CAR_Public/991229.MBX                  C L A S S   A C T I O N   R E P O R T E R

                Wednesday, December 29, 1999, Vol. 1, No. 230

                                 Headlines

AMERICAN FAMILY: To Pay $32 Mil to Settle Sweepstakes’ Claims in NJ
CENTRAL LIMIT: SIAS Asks Investors to Join for Cheaper Class Action
DINERS CLUB: Il. Refuses to Reinstate Fraud Case Denied Class in Kenya
GRAHAM-FIELD: Settled Shareholder Suit Earlier; Makes Ch 11 Filing
HAZELTINE CORP: NY Ap Ct Oks Dismissal of Suit over Hazardous Materials

KOCH INDUSTRIES: Osage Nation to File Securities Suit V. Kan.-Based Co.
LEARNING TREE: Faces Securities Lawsuits in California
METLIFE: Policyholders Object to $1.6B Settlement for Fraudulent Sales
MORTGAGE INSURERS: Hit by Lawsuits on Kickbacks, American Banker Says
NETWORK ASSOCIATES: San Jose Lawyer Robert Vatuone Is Lead Plaintiff

NETWORK SOLUTIONS: Suit Asks Supreme Court for Ruling on Internet Fees
PUERTO RICO: Thousands May Sue for Redress for Secret Police Dossiers
STORAGE TECHNOLOGY: Colo. Ct Hears Proposed Settlement for ADEA & ERISA
TOBACCO LITIGATION: Fl. Sp. Ct. Allows Jury to Consider Lump-sum Award
UICI: Scott & Scott LLC Files Securities Lawsuit

WASHTENAW MORTGAGE: MS Ct Dismisses Lawsuit over Yield Spread Premium
WASHTENAW MORTGAGE: Sued in Alabama & Georgia over Yield Spread Premium
WEYERHAEUSER CO: $105M Settlement Announced for Cemwood Roofing Shakes

* Industries Call on Congressional Allies for Legislation to Curb Suits
* The National Law Journal Names David Boies Lawyer of the Year

                              *********

AMERICAN FAMILY: To Pay $32 Mil to Settle Sweepstakes’ Claims in NJ
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Shed no tears for American Family Publishers, which will pay $ 32
million to people it may have duped by deceptive sales pitches. The
company's legal difficulties are also causing it to declare bankruptcy.

AFP agreed to pay the money to settle all outstanding legal claims
against it, which could have been substantially higher. A federal judge
in New Jersey gave a preliminary stamp of approval to the deal.

The agreement comes seven months after AFP settled lawsuits with four
states, including Florida, whose residents are in line for $ 1.3 million
of the settlement. Previously, AFP settled with 39 other states.

As in all class-action lawsuits like this one, finding the real victims
and compensating them fairly is an imperfect process. The settlement
provides for refunds to anyone who files a claim form with receipts
showing they paid AFP more than $ 40 for magazines in a year from 1992
through 1999, and swears he believes subscribing was essential to enter
or increase chances of winning the sweepstakes. Oddly, another $ 1
million will be paid out in the form of a sweepstakes drawing to 10
people drawn at random from those who qualify for those refunds.

About 200,000 consumers who spent a lot of money on magazine
subscriptions with AFP will automatically get a refund claim form. To
obtain a refund form, call toll-free 1-888-469-5408. Soon, the forms
will be available on an Internet web site, http://www.afpsettlement.com/

Earlier, AFP agreed to make substantial changes in its letters to
potential customers, clarifying that no purchase is necessary to enter
or win the contest and dropping misleading statements indicating a
customer has already won when he really has not.

Direct-mail companies like AFP and Publisher's Clearing House send
millions of letters inviting people to subscribe to magazines and enter
a contest in hopes of winning a multimillion-dollar sweepstakes prize.
Because of confusing appeals, some elderly customers flew to Tampa,
AFP's return mail address, to claim winnings, only to have their hopes
dashed. Some seniors testified to Congress that they borrowed money,
spent Social Security checks and squandered their savings in a desperate
effort to buy magazines they didn't want, sometimes many copies of the
same magazine, so they could get rich quick.

Don't quibble over the size of the settlement or how it will be
distributed. The important lesson is a victory for consumer protection.
A big company that deceived gullible customers for years with misleading
advertising and letters is finally being forced to pay the price for its
behavior. For customers who have suffered, they now really are winners.
(Sun-Sentinel (Fort Lauderdale, FL) December 28, 1999)


CENTRAL LIMIT: SIAS Asks Investors to Join for Cheaper Class Action
-------------------------------------------------------------------
Central Limit Order Book International (CLOB) investors say they will
not hesitate to take legal action if there remains no political will to
resolve the long-standing issue of their frozen securities amicably.

