Homes had filed but
withdrew an earlier lawsuit. "There was no legal impediment," the
Appellate Court said, "which prevented the plaintiff from seeking an
immediate refund of the road impact fees after they were paid."

The Appellate Court agreed with arguments made by lawyers for the county
who contended that the law required Sundance Homes to sue within five
years of paying the fees. "In essence, the plaintiff silently watched as
the county spent all of the contested impact fees," wrote Judge Fred A.
Geiger on behalf of the Appellate Court.

Byrne had ordered the County Board to give DuPage property owners a
one-time, partial real estate tax rebate with the estimated $2.25
million that would have been left over after claims and legal fees were
paid. That portion of the ruling also was overturned as a result of the
Appellate Court's decision. (Chicago Tribune Nov-25-1999)

HMO: Lawyers in Big Tobacco Have Teamed up in Case v. 5 Giant Operators
The legal team that challenged Big Tobacco in successful state cases has
reunited in new lawsuits accusing five of the nation's largest HMOs of
unscrupulous business practices.

The lawsuits, filed in Mississippi where the first state tobacco case
originated, seek class-action status on behalf of the 32 million people
who are members of Pacificare Health Systems Inc., Foundation Health
Systems Inc., Cigna Healthcare, Prudential Health Care and Humana Inc.

Spokesmen for several of the companies said the suits are similar to
others filed over the past two months and would be vigorously fought.

Lead attorney Richard Scruggs said that nearly half of the lawyers
involved in cigarette cases teamed up again because "we learned lessons
together in tobacco in how to resolve these big national issues when the
political process gets stalemated." "We believe we can be a big catalyst
to force action to break up a logjam," he said Wednesday. Scruggs led
lawsuits filed by states against the tobacco industry that resulted in $
246 billion in settlements.

Legislation to make HMOs more accountable to patients is pending in
Congress, but Scruggs said more sweeping changes are needed. The five
lawsuits he filed Monday in federal court in Hattiesburg, Miss., claim
the companies are violating anti-racketeering laws and have offered
bonuses to physicians who restrict patients' access to expensive
procedures, treatments and tests.

There are now at least nine recent class-action suits alleging
violations of federal law by managed health plans.

"Certainly it has investors concerned because of the notoriety of the
attorneys involved. On the other hand, the case to be made with the HMOs
is tougher than it was with tobacco," said Robert Mains, a health care
analyst for Advest Inc.

The only major HMO not sued was United Health Care, which Scruggs said
has agreed to meetings next week with the lawyers. Scruggs filed a
separate suit in October against Aetna, which has about 18.3 million
customers. That same week suits were also filed against HMOs in
Philadelphia and Miami.

Mains said the multiple suits could be part of a legal strategy to shake
the confidence of investors who will then pressure the industry to
settle. "That strategy speeds up the process of getting a one-third
contingency payment in the lawyers' pockets," Mains said. "The lesson
learned from the tobacco litigation is if you settle up with one group
of attorneys, there's another group in line behind them. I don't think
the HMOs are eager to appease these attorneys then face the same thing
with 50 attorneys general."

Alan Hoops, head of Pacificare, said the lawsuits would result in higher
costs for patients. "This again appears to be one of many lawsuits that
will ultimately drive up health care costs for consumers by forcing HMOs
through unwarranted, costly and protracted litigation," Hoops said. (St.
Louis Post-Dispatch Nov-25-1999)

HMO: President of Association of Health Plans Issues Statement on Suits
The following statement was issued by Karen Ignani, President and CEO of
the American Association of Health Plans.

"Wealthy personal injury lawyers have a new procedure of first vilifying
an industry in the media and then filing lawsuits. They hope that courts
will ignore basic principles of law and act as regulators. Class actions
are their weapon. The net result is often to enrich these lawyers at the
expense of the American people.

The health care industry is now the target of these wealthy personal
injury lawyers. If these lawyers are successful in their litigation
game, they may turn back the clock on the health care system, forcing
patients to pay more for services and get less results. It is surprising
that these lawsuits are being filed when the health care marketplace is
evolving in aggressively addressing concerns that face today's health
care consumers.

We believe that the American people will reject lawsuits that place
profits for lawyers above quality patient care. Health care dollars
should be invested in improving the system, not further enriching
wealthy personal injury lawyers."
Source: American Association of Health Plans

HOLOCAUST VICTIMS: German Negotiator Says Talks At 'Decisive Moment'
The negotiations to resolve Nazi-era slave labor claims have reached the
"decisive moment," the chief German negotiator warned, saying that
failure to reach an agreement on a DM 8 billion German offer could
provoke a backlash in Germany. "We have reached a very decisive moment,"
Count Otto Lambsdorff said in an interview with The Jerusalem Post on
Tuesday night in New York. "At the end of these three weeks, we have to
make a decision. We either come to a positive agreement or the whole
initiative breaks down."

Last week in Bonn, the German government and industry offered DM 8b. to
resolve all claims for war-era slave and forced labor. The government
share is DM 3b. The total had been raised from the DM 6b. offered in
October at a meeting in Washington with the Claims Conference, lawyers
representing Nazi victims, and delegations from Israel and Central and
Eastern European governments.

"The money from industry is given on a voluntary basis. Everybody
accepts that there is a moral and historic responsibility; that is
undisputed and that was the starting point," Lambsdorff said. "On a
voluntary basis to collect DM 5 billion from industry is not an easy

Lambsdorff also warned that the German government, which is in the midst
of cutting social programs and pensions, is trying to retain support for
the plan, which was first announced last February. "I don't want
something that would destroy the backing we now have from the German
media and public opinion...," he said. "If that should break down one
day, and if we overdo it on the financial side, we will have a reaction
from the German public and the German press which I would not like to
see, having in mind the last election in Switzerland and Austria."

He was referring to the recent advances of nationalist politicians
Christoph Blocher in Switzerland and Joerg Haider in Austria.

In Germany, which has paid more than DM 100b. in reparations, the slave
labor initiative is seen as a Jewish issue. That is "unjustified and
wrong," Lambsdorff said. "It is more an Eastern European forced labor
issue, but the general impression in Germany, unfortunately, is that
these are payments for Jews," he said. "We have to inform people better
- there is no doubt about it - because we don't want to have a reaction
against the Jews or the Jewish state. That should not happen."

The Bonn offer was final, and came with a deadline. Lambsdorff said that
if after three weeks there is no agreement, the enterprises will leave
the initiative and settle on an individual, company-by-company basis the
claims of former forced laborers who worked for their companies during
the Nazi regime. For industry, that would be the cheaper solution.

"That is an approach that cannot be criticized fundamentally, but it
does not cover the whole necessary spectrum," he said. "We want with the
initiative to give payment for people who have worked for German
companies that do not exist anymore and, on an individual basis, these
people would get nothing."

If the companies adopt a separate approach, theoretically the government
could step in and offer compensation, but it would focus on former
laborers in Central and Eastern Europe, where Nazi victims have received
insignificant or no compensation.

However, he said: "It is not the duty of the government to pay people
who worked for the companies in Central and Eastern Europe. "Dividing
the initiative into different groups or different parts leads nowhere.
We need an approach that covers all possible cases and goes from slave
labor to forced labor to hardship cases. Any other result would not
serve its purpose."

Lambsdorff said he is seeking a compromise "that makes everyone equally
dissatisfied." Survivors are seeking between DM 10b. and DM 15b.,
according to Noah Flug, an executive of the Israeli survivors
organization. He said the amount Germany has paid previously in
reparations does not cover all the claims. He likened the German
reparations programs to building a house. "You built a beautiful house,"
Flug told the Germans, "but you left the roof open. Now you have to
finish the roof."

Lambsdorff was in New York for a round of meetings with Jewish groups,
and is scheduled to meet with Deputy Treasury Secretary Stuart Eizenstat
on November 26. German industry is seeking a US commitment for "legal
peace" from all class-action lawsuits in the US. "Without legal closure,
the government and industry cannot and will not pay," he said.

Former forced laborers who worked during the Nazi era for Siemens and
Volkswagen have gotten DM 10,000 in the last year from company-financed
funds. (The Jerusalem Post Nov-25-1999)

HORIZON PHARMACIES: Vigorously Defending Securities Suit in Texas
The Company and certain present and former officers or directors are
named as defendants in an action styled FRANK GABLE, ET AL. V. HORIZON
PHARMACIES, INC., ET AL., No 3-99CV-1244-L, United States District Court
for the Northern District of Texas, Dallas Division that was filed on
May 28, 1999. Plaintiffs seek to certify a class of persons who
purchased shares of the Company's common stock during the period between
August 14, 1998 and March 3, 1999, inclusive, alleging that defendants
failed to timely disclose complications with the Company's prescription
pricing communications technology. Plaintiffs seek unspecified
compensatory and/or rescissionary damages. Defendants are vigorously
defending against the action. Defendants' motion to dismiss the
complaint is pending and no determination has been made whether the
matter may proceed as a class action.