Noting that the authorisation of Singapore's Central Depository Pte Ltd
as a nominee expires on December 31, the Securities Investors'
Association of Singapore (SIAS) urged on December 27 that the status be
extended if the Malaysian authorities are keen on resolving the issue.

While SIAS has always viewed the courts as a last resort, "it will not
hesitate to advise its members to take legal action if it becomes clear
that there is no political will to resolve the issue amicably to the
satisfaction of both parties," its president David J. Gerald said in a
statement. For this reason, all CLOB investors are advised to join the
SIAS as it will be much cheaper for them if class action proves
necessary, he said.

SIAS currently has slightly over 50,000 members, representing about 30
per cent of the 172,000 frozen accounts. Gerald wants the rest of the
affected investors to join up immediately.

A collective effort will enable members of SIAS to share the cost and
also make it possible to engage experts as their representatives in the
Malaysian courts, he said.

SIAS secured the cooperation of Bintang Melewar Sdn Bhd to make
representations on its behalf with Malaysian authorities, especially
with regards to its proposal for the migration and staggered release of
the securities over a 12-month period. The Kuala Lumpur Stock Exchange
has received the proposal but has yet to issue a response. "SIAS hopes
that the issue will not be allowed to drag on for too long as some 15
months have already elapsed and that the Malaysian authorities will
demonstrate...a sense of urgency," Gerald said. (Business Times
(Malaysia) (Malaysia) December 28, 1999)


DINERS CLUB: Il. Refuses to Reinstate Fraud Case Denied Class in Kenya
----------------------------------------------------------------------
Action that is dismissed on grounds of forum non conveniens may be
reinstated if court in other forum refuses to accept jurisdiction; in
this case, proposed class action was dismissed on forum non conveniens
grounds because parties and subject matter of litigation all were in
Kenya but trial court correctly refused to reinstate case in Illinois
because Kenya court, while rejecting class certification for case, did
not refuse to accept jurisdiction for individual plaintiffs.

The Illinois Appellate Court, 1st District, 4th Division, has affirmed a
ruling by Judge Lee Preston.

On May 24, 1995, the plaintiffs filed a nine-count class action against
Diners Club, alleging fraud, conspiracy to commit fraud, negligence,
willful and wanton misconduct, and conversion. The plaintiffs, Kenyan
corporations or individual residents of that country, sought the payment
of money allegedly owed to them by Diners Club's licensee in Kenya.

The plaintiffs sought to represent two classes: an establishment "class,
whose members agreed to honor the Diners Club card and who are now
allegedly owed money for customer purchases made using the card; and a
depositor" class, whose members are allegedly owed money from their
participation in the Diners Finance bank deposit program.

The defendant filed a motion to dismiss based on grounds of forum non
conveniens. The defendant argued that Kenya is the appropriate forum in
that all the activities underlying the plaintiffs' theories of liability
took place in Kenya, all of the documents, witnesses and necessary third
parties are in Kenya, and all of the plaintiffs and purported class
members are Kenyan.

The plaintiffs responded by contending that although Kenya civil
procedure recognizes representative actions, it does not provide the
scope of relief Illinois offers for class actions.

The trial judge granted the dismissal motion. The judge said that even
if the scope of relief in Kenya is not the same as in the United States,
or if the Kenyan substantive law is less favorable, neither provides a
basis to avoid dismissal on grounds of forum non conveniens.

The dismissal of the complaint was made subject to the provisions of
Rule 187(c) of the Code of Civil Procedure, which states that an action
dismissed on forum non conveniens grounds is subject to certain
conditions and may be reinstated in cases in which the court of the
other forum refuses to accept jurisdiction.

In April 1998, the plaintiffs asked the trial judge to reinstate the
action. The request was based on a March 13, 1998, order of a Kenyan
court declining to take the case as a representative action and that
this action constituted a refusal to accept jurisdiction under Rule 187.
The defendant contended that the plaintiffs were incorrect and that the
litigation was proceeding in Kenya. The order from the Kenyan court
stated that the litigation could not be maintained as a class action.

The Illinois trial judge denied the plaintiff's Rule 187 petition to
reinstate, noting that the Kenyan court did not dismiss the case but
merely ruled that it could not go forward as a class action and that
this was an insufficient basis to reinstate the case.

The appeals court affirmed, saying that a court's refusal to entertain
an action as a class action does not mean that the court lacks
jurisdiction to hear the action. The court said an order denying class
certification or dismissing class allegations is interlocutory and does
not terminate the litigation. Instead, it allows plaintiff to proceed on
their individual claims, the appeals court said.

The court said the plaintiffs' arguments here were really an attack on
the adequacy of potential recovery in the other forum. In addition, the
court said, the plaintiffs were not able to cite any case in which the
refusal of the other forum's court to entertain the action as a class
action was considered tantamount to a refusal of jurisdiction.

Uchumi Supermarkets Ltd., et al. v. Diners Club International Ltd., No.
1-08-4839. Justice John N. Hourihane wrote the court's opinion with
Justices Thomas E. Hoffman and Shelvin L. Hall concurring. Released Dec.
16, 1999. (Chicago Daily Law Bulletin December 27, 1999)


KOCH INDUSTRIES: Osage Nation to File Securities Suit V. Kan.-Based Co.
-----------------------------------------------------------------------
Koch Industries Inc., which was found liable for falsifying oil
measurements in several states, is facing more legal action from those
it allegedly shortchanged in Oklahoma.

Pawhuska lawyer Geoffrey Standing Bear said on December 27 he plans to
file a civil lawsuit this week on behalf of Osage Nation shareholders
who believe the Wichita, Kan.-based company cheated them out of royalty
payments.

The week before, Marvin Kaiser, a lawyer from North Dakota, filed a
class-action lawsuit against the company in Seminole County on behalf of
another group of royalty owners. "All we want is what we're owed, with
interest," Standing Bear said. "We are carefully framing our complaint."
During the week, a federal jury in Tulsa found that Koch Industries
deliberately falsified oil measurements. Of more than 31,000 claims,
24,587 were false, the jury concluded. Under federal law, the company
can be fined $ 2,000 to $ 10,000 for each false claim. The penalty,
which would be levied by U.S. Chief District Judge Terry Kern, could
reach as high as $ 214 million. Koch Industries said it will challenge
the jury's verdict.

During the trial, plaintiffs argued that the company's overages -- oil
it did not pay for -- resulted from fraudulent measurement practices. It
was a companywide scheme that generated more than $ 170 million for Koch
in the 1980s, they argued.

Nearly half the oil leases involved in the Tulsa trial were in Osage
County, where the tribe owns an interest in every oil well. The tribe,
though, did not join the lawsuit because tribal officials said they
could not find any evidence of wrongdoing by Koch Industries.

Osage Chief Charles Tillman reaffirmed his support of Koch Industries
after the recent verdict, saying the company's business practices are
"fair and honest." Tillman called the verdict "baffling." He pointed to
the findings of federal authorities, including the Bureau of Land
Management and the Bureau of Indian Affairs, which found nothing wrong
with Koch's measurement practices.

But Standing Bear said the evidence unveiled during the trial is
overwhelming and conclusive. The company's profit plan shows that annual
overages accounted for up to 39 percent, or $ 27 million, of its crude
oil revenue. Standing Bear also pointed to the testimony of former Koch
employees who said they were instructed to record false measurements
using a method designed to cheat producers. "I've got sworn statements
from truck drivers who say they did it," he said.

But Koch's records show it paid for more oil than it actually collected
in Osage County. Records show the company was short by more than 4,000
barrels in Osage County during the four-year period addressed by the
Tulsa lawsuit, indicating the company paid for 4,000 uncollected barrels
of oil.

Standing Bear said the statute of limitations should not be applied to
his case because Osage shareholders had no way of knowing about the
extent of the alleged wrongdoing by Koch Industries. Tribal officials
led them to believe nothing was wrong, he said. "We didn't see this
evidence until November," Standing Bear said. "The statute of
limitations starts to run when you know about it or when you should have
known about it." Standing Bear would not discuss potential damages.
"That's up to a jury," he said.

A lawsuit alleging similar facts was filed in Seminole County District
Court. Sam Adkisson, Ronny Moseley, Ferrel Nutley and the City of Elk
City claim Koch Industries consistently collected more oil than it paid
for from leases in which they own an interest. "From 1975 through 1989,
Koch consistently reported volume gains from the measurement of oil and
condensate," the suit states. "These volume gains have resulted in Koch
receiving hundreds of thousands of barrels of oil and condensate in the
state of Oklahoma which it has not paid for."