I.C. ISAACS: Wolf Haldenstein Files Securities Suit in Maryland
Wolf Haldenstein announces filing of a class action complaint against
I.C. Isaacs & Company, Inc. (Nasdaq:ISAC):

Notice is hereby given that a class action lawsuit was filed on November
24, 1999, in the United States District Court for the District of
Maryland, on behalf of all persons who purchased the common stock of
I.C. Isaacs & Company, Inc. ("Isaacs" or the "Company") [Nasdaq: ISAC ]
between December 17, 1997, and November 11, 1998, inclusive (the "Class
Period"), including all persons who purchased the common stock of Isaacs
pursuant or traceable to the Company's initial public offering ("IPO")
on December 17, 1997.

The complaint charges Isaacs and certain of its officers and directors
with violations of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder, and Sections 11,
12(a)(2) and 15 of the Securities Act of 1933.

The complaint alleges that defendants issued a series of materially
false and misleading statements concerning the Company's operations
which artificially inflated the price of Isaacs common stock during the
Class period. In addition, the complaint alleges that the Registration
Statement and Prospectus issued in connection with the Company's IPO
contained false and misleading statements concerning the Company's
business, operations and future prospects.

If you purchased Isaacs stock during the Class Period, you have until,
January 10, 1999, to participate in the case and ask the Court to
appoint you as one of the lead plaintiffs for the Class. In order to
serve as lead plaintiff, you must meet certain legal requirements.
Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York (800) 575-
0735 Michael Miske, Gregory Nespole, Esq., Fred Taylor Isquith, Esq. or
Shane T. Rowley, Esq. e-mail: classmember@whafh.com, whafh@aol.com,
nespole@whafh.com, Gnespole@aol.com pivenlaw@erols.com website:

IKON OFFICE: Announces Settlement of Shareholder Litigation
IKON Office Solutions (NYSE: IKN) announced on November 24 that it has
reached an agreement to settle, subject to court approval, the
securities class-action and derivative lawsuits brought by its
shareholders. The litigation had contended that the Company had failed
to make appropriate financial disclosures. The settlement does not
reflect any admission of liability by the Company, and there has been no
finding of any violation of federal securities laws.

In the settlement, IKON agreed to pay $111 million (which will result in
a net amount of approximately $45 to $60 million, after tax). In
addition to available insurance coverage, the Company will take a
special one-time charge to reflect this payment and anticipates that the
charge will be treated as a subsequent event for its fiscal year 1999.
The Company has adequate sources of financing to fund the settlement and
to continue to invest in its fiscal 2000 business plan.

In announcing the settlement, Richard Jalkut, non-executive Chairman of
IKON's Board of Directors, said, "This settlement is in the best
interests of the Company and all our shareholders. The Board reached
that decision after weighing several factors, including the uncertainty
and inherent risks of a jury trial, increasing litigation expenses, and
the constant and significant diversion of the management team from its
focus on sustaining progress and continuing to move this company ahead.

INMATES LITIGATION: What Happened in Dekalb and in Case v. Dorsey?
In one wild case in DeKalb Superior Court, the judge has felt so under
attack that he keeps filing "statements" in the record to explain

Judge Hilton M. Fuller Jr.'s statements answer such questions as whether
his conduct in the case is politically motivated (it isn't) and why he
appointed counsel at county expense to represent the inmate-plaintiff
(the allegations were serious and needed investigation).

Another statement admonished lawyers not to "misrepresent court action,
to clients or to the public" and noted that "skilled lawyers can
effectively 'spin' certain events in ways which result in
misunderstanding, misrepresentation, or worse."

If written statements seem a peculiar way for a judge to express
himself, that's not the only thing odd about Adams v. Dorsey, in which
first one and now 14 inmates are suing the sheriff claiming rampant
brutality and dangerously inadequate medical care at the DeKalb County
Jail. This summer, acting ex parte and with no clear precedent, Fuller
appointed and set fees for a lawyer, a paralegal and an investigator for
the original, pro se plaintiff-and then sealed the orders. And if that
seems an unusual tack for a state judge to take, consider what happened

The chief judge of the Stone Mountain Circuit, Robert P. Mallis, kicked
Fuller off the job of ruling on plaintiffs counsel's pay and brought in
a Rockdale County judge to take over that aspect of the case. Fuller
responded by vacating Mallis' order and ignoring it, while the new judge
acted to reverse Fuller.

With so many judges stirring the case, the situation might be
entertaining if it weren't for the seriousness of the allegations the
suit raises.

It is alleged, for example, that to humiliate a mentally ill inmate,
guards stripped him naked, cuffed his hands behind him, placed a
motorcycle helmet on his head and left him for hours in a "multipurpose
room" with no bathroom access, bringing predictable results. This was
done in full view of other inmates. This same inmate, who suffers from
schizophrenia, had entered the jail bleeding from his anus and his
stomach, the latter being the spot where he'd been shot by a cop and had
undergone surgery. Despite the bleeding, no medical personnel saw him
for his first month in jail, the amended complaint says-but jail
officers did. One threw him on the floor and kicked him in his
already-wounded stomach, it is alleged.

The amended complaint goes on like this for pages, describing individual
and group acts of brutality, cruelty and neglect. It focuses on
seemingly systemic problems with basic medical treatment for ailing

Diabetic inmates, for example, are said to routinely receive the wrong
medication, the wrong amount of insulin and the wrong food. Adams v.
Dorsey, No. 98-cv-11747-5 (DeKalb Super. Ct., Sept. 7, 1999).

Sheriff Sidney Dorsey denies all allegations and insists the jail meets
or exceeds state standards. County Attorney Jonathan A. Weintraub says
some of the allegations are just plain wrong, that in many cases inmates
received medical treatment they claim they didn't. As for guards kicking
and humiliating the injured, schizophrenic inmate, "We have no proof
that ever happened," says Weintraub. He says he wants discovery to
proceed so the truth can come out but he wants an impartial judge, not
Fuller, whom he calls a "rogue judge."

But while Weintraub calls Fuller's actions outrageous, the lawyer for
the other side insists that Weintraub and the multiple lawyers working
with him are kicking up dust only to hide the truth. "They've got some
very serious problems at the jail, and I think they're well aware of
it," says Robert L. McGlasson III, the Decatur sole practitioner Fuller
appointed as plaintiffs' counsel. He says they're tossing in procedural
monkey wrenches "to avoid dealing either in court or in public with what
this case is really about."

And while McGlasson is now working without payment and without anyone
else paid to help him, the other side is crawling with lawyers. At any
given hearing, four to 10 attorneys show up for the county, the sheriff
and defendant Wexford Health Sources Inc., the private company that
provides medical services to the jail. It's ironic at best that the
county is paying so much money in legal fees while fighting an order to
pay McGlasson's, which came to $16,800 as of Sept. 10.

Weintraub hired David F. Walbert and his firm, Middleton, Mathis, Adams
& Tate, to represent the sheriff. "I could see Judge Fuller was
prejudiced against me," Weintraub says, so "I hired Dave Walbert, who's
a friend of his." At a rate of $165 an hour, that tab had run to $46,000
as of Oct. 11, with another $2,000 for paralegal work, according to a
statement Walbert submitted to the county. And to avoid possible
conflicts between representing the county commission and the sheriff,
Weintraub says, he brought in more outside counsel to fight Fuller's
order that the county pay McGlasson. For $140 an hour, Harvey S. Gray of
Gray, Rust, St. Amand, Moffett & Brieske has been handling that part of
the case.

Wexford is represented by William T. Mitchell of Drew, Eckl & Farnham.
And even though the county is not a named defendant, the county
attorney's office is deeply involved, too. At a recent status
conference, for example, Weintraub sat in the lead spot at the defense

Given the imbalance, one might think the defense would not need to take
unfair advantage. But just before the hearing in Rockdale County, Gray's
office faxed a brief and couriered documents to the judge while relying
on the U.S. Postal Service to deliver a copy of the brief to McGlasson,
according to documentation that Weintraub does not dispute. McGlasson,
who had not filed a brief, went to the hearing not realizing the other
side had. His copy arrived after the hearing was over. There is nothing
pretty about this litigation, not the allegations it raises or the way
the law so far has been applied to resolve them. Is this any way to
ensure careful consideration of important matters?

How Did Case Get So Messed Up? It started simply enough last year with a
pro se complaint from a diabetic inmate, Ernest Adams, whose allegations
Weintraub ridicules. But Fuller took them seriously, in large part
because he'd heard similar complaints about negligent medical attention
at the jail. He had seen defendants come before him in dire need of care
they obviously were not getting, he says in statements and orders. So
after what Fuller describes as "an initial review" of Adams' complaint,
he asked Atlanta lawyer Robert W. Cullen, an expert in jail and prison
cases, to represent the inmate.

Cullen looked into the matter and then declined the appointment but told
the judge his brief investigation had turned up possible problems,
according to a Fuller order. So the judge brought in McGlasson this
June, set his fee at $135 an hour, authorized him to retain
investigative and paralegal assistance, and put those orders under seal.
The team went about interviewing more inmates. On Sept. 7 McGlasson
filed a much-expanded amended complaint, asked to add 13 inmates as
plaintiffs and filed a motion for class certification for all DeKalb
jail inmates. Only then, with his earlier ex parte orders under seal,
did Fuller schedule a hearing. But even then, "never did he tell me he
had already issued an order under seal to pay these attorneys," says

Fuller unsealed his orders on Sept. 27 after three days of testimony
from inmates and medical experts at a hearing to determine whether the
allegations were substantial enough to warrant publicly-paid plaintiffs'
counsel. Fuller concluded they were. In a Sept. 29 order, he said Adams'
complaint is "not frivolous" and that it "contains serious allegations
of significant public importance." He wrote, "It is unreasonable to
suggest that the truth seeking process in this case would be best served
by pitting chronically ill and physically and mentally challenged
inmates, pro se, against well-financed teams of lawyers."

Fuller ordered the county to pay McGlasson, the paralegal and the
investigator a total of $23,400 within 10 days, citing a judge's
inherent powers as granted by statute and by the Georgia Constitution.
He also ordered the appointment of two auditors to investigate and
monitor the jail, at county expense. Fuller picked the auditors from
lists submitted by lawyers on each side: Jonathan C. Peters of Love &
Willingham came from the defense list; Robert W. Cullen, who had briefly
been Adams' lawyer, from the plaintiffs' list.

By now the defense believed it clear that Fuller was acting out of his
own beliefs rather than the law, and that he had taken extraordinary
measures to see that the inmates' complaints were prosecuted.

The next day, Walbert filed a 15-page motion - complete with affidavits
from Walbert, Weintraub and Dorsey - seeking Fuller's recusal and that
of the entire DeKalb's Superior Court bench. The motion says the judge
had become the "plaintiff's prosecutor" and had "breathed life into
plaintiff's complaint" by secretly providing Adams with legal help at
county expense to dramatically expand the scope of the case, and by
appointing auditors and giving them authority far beyond the scope of
the law.

Fuller denied the recusal motion, calling the affidavits "legally
insufficient," and noting that the law prevented him from explaining his
decision. So, while appealing Fuller's Sept. 29 order requiring payment
and appointing auditors, the county also filed a "protest" of Fuller's
orders, saying he had grossly exceeded his authority. DeKalb, which is
not a defendant in the suit, invoked a 1990 Savannah case to get around
Fuller's order.

The 1990 case set up a procedure for settling clashes between a county
government and the judiciary over funding for court functions. It relies
on a statute governing county expenditures for such court needs as
"lights, fuel, stationery, rent, publication of grand jury presentments
and similar items."

The Chatham County Commission had cut two court clerks' positions from
the budget, only to be ordered by the en banc bench in Savannah to fund
them. The Georgia Supreme Court said the judges should have mandated the
funding administratively by issuing a certificate of need, not through
court order.

The court also said that while a certificate of need is not appealable,
it is reviewable. To seek review, the county could file a "protest" and
win recusal of all local judges, since they all have an interest in
funding a court-related function. Under those circumstances, an outside
judge would be brought in to hear the appeal. McCorkle v. Judges of
Superior Court, 260 Ga. 315 (1990).

That same procedure was used when DeKalb Superior Court Judge Clarence
Seeliger tried to force the county to install a sprinkler system in the
courthouse. In Re: DeKalb County Fire Sprinkler System, 265 Ga. 96,

There are significant differences, however, between those cases and
Adams. For one thing, the limited issue of paying counsel in the jail
case grows from a pre-existing suit in which the county has a direct
interest. DeKalb seems to be invoking McCorkle to win a suit, not to
settle a dispute over general court operating funds.

To some degree, Fuller invited this blurring of distinctions by writing
that appointment of counsel and investigation of the inmates'
allegations were crucial to the proper functioning of DeKalb's criminal
justice system. He also cited matters beyond the Adams record, such as
those times when he'd seen jailed, criminal defendants in dire need of
medical attention.

But Mallis heard no argument either way before agreeing to put McCorkle
to work. Acting only on the county's brief and motion, he recused the
whole DeKalb bench and assigned to Rockdale County Chief Judge Sidney L.
Nation the job of reviewing Fuller's decision ordering the county to pay
plaintiff's counsel, paralegal and investigator. "I am not aware of why
Judge Mallis even acted," McGlasson said in a letter written the same
day as Mallis' order, clearly surprised by it. Fuller, too, was
obviously shocked. He issued an order calling it "factually, legally,
procedurally and administratively erroneous" and vacating it. Then,
after a hearing, he found the county in contempt of court for refusing
to obey his previous order mandating payment of the fees. And he issued
several statements, too.

But 12 days after Mallis' order, Nation held a hearing where the
county's outside counsel, Gray, argued that case law was clear in saying
state judges had no authority to appoint plaintiff's counsel in civil

Nation helped him along by describing a recent Georgia Supreme Court
decision on a habeas petition from a death row inmate who had no lawyer.
"Now, if a fellow who is sitting there facing the electric chair is not
entitled to a taxpayer-paid lawyer," Nation said to Gray, "why is this
plaintiff entitled to one?" "I couldn't have said it better myself,"
Gray responded.

When it came his turn, McGlasson first objected to the hearing taking
place, arguing that Nation did not have jurisdiction and that Fuller was
correct in ignoring the venue shift. "Judge Fuller is dead wrong,"
Nation declared. He did so without benefit of briefing or argument from
McGlasson, who'd barely begun speaking.

And yet Nation apparently found it not ironic when he told McGlasson,
"You're down here in Rockdale County today so that these proceedings
will have an air of not being biased, so they'll have an air of being

                            Adams Case a Mess

As it stands, Adams v. Dorsey is a mess. Lawyers for the county have
filed a notice of appeal on Fuller's contempt of court order. Nation
ruled that the county does not have to pay the legal fees, but McGlasson
is not sure he can afford to appeal. He's hoping the state Supreme Court
will uphold Fuller's contempt order and resolve the matter that way.

Walbert argued at a recent status conference that Fuller should do
nothing further in the litigation while the question of plaintiffs'
legal fees is on appeal. McGlasson countered, "I think it's outrageous
to suggest a lawyer can control what a court can do by filing a
frivolous notice of appeal."

But when Fuller asked for both sides' advice on how to proceed with
McGlasson's class certification motion, McGlasson complained that he
could not handle the 60-day discovery process the defense described, as
he was working by himself for no pay against a stable of well-paid
defense lawyers and firms. "The court can't be blind to the procedural
situation they put me in." He said, "I'm not getting paid. I don't have
anybody helping me who's getting paid ... ." Nodding to the four lawyers
at the defense table, McGlasson said, "They're all being well paid over
here, arguing that I don't have a right to be paid at all." He
continued, "I cannot come to 15 depositions over the next two months
while they overpower me with documents." He said the law doesn't require
the sort of discovery Walbert described and suggested Fuller simply hold
a hearing and listen to live testimony to determine whether to certify a

Walbert took McGlasson's statement as evidence that he was not capable
of representing the class and told the judge so. At press time, Fuller
was still contemplating his options. If the Adams case was in federal
court where judges have clear authority to appoint lawyers in such
cases, McGlasson would have had an easier time getting paid. But
Congress in recent years has made prison cases harder to bring and
harder to sustain in federal court, so more of these actions are being
brought in state courts.

McGlasson says he believes he should stay in the court where the judge
appointed him, even though the question of attorneys' fees is a new one
here. McGlasson acknowledges there's "not a plethora of authority"
saying the county must pay his fees, and he's hoping Adams will create
it. "It's time the Georgia courts acknowledge the idea that they, too,
can enforce both the state constitution and the state laws" on humane
inmate treatment, says McGlasson.

He points out that the state constitution is more specific than the U.S.
Constitution on that. While both outlaw cruel and unusual punishment,
only the state constitution adds, "nor should any person be abused in
being arrested, while under arrest or in prison."

                  Has that happened in DeKalb County?