The plaintiffs are seeking a reasonable payment for the lost revenues,
including interest. (TULSA WORLD December 28, 1999)


GRAHAM-FIELD: Settled Shareholder Suit Earlier; Makes Ch 11 Filing
------------------------------------------------------------------
Graham-Field Health Products, a company in which Atlanta deal-maker J.B.
Fuqua once lost $ 30 million on paper, has filed for Chapter 11
protection from creditors. The filing comes after the No. 3 U.S.
wheelchair maker failed in attempts to sell itself following five
consecutive quarterly losses. The Bay Shore, N. Y., company lists more
than $ 201 million in debts and $ 182 million in assets.

Graham-Field's shares have fallen more than 70 percent in the last year.
They closed at 8 cents on December 27, down 5 cents, in over-the-counter
trading. In March 1998, the company closed a $ 215 million
stock-and-debt deal to purchase Atlanta-based Fuqua Enterprises, making
the Fuqua family the second- largest shareholder with 3 million
Graham-Field shares. Soon afterward, Graham-Field informed Wall Street
that it had misjudged the difficulty of processing the Fuqua
acquisition. That deal came on the heels of another large buyout and in
the midst of strong competition. The surprise announcement came after a
run-up in its stock. The revelation sent Graham-Field's stock into a
tailspin. "We just got snookered," J.B. Fuqua said at the time. "We sure
would not have done the deal had we known what we know now."

Graham-Field's proxy statement for its annual meeting in August showed
J.B. Fuqua owning or controlling 7.5 percent of the company's stock.
Information on his current holdings were not available.

Other shareholders subsequently filed a lawsuit against Graham-Field.
That class-action suit was settled earlier this year for $ 20 million.

In addition to the Chapter 11 filing, Graham-Field said it named David
A. Hilton president and chief executive, replacing John G. McGregor, who
resigned. It added that its chief financial officer, Robert J. Gluck,
resigned. (The Atlanta Journal and Constitution December 28, 1999)


HAZELTINE CORP: NY Ap Ct Oks Dismissal of Suit over Hazardous Materials
-----------------------------------------------------------------------
In August 1994, a class action lawsuit was filed by Ronald and Angela
Aprea and other persons against Hazeltine in the Supreme Court of the
State of New York, Suffolk County, alleging personal injury and property
damage caused by Hazeltine's purported releases of hazardous materials
at Hazeltine's facility at Greenlawn, New York. In connection with the
sale of Hazeltine, Esco Electronics Corp indemnified Hazeltine and
GEC-Marconi against expenses and potential liability related to this
suit. The suit seeks compensatory and punitive damages, and an order
enjoining Hazeltine from discharging further hazardous materials and for
Hazeltine to remediate all damage to the property of the plaintiffs.
Esco Electronics Corp. believes that no one and no property has been
injured by any release of hazardous materials from Hazeltine's facility.

In fiscal year 1995, the Court dismissed two counts of the complaint as
a result of Hazeltine's motion to dismiss, and the plaintiffs filed an
amended complaint. The plaintiffs filed a motion to be certified as a
class, and, early in fiscal year 1997, the Court denied this motion. The
plaintiffs appealed, and the state appellate court affirmed the denial
in fiscal year 1998. Currently, settlement negotiations are underway.


LEARNING TREE: Faces Securities Lawsuits in California
------------------------------------------------------
On April 16, 1998, a class action lawsuit was filed against certain
officers and directors of Learning Tree International Inc. in the
Superior Court of the State of California, County of Los Angeles, (Sarah
v. Collins et al., Case No. BC189499), purportedly on behalf of persons
who purchased the Company's Common Stock between May 8, 1997 and
November 3, 1997. On June 29, 1998, a second class action lawsuit was
filed by the same law firms against the same officers and directors of
the Company in the Superior Court of the State of California, County of
Los Angeles (Guthrie v. Collins et al., Case No. BO193465), also
purportedly on behalf of persons who purchased the Company's Common
Stock between May 8, 1997 and November 3, 1997. On August 6, 1998, a
third class action lawsuit was filed by the same law firms against the
Company and certain officers and directors of the Company in the United
States District Court for the Central District of California (Schlagal
v. Learning Tree International et al., Case No. 95-6384ABC), purportedly
on behalf of persons who purchased the Company's Common Stock between
May 8, 1997 and May 13, 1998. On August 10, 1998, the Superior Court
dismissed the Sarah case. On April 15, 1999, the Court of Appeals
reversed the dismissal of Sarah.

On August 27, 1998, plaintiffs amended the Guthrie action to add the
Company and two additional officers as defendants and to expand the
proposed class period to include persons who purchased the Company's
Common Stock between May 8, 1997 and May 13, 1998.