After all this litigation, we still do not know, nor do we seem close to
finding out. (Fulton County Daily Report Nov-25-1999)

LADY LUCK: Securities Suit over IPO Partly Dismissed & Partly Amended
Lady Luck Gaming Corp. has been named as a defendant in a purported
stockholder class action lawsuit alleging violations by the Company of
the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for
alleged material misrepresentations and omissions in connection with the
Company's 1993 prospectus and initial public offering of Common Stock.
The complaint seeks, among other things, injunctive relief, rescission
and unspecified compensatory damages. In addition to the Company, the
complaint also names as defendants Tompkins, Alain Uboldi and Michael
Hlavsa, the former Chief Financial Officer of LLGC, Bear, Stearns & Co.,
Inc. and Oppenheimer & Co., Inc., who acted as lead underwriters for the
initial public offering. The Company has retained outside counsel to
respond to the complaint.

On October 8, 1997, the Company was served with an order of the court
dismissing all of the Plaintiffs' claims under Section 10(b) of the
Exchange Act and 11 of the Plaintiffs' 16 claims under Sections 11, 12
and 15 of the Securities Act with prejudice for failing to adequately
state a claim. The court also ordered the Plaintiffs to file, and the
Plaintiffs have filed, an amended complaint regarding the five claims
under Sections 11, 12 and 15 of the Securities Act which were not
dismissed with prejudice. While the outcome of this matter cannot
presently be determined, the Company believes, based in part on advice
of counsel, that it has meritorious defenses.

LIFETEK CORP: Consumers Sue over LifeTek GO, Krause & Kalfayan Announce
A San Diego resident has filed a Lawsuit against LifeTek Corporation who
markets the herbal supplement LifeTek GO, which contains the Chinese
herb Ma huang (a botanical, or so-called "natural", source of
ephedrine), as a safe, fast, and effective appetite suppressant.

The Complaint alleges that defendant LifeTek Corporation has not
adequately tested the diet drug products for safety and has failed to
warn users that ephedrine is a potent central nervous system stimulant
and is capable of producing the following adverse effects from taking
LifeTek GO: nervousness, dizziness, tremors, alternations in blood
pressure or heart rate, headache, gastrointestinal distress, chest pain,
myocardial infarctions, stroke, seizures, psychosis, brain damage, and

Plaintiff is represented by the law firms of KRAUSE & KALFAYAN and
FRANTZ & GERACI, LLP. If you wish to discuss this action or have any
questions concerning the lawsuit or rights or interests with respect to
these matters, please contact attorneys for plaintiff, Patrick N. Keegan
at Krause & Kalfayan, 1010 Second Avenue, Suite 1750, San Diego, CA
92101, Tel: (619) 232-0331, or visit www.lawyers.com/krausekalfayan or
e-mail Patrick N. Keegan at: pkeegan@krausekalfayan.com

MICROSOFT CORP: First Talks on Antitrust to Take Place in Chicago
The government and Microsoft have been summoned to Chicago on Tuesday
for their first round of settlement talks under Richard A. Posner, the
federal appeals court judge who has been selected as a mediator,
according to a person close to the antitrust case.

The mediation talks themselves, under court rules, are secret
deliberations. Besides Judge Posner, chief of the United States Court of
Appeals for the Seventh Circuit in Chicago, the meeting will include
lawyers representing Microsoft and the Justice Department and 19 states
suing the company.

Judge Posner, regarded as both an antitrust expert and a brilliant
jurist, is expected to quickly assess the chances of any settlement
between the two sharply divided sides.

In a meeting last Thursday, Thomas Penfield Jackson, the trial judge for
the Microsoft case, told lawyers for the two sides that he had asked
Judge Posner to mediate. At the time, Judge Jackson noted, "I don't
think he is going to be prepared to waste a whole lot of time if it
looks from the outset that it's not promising."

If a settlement is reached, it will most likely happen in the next two
months or not at all, according to another person close to the case. "By
the end of January, or it won't happen," he said.

Judge Posner is serving as a mediator, not an arbiter, for the
settlement talks. There have been sporadic settlement talks between
Microsoft and the government stretching back to before the suit was
filed in May 1998. Yet the previous efforts stalled.

Antitrust experts expect that Judge Posner will try to deliver a
sobering helping of reality to both sides. The judge, they predict, will
tell the government and states that their hand is as strong as it will
ever be, while telling Microsoft to settle before it is hit with a final
ruling that it violated the law, which could sharply increase its
vulnerability to class-action lawsuits.

Final oral arguments in the case are scheduled for Feb. 22 before Judge
Jackson at Federal District Court in Washington. (The New York Times

MICROSOFT CORP: Law Firms Announce Antitrust Suits in CA and Florida
Lieff, Cabraser announces filing of lawsuit in San Francisco:

Joseph R. Saveri of the law firm of Lieff, Cabraser, Heimann &
Bernstein, LLP, announced on Nov. 24 the filing of a class action
lawsuit in San Francisco Superior Court against Microsoft Corporation
(Nasdaq:MSFT) on behalf of all persons and businesses in California who
indirectly purchased Window 95 or Windows 98 from August 1, 1995 to the

The main allegation in the complaint is that Microsoft intentionally
engaged in predatory and anti-competitive conduct to obtain monopoly
power over the licensing of all Intel-compatible (Nasdaq:INTC) personal
computer operating systems. The complaint seeks threefold, compensatory
and punitive damages for plaintiff and class.

"As alleged in the complaint, Microsoft's suppression of competition and
other misconduct forced consumers in California to pay substantially
more for the Windows 95 and 98 operating systems than they would have
had to pay in a competitive marketplace," stated Lieff, Cabraser partner
Joseph R. Saveri. The suit alleges Microsoft violated the common law
prohibition on monopolization, the Cartwright Act, which serves as
California's antitrust statute, and California's Unfair Competition Law.

"We recognize that other suits in federal and state have recently been
filed against Microsoft raising similar issues," observed Saveri.
"However, Lieff, Cabraser is a nationally recognized leader in the field
of antitrust and other complex litigation. We bring to forefront of the
suits against Microsoft sophisticated legal skills, the necessary
financial resources for handling complex cases, and a track record of
leadership in cases resulting in landmark decisions and
precedent-setting rulings."

                            Fact Sheet

Plaintiff: Nanette Fisher, a resident of California who purchased
Windows 98.
Defendant: Microsoft Corporation and numerous unnamed Does.
Court: The lawsuit was filed November 24, 1999 in the Superior Court for
the State of California, City and County of San Francisco
Claims alleged: Microsoft Corporation violated common law prohibition
against monopolization, the Cartwright Act (California Business and
Professions Code Section 16720) and the Unfair Competition Act
(California Business and Professions Code Section 17200).
Proposed class: All sole proprietorships, partnerships, corporations,
other entities, and natural persons in the State of California who
indirectly purchased Windows 95, or Windows 98 from Microsoft
Corporation during the period August 1, 1995 to and including November
24, 1999.
Relief sought: An injunction against continuing alleged misconduct by
Microsoft, treble damages for violations of the Cartwright Act,
compensatory and punitive damages and disgorgement of all ill-gotten
Media contact: Lieff, Cabraser, Heimann & Bernstein, LLP Joseph R.
Saveri, 415/956-1000 (for Press only) Please visit LCHB on the Internet
at www.lchb.com

Haggard & Parks, P.A., announces filing of lawsuit in Florida:

The Coral Gables law firm Haggard & Parks, P.A., was selected as
exclusive Florida counsel in the national class action with the law
firms Hare, Wynn, Newell & Newton of Birmingham, Ala., and Baldwin &
Baldwin, L.L.P. of Marshall, Texas.

Wednesday's suit charges Microsoft with one count of violating the
Florida Deceptive and Unfair Trade Practices Act (Florida Statutes, No.
501.201 et. seq.) as well as federal antitrust laws. It seeks
certification of class status and an award to members of the class.
(Shelby Hartman et al. versus Microsoft Corporation, 11th Judicial
Circuit, Miami-Dade County, Case No. 99-27340)

"Microsoft has used its monopoly power to charge illegal monopoly
prices," the suit says. "For example, Microsoft exercised its monopoly
power to artificially maintain the price of Windows 95 after Microsoft
released the newer Windows 98 operating system. Additionally, a November
1997 Microsoft study determined that Microsoft could charge$49 for an
upgrade from Windows 95 to Windows 98. The study further determined that
the profit-maximizing price that Microsoft could charge was $89.
Microsoft elected to charge consumers the higher, profit-maximizing

The new wave of actions against Microsoft stems from the Nov. 5 federal
court decision by U.S. District Judge Thomas Penfield Jackson, who
determined that Microsoft stifled competition and innovation in the
computer industry and harmed consumers.

National counsel in the case include James J. Thompson, Jr., James B.
Gunther, Jr., and Bruce J. McKee of Birmingham's Hare, Wynn, Newell &
Newton (205/328-5330), and Jack B. Baldwin of the Marshall, Texas firm
of Baldwin & Baldwin, L.L.P. (903/935-4131). Contact: Haggard & Parks,
P.A., Coral Gables Robert L. Parks or William Andrew Haggard
305/446-5700 (office) Bob Parks (home): 305/442-1142 Andy Haggard
(home): 305/661-3702 or Mark Sell Communications Mark Sell, 305/374-8874

According to Extel Examiner, Milberg Weiss Bershad Hynes & Lerach filed
a consumer class action in the U.S. district court in West Palm Beach,
Florida against Microsoft on behalf of consumers who purchased personal
computers loaded with Microsoft's Windows '95 and Windows '98 software.

The suit alleges Microsoft's anticompetitive conduct drove up the price
of personal computers that were loaded with Microsoft's operating
software. No damages are specified, as more plaintiffs could still be
added to the lawsuit. (Extel Examiner Nov-25-1999)

MILBANK, TWEED: Not Liable for Punitive Damages in NY Fraud Claim
Milbank, Tweed, Hadley & McCloy has conceded its liability for the
dismissal of a client's claim in Bankruptcy Court because of the actions
of its former partner, but it will not be held liable for punitive or
treble damages, a state judge has ruled.

Justice Herman Cahn in South Street Corporate Recovery Fund L.P. v.
Milbank, Tweed, Hadley & McCloy, filed in Supreme Court, New York
County, IA Part 49, granted Milbank's motion to dismiss its former
client's actions for fraud and treble damages under Judiciary Law @ 487,
which punishes an attorney who is guilty of deceiving the court or any

John G. Gellene, who was disbarred in August 1998 after his conviction
in Wisconsin of bankruptcy fraud, was the Milbank partner representing
the South Street Funds on a claim it had asserted in a bankruptcy in
Colorado in 1993. The South Street Funds held a promissory note,
originally issued at $ 15 million and claimed to be potentially worth as
much as $ 2 million in the bankruptcy. The note had been guaranteed by
George N. Gillett Jr., who filed the bankruptcy.

Mr. Gellene had received documents sought in discovery from an agent of
South Street Funds, but never provided them to the bankruptcy trustee.
Milbank did not respond to two motions to compel discovery, and the
South Street claim was dismissed. Mr. Gellene moved for reconsideration
of the dismissal, but the motion was denied, and no appeal was ever
taken of the order. Thus South Street lost the full value of its claim.

Milbank conceded that Mr. Gellene's actions constituted legal
malpractice and that it was liable for compensatory damages. However,
the firm argued that it was not liable for punitive or treble damages.

Justice Cahn agreed that a fraud claim against the firm should not
stand. He noted that New York rulings have determined that a fraud cause
of action is viable only when there are damages beyond the malpractice

"Assuming that plaintiffs detrimentally relied on Gellene's
representations, their damages are, at best, the loss of the entire
value of [ their] claim (potentially as much as $ 2 million, according
to plaintiffs), or perhaps, the loss of the opportunity to settle the
case for either $ 100,000 or $ 50,000," the judge wrote.

Since the fraud claim was dismissed, the judge struck the claim for
punitive damages, noting that such damages are normally not available in
legal malpractice actions. "There is no claim here that the alleged
malpractice was part of a pattern directed at the public generally," he
said. "Gellene's conduct was deplorable and can be imputed to his former
law firm, Milbank, for the purpose of establishing Milbank's liability
for the legal malpractice. However, it does not constitute a basis for
finding that Milbank acted with criminal indifference in this action. In
a relatively large law firm, the bad acts of one partner should not be
imputed to all the other attorneys in the firm insofar as claims for
fraudulent conduct and punitive damages are concerned," Justice Cahn

He also dismissed the treble damage claim, finding that the Judiciary
Law did not apply to Mr. Gellene's misconduct because it occurred in a
bankruptcy proceeding in Colorado, not New York. "The section [@ 487]
does not apply to acts committed by attorneys outside New York's
territorial borders," the judge said.

The South Street funds were represented by Howard J. Kaplan, of Arkin
Schaffer & Kaplan. Martin London and Claudia L. Hammerman, of Paul Weiss
Rifkind Wharton & Garrison, appeared for Milbank. (New York Law Journal

PHILLIPS PETROLEUM: Settles for 1987 Rail-Car Fire in New Orleans
Bartlesville-based Phillips Petroleum Co. has agreed to pay $ 62.5
million to settle a class-action lawsuit over a 1987 rail-car fire in
New Orleans. Phillips said Tuesday the settlement doesn't include an
admission of guilt or liability. Insurance proceeds will make the
settlement's effect on fourth-quarter earnings "insignificant," the
company said.

In September 1987, a rail car leaked chemicals and started a fire that
burned for 36 hours, Phillips said. While there were no fatalities,
about 8,000 people, including residents, property owners and employees,
filed claims for personal injury or property damage.

Phillips, the nation's eighth largest oil company, said it was named in
the lawsuit because it had sold the rail car to General American
Transportation Corp. a year earlier. General American and four other
defendants name in the suit settled separately for a total of $ 152.5
million. (Tulsa World Nov-24-1999)

PHOENIX INT'L: Issues Statement Regarding Securities Lawsuit in Florida
Phoenix International Ltd., Inc. (Nasdaq/NM:PHXX), announced on November
24, 1999 that the Company has learned that a lawsuit has been filed as a
purported class action against the Company and its chief executive
officer in the United States District Court for the Middle District of
Florida involving securities claims by a former employee, Mr. George
Taylor. It is the Company's opinion that Mr. Taylor is a disgruntled
former employee and the lawsuit is without merit. Phoenix has turned the
matter over to its counsel and instructed counsel to mount a vigorous

Commenting on the announcement, Bahram Yusefzadeh, chairman and chief
executive officer of Phoenix International, said, "It is unfortunate
that this event has occurred; however, such lawsuits have become common,
and as Phoenix's profile has risen, its risk of such litigation has also
increased. We hope that this will not be a concern for our employees,
customers and shareholders. We intend to take all the appropriate steps
to protect the Company's interests."

PRUDENTIAL INSURANCE: Ex-Employee Claims Settlement Money Was Held Back
Florida regulators plan to investigate allegations that Prudential
Insurance Co. withheld settlement money from customers who were cheated
by the insurer's sales practices.

In 1997, Prudential agreed to pay up to $2.6 billion nationwide to
settle charges that it sold customers - mostly senior citizens - more
expensive but unnecessary life insurance policies. So far, Prudential
has disbursed about $1 billion under the settlement, including about
$234 million in Florida.

A former employee responsible for doling out settlement money from a
Prudential call center in Jacksonville told the state Insurance
Department that managers routinely encouraged workers to shortchange
people seeking reimbursements.

Prudential faces similar accusations from 44 past and current workers in
Minnesota. Earlier this month, those employees filed a lawsuit accusing
the company of racial and gender discrimination. In the suit, which
seeks class-action status, the employees said they were pressured to
withhold settlement money.

On Wednesday, the Insurance Department said it will investigate the
claims of the former Jacksonville employee. The department will work
with the Minnesota lawyers, who will likely depose current workers of
the call center, the agency said. "If the charges are true, it could
mean that a lot of people didn't get back all the money they could
have," said Don Pride, a spokesman for the Insurance Department.

Regulators have overseen the disbursement process, making it impossible
for Prudential to cheat customers, said Tom DeFillippo, a Prudential
spokesman. "What makes this ludicrous is that there has not been a time
throughout this process that there hasn't been close regulatory
scrutiny," he said. (The Orlando Sentinel Nov-25-1999)

SPECTRAN CORP: Will Contest Delaware Suits over Merger with Lucent
After the announcement of the Agreement of Merger by the Company and
Lucent on July 15, 1999, two putative class action suits relating to the
Merger were filed in the Court of Chancery for the state of Delaware:
Chase v. Harrison et al., C.A. No.17312-NC and Airmont Associates et
al., v. SpecTran Corporation, et. al., C.A. No. 17314-NC.

The lawsuits were filed by plaintiffs claiming to be stockholders of the
Company, purportedly on behalf of all the company's stockholders,
against the Company, members of the board of directors of the Company
and Lucent. The plaintiffs in both lawsuits allege, among other things,
that the terms of the proposed Merger were not the result of an auction
process or active market check, that $9.00 per share offered by Lucent
is inadequate, and that the Company's directors breached their fiduciary
duties to the stockholders of the Company in connection with the
Agreement of Merger. Both lawsuits seek to have the Merger enjoined, or
if the Merger is completed, to have it rescinded and to recover
unspecified damages, fees and expenses. The Company and Lucent intend to
vigorously oppose these lawsuits.

On July 29, 1999, the plaintiff in Chase v. Harrison, et al., Civil
Action No. 17312-NC, filed an Amended Class Action Complaint (the
"Amended Complaint") in Delaware Chancery Court. In the Amended
Complaint, the plaintiff alleges, among other things, that (1) the
proposed purchase price is inadequate; (2) the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 is misleading
and omits material information in that it fails to disclose (a) the
Company's financial results for the second fiscal quarter ended June 30,
1999, (b) why the Company's projected financial results, as announced by
the Company on May 28, 1999, did not warrant that a substantial premium
be paid for the Company relative to the existing market price, (c)
information concerning the identity of other bidders for the Company and
the terms of any competing bids or expressions of interest, (d) why the
Company did not wait until after its third quarter ended September 30,
1999 financial results were available to determine whether Company C
would make an offer to acquire the Company, (e) the reasons for Lazard
Freres & Co. LLC's determination that the Merger was "fair", (f) the
total amount of benefits that each of the Company's executive officers
and directors will realize from the Merger, and (g) the value of the
Company to Lucent and the benefits Lucent will derive from the Merger,
including the equivalent amount that Lucent would have to spend to build
the manufacturing capacity that it will be buying from the Company and
that Lucent had approved a higher purchase price; and (3) the board of
directors of the Company breached its fiduciary duty to the stockholders
of the Company to exercise due care, loyalty and candor. The Amended
Complaint further alleges that Lucent aided and abetted the breach of
fiduciary duty by the individual defendants. The foregoing is qualified
in its entirety by reference to the Amended Complaint, a copy of which
is filed as an exhibit to the Company's Amendment No. 1 to Schedule
14D-9, dated August 4, 1999 and filed with the Commission on August 5,
1999, and is incorporated by reference herein.

Concurrent with the filing of the Amended Complaint, the plaintiff in
Chase v. Harrison, et al. petitioned the Delaware Chancery Court for
expedited discovery and the scheduling of a hearing on a preliminary
injunction. A telephone conference call was held by the Delaware
Chancery Court on July 30, 1999, at which time the court declined to
permit expedited discovery and declined to schedule a hearing on a
preliminary injunction. Instead, the court scheduled a hearing on August
13, 1999 to hear arguments as to whether an order temporarily
restraining consummation of the Merger should be issued. This scheduled
hearing was subsequently canceled when, by letter dated August 2, 1999,
plaintiff's counsel withdrew plaintiff's application for a temporary
restraining order.

SPECTRAN CORP: Will Vigorously Defend Securities Suit in Boston, MA
On November 6, 1998, the Company announced that it would contest a
complaint filed in the United States District Court in Boston, MA on
October 2, 1998, purportedly as a class action suit. Titled Cruise v.
Cannon, et al., the complaint alleges that the Company and three of its
current or former officers and directors violated securities laws by
misrepresenting the Company's financial condition and financial results
during 1998. The suit purports to be a class action on behalf of all
individuals who purchased the Company's stock on the open market from
February 25, 1998 to July 17, 1998. The suit alleges, among other
things, that there were public misrepresentations or failures to
disclose material facts during that period which allegedly artificially
inflated the price of the Company's common stock in the marketplace. The
complaint seeks an undisclosed amount of compensatory damages and costs
and expenses, including plaintiff's attorney's fees and such further
relief as the Court may deem just and proper. The Company believes the
action is totally without merit, believes that it has highly meritorious
defenses and it intends to defend itself vigorously.

TAKOMA PARK: Black, Latino Police Officers Claim Bias in Promotions
Four Takoma Park police officers and a former officer have filed a
complaint with the federal government alleging the police department
repeatedly denied them promotions because they are Latino or black. The
200-page document, delivered Monday to the Equal Employment
Opportunities Commission, also alleges that the five endured racial and
ethnic slurs from colleagues and that the department ignored their
complaints about the offensive comments.

Police Chief Thomas W. Anderson, who assumed his job two years ago after
serving as the police chief in West Columbia, S.C., denied that there is
discrimination on his 42-member force, which includes two Latino and 16
black officers. Anderson has asked the U.S. Department of Justice for
assistance in resolving the matter, a police spokeswoman said.

Mayor Kathy Porter said the complaint was troubling because Takoma Park,
a Montgomery County city of 18,000 known for having some of the region's
most liberal laws, "prides itself on diversity." Porter said she told
the city attorney to open an investigation.

In a related development, the local branch of the Hispanic National Law
Enforcement Association said it had sent a copy of the EEOC complaint to
the Justice Department and asked for a separate inquiry. The local
group's president, Tom Garcia, said he "can only imagine that if the
officers in this department are being discriminated against, what the
community is going through."

One of the EEOC complainants, Joe Perez, now employed by the Prince
George's County police, said that he had won numerous awards during
three years on the Takoma Park force but that he was denied promotion to
specialized units three times. He said several black and Latino officers
who obtained additional training to qualify for promotion were rejected
in favor of less qualified white officers. "We are being held to a
higher standard, all the time," Perez said. "We can't understand how the
chief can deny [the discrimination within] the organization."

The EEOC complaint also alleges that a sergeant once told officers that
"Hispanics are always stealing hubcaps" and that an officer once joked,
as a group of minority officers approached, that "the squad is starting
to look like a gang."

Perez, 35, said he resigned after an ethnic slur was sprayed on his
personal car in the department parking lot and the police chief told him
he was taking the incident "too seriously." The EEOC complaint alleges
that Anderson replied: "It's not as bad as it seems. It's your
imagination, don't be so paranoid." The department spokesman denied that
Anderson made the comments.

At a news conference on November 23, Anderson, who said the EEOC
complaint was the first to be filed against the Takoma Park police in 15
years, acknowledged that during several roll calls, Latino officers were
referred to as "amigos." "There was a comment made, and I recall hearing
about that," Anderson said. "But the officers involved didn't file a
complaint. . . . We always try to be sensitive to the concerns of our
employees." The complaint alleges that memos about discrimination were
sent to the chief and went unanswered.

Anderson said that he has bolstered efforts to recruit women and
minority officers. As a result, 60 percent of the new officers are
black, and the number of women officers has increased from three to
five, he said. There is only one black and one woman above the rank of
corporal, officials said.

If the EEOC finds that the allegations have merit, the agency will meet
with the parties to reach a resolution, spokesman Michael Widomsky said.
If agreement cannot be reached, the EEOC will refer the matter to the
Justice Department for possible litigation, he said. By law, the EEOC is
allowed to file suit against only private employers.

A Justice Department spokeswoman said she was unaware of the separate
request for an investigation made by the local branch of the Hispanic
National Law Enforcement Association. But the department can investigate
class-action complaints filed by organizations, she said. (The
Washington Post Nov-24-1999)

* Life Insurance Industry Is Settling Lawsuits on Massive Basis
The life insurance industry is settling class action lawsuits on a
massive basis involving millions of life insurance policies. These cases
have claimed settlement values as large as $ 1.7 billion. These
settlements typically include most or all of the company's whole life
and universal life insurance portfolios. In these settlements, general
releases are commonly given by the classes of policyholders in favor of
the insurance company. Although policyholders are given the opportunity
to opt out of these settlements, few consumers really understand the
implications of not opting out and how their life insurance policy has
performed or not performed. Even fewer policyholders know the manner in
which insurance companies have manipulated the internal cost and pricing
elements of their insurance policies. Because of the complexity of whole
life and universal life insurance, the average consumer likely does not
comprehend what has happened to the values in his or her life insurance
policy and the reasons for changes in those values.

The life insurance industry closely guards its pricing assumptions and
other practices which impact the value of a life insurance policy and
there is much room for an insurance company to manipulate the components
of a life insurance policy. The nature and the extent of the
manipulation is only beginning to come to light.

Under these circumstances, there is little reason for a policyholder to
give an insurance company a general release of all claims (even unknown
claims), particularly where the policyholder receives some slight
benefit or nothing at all under the class settlement. Many viable and
unknown claims under the insurance policies are likely being released,
which greatly benefits the insurance industry.

          The Nature of a Universal Life Insurance Policy

In the 1980's, life insurance companies started to sell a product called
universal life insurance which was supposed to be permanent life
insurance for a policyholder. Under a universal life policy, premiums
are not fixed. Rather, the premiums are called "flexible" meaning the
amount and timing of premiums can vary and the premiums are deposited
(less an expense charge) into a fund inside the policy called the
accumulation account. The insurance company pays interest on the
accumulation account and deducts cost of insurance charges (known as the
mortality charge) each month from the accumulation account. As long as
there are sufficient funds in the accumulation account to cover the next
monthly cost of insurance charge, the policy will remain in force. In
contrast to whole life insurance policies, universal life insurance
policies do not participate in dividends paid by an insurance company.
On each anniversary of the policy, the company sends the policyholder an
annual report containing some general information about the values of
the insurance policy.

Universal life insurance policies contain two variable elements, cost of
insurance and interest rates. The theory was that the policyholder would
share with the insurance company the risk of mortality changes and
fluctuations in the economy. According to the universal life policy,
interest rates may be determined at the insurance company's discretion
subject to a guaranteed minimum rate of interest. The cost of insurance
is the "pure cost of insurance" or mortality charge deducted by the
insurance company each month from the accumulation account.
Policyholders were led to believe that, as mortality improved (i.e.,
people lived longer), cost of insurance rates would be decreased and
more funds would be left in the accumulation account for the benefit of
the policyholder.

To make the policy illustrate favorably into the future with a strong
accumulation account, companies sold the policies with a high interest
rate and a cost of insurance rate set well below the maximum guaranteed
rates set forth in the policy. The projections were often unrealistic
with incomplete disclosure of the impact of lowering interest rates or
increasing cost of insurance rates. Moreover, the insurance companies
did not disclose basic assumptions underlying the pricing of the
insurance policies and that they intended to maintain a constant rate of
return on a particular block of business by lowering interest rates or
increasing cost of insurance rates.

Consistent with the idea of sharing the risk on mortality, many of the
universal life policies sold in the 1980's contained explicit language
tying the cost of insurance rates to the expected future mortality
experience of the life insurance company. (e.g., "Actual monthly cost of
insurance rates will be determined by the company based on its
expectations as to future mortality experience".) Thus, as a predicate
for increasing cost of insurance rates, an insurance company needed
expected future worsening mortality based on a solid and continuing
trend of heightened death claims. However, many companies have increased
cost of insurance rates for reasons completely unrelated to anticipated
worsening mortality experience. (e.g., to pass on the Deferred
Acquisition Cost tax to policyholders, to squeeze revenue and profit
from a closed block of business, etc.) The insurance companies did not
disclose to policyholders that the language tying the cost of insurance
rates to mortality would be disregarded. The insurance company
materially breached the universal life insurance policies if it raised
cost of insurance rates without expected worsening future mortality

By definition, the cost of insurance increases each year as a
policyholder ages and, typically, insurance companies have implemented
the cost of insurance increases at the anniversary date for each
policyholder so that the increases would not be noticeable to
policyholders. For example, if the monthly cost of insurance is supposed
to increase from $ 28.84 to $ 29.90 at the policy anniversary (without
an increase in rates), how can a policyholder detect a 10% increase in
rates meaning the charge appears as $ 31.75 instead of $ 29.90. Further,
most insurance companies gave no notice at all to policyholders that
cost of insurance rates were being increased and the annual policy
report is presented in an unnecessarily confusing manner. Some companies
even changed the format of the annual report when implementing an
increase in cost of insurance rates to further disguise cost of
insurance increase.

Over the years, companies have also hugely decreased interest rates paid
on the accumulation account. The impact of decreased interest rates and
increased cost of insurance rates have been devastating to the value of
these policies. Many policyholders are faced with paying many multiples
of what they thought they would have to pay in premiums for the same
coverage and can no longer afford the coverage.

                  The Vanishing Premium Litigation

In life insurance, the most common and well-known type of lawsuit (class
or individual) has been the vanishing premium case usually based on a
whole life policy. Whole life policies participate in dividends paid by
a life insurance company. In these cases, policyholders argue that they
were promised in writing and orally that only a certain limited number
of out of pocket premium payments were necessary to completely fund the
insurance policy. Usually, the company has presented a misleading sales
illustration to the consumer showing graphically that only a certain
number of out of pocket payments are required and with some limited
language about dividends not being guaranteed. However, there is no
clear or prominent statement that the number of out of pocket premium
payments is dependent on the future level of dividends. Based on the
illustration, combined with an aggressive presentation by the sales
agent, the consumer understandably believes that only a certain number
of out of pocket premium payments are necessary to completely fund the

Unfortunately, insurance companies have seriously reduced the dividends
paid into these whole life policies and policyholders found out that
many more out of pocket premiums were necessary to maintain the desired
coverage. The theory of these cases is that the companies knew at the
time of sale that the rosy projections of high future dividends were
unrealistic and flawed, but the company sold the policies nonetheless.
The vanishing premium cases present some obstacles to recovery because
the illustration may not be part of the insurance policy and the
insurance policy usually provides that premiums are payable for the life
of the policy. These arguments translate into defenses based on parol
evidence, integration clauses, and statute of frauds. Thus, the cases
are usually presented as fraud or breach of fiduciary cases because the
fine print of an insurance policy may preclude an action for breach of

Other cases have been based on claims that insurance policies were
improperly sold as investment or retirement vehicles and that insurance
policies have been improperly and unnecessarily replaced by insurance
companies. Usually, these vanishing premium, churning, and
retirement/investment claims are grouped into one global class action
against an insurance company and, at settlement, most of the company's
life insurance is included in the settlement.

On a class basis, these cases are often settled with a variety of
opportunities to participate in alternative dispute resolution, the
opportunity to purchase more insurance at a discount, slight policy
enhancements, and, in limited cases, modest infusions of value into the
policies by the insurance company. Unfortunately, many of these
settlements contain broad and, in effect, general releases given by the
policyholders in favor the insurance companies. In this way, insurance
companies are able to gain a broad release from liability for a wide
range of misconduct much of which may not be uncovered or addressed in
the lawsuit or in the settlement.

More Focused And Limited Class Actions May Be More Effective. Class
actions focused on a particular block of business with a particular
claim can be much more effective and beneficial to policyholders.

                  Rosenbaum v. Philadelphia Life

One of the class actions prosecuted by our law firm was Rosenbaum v.
Philadelphia Life Insurance Co., case number CV 93-0834 MRP, United
States District Court, Central District of California. In Rosenbaum, the
insurance companies increased the cost of insurance rates by 10% to pass
on the impact of the DAC tax to some 100,000 universal life
policyholders even though the language in the universal life policies
tied the cost of insurance rates to mortality experience.

In Rosenbaum, the insurance company placed a statement on the annual
policy reports sent to policyholders that the increase in costs of
insurance rates was due to "changes in mortality." However, in the
lawsuit, the insurance company conceded that the increase in cost of
insurance rates was not based on future expected worsening mortality,
but argued that cost of insurance included costs other than mortality.
The Court granted summary judgment in favor of the policyholders holding
that "the court has no difficulty in concluding that the Flexible Policy
did not permit the Companies to increase the cost of insurance to
account for a change other than in future mortality experience . . . The
court finds Philadelphia breached its obligations under the Flexible
Policies . . . when it increased the cost of insurance to pass on the
DAC tax."

Subsequently, with the summary judgment granted against the insurance
company and a national class certified, the Rosenbaum case settled with
a payment of approximately $ 22,000,000 and roll back of future cost of
insurance rates to the level before the increase. The roll back of rates
had a present value to policyholders of approximately $ 95,000,000.
Under the settlement, all policyholders received 100% of the increased
cost of insurance charges wrongfully taken from them, plus interest.
Significantly, the policyholders in Rosenbaum released only the claims
actually litigated and for which they received value. There was no
general release. Rosenbaum was the first cost of insurance case to be
prosecuted against a life insurance company.

The Rosenbaum case focused much attention on cost of insurance rates
and, over the past several years, cost of insurance cases based on
universal life policies have been successfully prosecuted against major
life insurance companies. The cases present natural class actions
because they are premised on a uniform breach of policy language by the
insurance company and the damages to each policyholder are easy to
compute from company records and by actuarial formula.

                     Armstrong v. Crown Life

Armstrong v. Crown Life Insurance Co., case number C96-1675R, United
States District Court, Western District of Washington at Seattle, was a
significant case for policyholders and our law firm also prosecuted the
Armstrong action. During the 1980's, Crown Life aggressively marketed
and sold universal life policies known as "Extra" with a promise of a
refund (the "giveback") to policyholders of the cost of insurance
charges previously paid at policy years 10 and 20. This return of cost
of insurance charges to policyholders (who maintained their policies
until these 10 and 20 year milestones) made the policies illustrate
favorably with less premiums required to fully fund the policy.
Originally, Crown Life priced the policies assuming a 10% lapse rate and
Crown acknowledged that the pricing of these policies was "risky". The
10% lapse rate meant that out of 100 policyholders, at year 10, there
would be only 32 policyholders remaining and eligible for givebacks. The
cost of insurance rate language was "we may use such lower monthly costs
of insurance as we may determine, based upon our expectations as to
future mortality experience".

Unfortunately for Crown Life, the lapse rate did not approach anywhere
near 10%, meaning more policyholders held onto their policies and were
entitled to receive the promised giveback of cost of insurance charges.
In 1992, Crown Life realized that it had a multi-million dollar
"problem". Crown Life reacted with a conversion/exchange program
offering a new life insurance policy without the giveback and Crown Life
also dramatically increased the cost of insurance rates on the "Extra"
policies by 50%. (A conversion or exchange program offered by a life
insurance company is usually a signal that the company mispriced a block
of business and the company is trying to move policyholders to a more
profitable line of business.)

Michael Armstrong, a former employee of Crown Life's general agent,
filed a lawsuit alleging that Crown Life materially breached the terms
of the policies and engaged in fraud by increasing the cost of insurance
rates because of increased persistency (not worsening mortality). Mr.
Armstrong argued that Crown Life could only increase the cost of
insurance rates due to worsening mortality experience. Crown Life
maintained that it could increase the cost of insurance rates for any
reason or no reason at all and that the cost of insurance language only
restricted its ability to lower rates. The case was originally filed in
the Washington state court and, after several adverse rulings from the
state court, including any order that Crown Life produce its documents
explaining reasons behind the cost of insurance increase, Crown Life
removed the action to federal court. Crown Life contended that it was a
foreign state under 28 U.S.C. "1330(a) and "1603 and there was federal
jurisdiction. At the time, a majority of Crown Life was owned indirectly
by the province of Saskatchewan, Canada.

Plaintiff maintained that Crown Life produced extremely damaging
documents to the effect that it was attempting to increase the lapse
rate (i.e., lost policyholders) by increasing the cost of insurance
rates and thereby avoid paying the givebacks to policyholders at policy
year 10. The Court certified a national class for breach of contract and
fraud. Subsequently, plaintiff filed a motion for partial summary
judgment on the breach of contract claim arguing that the contract
language precluded Crown Life from increasing cost of insurance rates
without the expectation of future worsening mortality experience.

Before the class notice was disseminated to the policyholders and, prior
to adjudication of the motion for summary judgment, the parties reached
a settlement of the class action. The settlement provided for a payment
of $ 27.15 million to the class and an agreement to explicitly tie
future increases in cost of insurance rates to expectations of worsening
mortality with a present value worth of approximately $ 60 million to
the class. The cash payment represented roughly the amount Crown Life
thought it would recoup through the cost of insurance increases at the
time it implemented those increases.

In exchange, the class of policyholders gave Crown Life a release
limited to the cost of insurance claims actually litigated in the
lawsuit and no other claims. Under the settlement, each policyholder
received a cash payment (an infusion to the accumulation account for
existing policyholders and a check to lapsed policyholders). One
policyholder received payment exceeding $ 180,000. Again, policyholders
only gave Crown Life a release limited to the cost of insurance aspects
of their insurance policies - - no other claims or parts of the policies
were released or compromised. Crown Life attempted to settle the case by
offering a supposed better and new insurance policy and other coupon
type settlements. We declined to help Crown Life sell more insurance.

Many other class settlements present little concrete recovery for
policyholders and a broad release.

The Rosenbaum and Crown Life settlements are in contrast to many other
settlements of life insurance class action because in the Rosenbaum and
Crown Life cases the policyholders received cash payments (without the
necessity of taking any action) and gave only a very narrow and limited
release of claims. In other massive life insurance settlements, the
presence of alternative dispute resolution is prominent as well as the
opportunity for class members to purchase additional products from the
life insurance company at a discount. At times, there are slight policy
enhancements as well. These benefits are often highly valued for
purposes of settlement approval and an award of attorney fees. However,
in reality, they may present little real value to the class members. For
example, in the most recent massive life insurance settlement, one of
the principal components of the settlement is a slight enhancement (from
8% to 16% of the original face amount) in the death benefit lasting for
several years after the settlement. Obviously, to receive this benefit
from the settlement, the policyholder must die shortly after the

Many class members do not bother to participate in the dispute
resolution or even understand that they have a problem with their
policy. Thus, at the time of the class settlement, a policyholder may
not even know that he will be required to pay more premiums than he or
she was promised and therefore that policyholder will not bother with
the cumbersome dispute resolution component of the settlement. Likely,
policyholders do not understand what happened to their insurance
policies and what cost elements have been adjusted behind the scenes by
the insurance company. Moreover, the policyholder is also unaware of
other manipulations to his or her policy. Clearly, this is not spelled
out in the class notices.

In addition, these settlements often include all or most of a company's
life insurance. The particular misconduct or manipulation respecting a
particular block or type of business is often overlooked or not directly
addressed in the settlement because so many policies are in the class
for settlement.

In these settlements, in return for these slight or nonexistent
benefits, class members give (although they might not know it) what
amounts to a general release of any and all claims in favor of the
insurance company. Under these settlements, the policyholders release,
not only the claims actually litigated, but any and all claims relating
to the sale, handling, servicing, performance, or administration of
their life insurance policies. The United States Supreme Court has held
that claims not certified or even contained in the class action
complaint maybe be released as long as there is adequate notice and
opportunity to opt out. Matsushita Electric Industrial Co., Ltd. v.
Epstein, 516 U.S. 367, 116 S.Ct. 873 (1996). However, at least one court
has held that a subsequent claim was not barred by a prior class action
settlement because the class notice did "not adequately inform an absent
class member like Twigg either that claims like his were being litigated
or that they had been settled." Twigg v. Sears, Roebuck & Co., 153 F.3d
1222, 1128 (11th Cir. 1998) ("The notices do not alert a reader that the
prior action included claims by Sears customers based upon being billed
for services that Sears never performed. The claims involved in the 1992
National Class Action apparently included claims of this kind, but the
notices do not say so.") However, in the large life insurance class
settlements, the last section of the class notice details over several
pages the broad releases.

Over the past years, we have had many policyholders approach our office
seeking representation for problems with their life insurance policies
and these policyholders were unaware of the import of the class action
notice they received. Typically, the policyholders disregarded the class
notice or they did not know or appreciate they had a problem with their
life insurance policy at the time they received the class notice. They
did not opt out of the class and they did not receive any settlement

Unfortunately, for these policyholders, although they received nothing
in the class settlement, these policyholders released basically all the
claims against their life insurance company, even though the claim was
premised on a cost increase and not on the lowering of dividends. Claims
likely not even plead or known in the class action are released. The
releases in these class settlements are much too broad and they should
be restricted to claims that actually were litigated and tied to the
receipt of actual and substantial benefits by that particular
policyholder. Further, as was apparently done in the recent Phen-fen
class settlement, the policyholder could be given the opportunity to opt
out again at a later date under certain circumstances.

A general release by its nature releases everything an insurance company
has done to manipulate the values of an insurance policy. Again, the
average consumer has no idea what decisions the insurance company has
made and there is little real disclosure given by insurance companies to
their policyholders. The policyholder cannot begin to even know whether
he or she has a valid claim and the alternative dispute resolution
mechanism does not seem set up to address these types of claims (other
than a known and existing vanishing premium dispute). The policyholder
is then left with receiving basically nothing in the settlement and
giving a general release to the insurance company.

The policyholders should give only a limited release and then only if
real value is received. There is no reason for someone to give a general
release to a life insurance company when they receive nothing in the
class action settlement. E.g., National Association of Consumer
Advocates "Standards and Guidelines for Litigating and Settling Consumer
Class Actions, 176 F.R.D. 375, 390 (1998) ("A "general release" may be
appropriate for the named class representatives. However, absent class
members should not be required to release independent individual claims
or claims as yet unknown in order to receive settlement benefits.
Specifically, if the class settlement only provides injunctive benefits
that do not result in restitution or other monetary payments to
individual class members, the release should provide that individual
damages claims are not being releases".)

Finally, to the extent that an insurance company is maintaining that a
settlement has a certain value, meaningful cash payments or infusions
into accumulation accounts or cash values of class members should be
made. In this way, there is no uncertainty in valuing the settlement and
the policyholders actually receive some concrete value without taking
any action.


Given the complexity of the cost and pricing elements of life insurance
and the concealment of this information by the insurance industry, there
is other significant misconduct of the insurance company other than
lowering dividends in a vanishing premium case. This misconduct includes
tampering with cost elements in policies and riders, hidden pricing
flaws, improper calculation of values at inception and termination of
the policies, and other misconduct not yet apparent. Counsel with
background and experience in life insurance matters may be able to
detect these abuses. (Mealey's Litigation Report: Bad Faith, New
Publication, Vol. 13, No. 11, Oct-5-1999)


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

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc.,
Washington, DC.  Theresa Cheuk and Peter A. Chapman, editors.

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The CAR subscription rate is $575 for six months delivered via e-mail.

Additional e-mail subscriptions for members of the same firm for the
term of the initial subscription or balance thereof are $25 each.  For
subscription information, contact Christopher Beard at 301/951-6400.

                    * * *  End of Transmission  * * *