Each of the complaints makes similar allegations of misrepresentations
in certain public disclosures made by the Company at various times
during the class period. Each complaint also alleges that the Company
and the defendant officers and directors concealed an alleged
deterioration of business early in 1997 and that several of the officers
and directors realized profits by trading their shares of Company Stock
while in possession of allegedly concealed material adverse information.
Each complaint seeks an unspecified amount of compensatory damages and,
additionally, seeks attorneys' fees and other costs, interest, and other
relief.

The Company has agreements with officers and directors under which it is
indemnifying them in each of these proceedings. The Company is unable to
estimate the outcome of these matters or any potential liabilities it
may incur. The Company may incur legal and other defense costs as a
result of such proceedings in an amount which it can not currently
estimate. These proceedings could involve a substantial diversion of the
time of some of the members of management, and an adverse determination
in, or settlement of, such litigation could involve the payment of
significant amounts or could include terms in addition to such payments,
which could have an adverse impact on the Company's business, financial
condition, results of operations and cash flows.


MORTGAGE INSURERS: Hit by Lawsuits on Kickbacks, American Banker Says
---------------------------------------------------------------------
For the second time in two years, private mortgage insurers are facing
the possibility of an overhaul of their industry, this time in the form
of a lawsuit charging that the companies illegally courted lenders with
cut-rate services funded by premiums charged to homebuyers.

The lawsuit, filed in U.S. District Court in Augusta, Ga., seeks class
action status and claims that services provided by insurers to lenders,
such as contract underwriting, pool insurance, and captive reinsurance,
amount to kickbacks for referrals of business in violation of the Real
Estate Settlement Procedures Act.

The suit alleges that the insurers have been hurting consumers by
offering these services at a below-market cost and making up the
difference by charging higher premiums.

Though only Mortgage Guaranty Insurance Corp. of Milwaukee and PMI
Mortgage Insurance Co. of San Francisco were named as defendants, many
said they expect other major mortgage insurer defendants to be named
later.

"We suspect that the entire industry will be (or already has been)
named," wrote David M. Graifman, analyst at Keefe, Bruyette & Woods
Inc., in a research note December 27 morning.

A spokesman for GE Capital Mortgage Insurance Corp. said the General
Electric unit had not been named in any suit. A spokeswoman for United
Guaranty Corp. declined to comment. A Radian Guaranty spokesman said he
was unaware of any such proceedings against the company. Republic
Mortgage Insurance Co. and Triad Guaranty did not return calls by press
time.

Whatever the suit's outcome, it could hardly come at a worse time for
mortgage insurers. The companies, which insure the credit risk of home
loans with low down payments, already have a black eye from last year's
debate over and passage of the so-called cancellation law, which took
effect in July. This law requires that insurance be automatically
terminated once the homeowner's equity reaches 22% and gives the
borrower the right to request cancellation once equity is at 20%.

Though the insurers and their lobbying group, the Mortgage Insurance
Companies of America, ultimately supported the legislation, they were
seen as slow to do so and came under attack from politicians who charged
that the companies were ripping off consumers by collecting premiums
even after insurance was no longer needed.

In the Georgia suit, the plaintiffs are seeking three times the amount
they have paid to the insurers, plus attorneys' fees and expenses. They
also want a declaration that the controversial practices are illegal.

The complaint says that thousands are eligible to join the plaintiff
class, which is defined as anyone who has obtained a loan insured by the
companies in question and whose lender got pool insurance or other
special benefits from the insurers since Jan. 1, 1996.

In a statement, PMI's chairman, W. Roger Haughton, said his company
intends "to vigorously defend ourselves in this litigation, and we are
confident that we will prevail." In a separate statement, MGIC said it
will "aggressively defend against this lawsuit and ... deny liability."

Private mortgage insurance is required for any loan with a down payment
of less than 20% in order for the credit to be eligible for purchase by
Fannie Mae or Freddie Mac, the secondary market giants. Though the
consumer pays the premium, it is the lender that decides which insurer
gets the business.

Though mortgage insurance is dominated by just seven companies, it is a
fiercely competitive business. In recent years, companies have competed
by offering costly services to woo business from lenders.

Examples include contract underwriting, in which the insurer processes
loan applications for the lender in exchange for a fee and the
opportunity to supply insurance for any loan that needs it. In other
cases, companies have set up captive reinsurance arrangements, in which
the insurer shares some of the risk and revenues -- with lenders.

The suit was not a complete surprise to industry-watchers. "There are a
number of event-risk issues in the industry, and this is one of them,"
Mr. Graifman, the Keefe Bruyette analyst said of the lawsuit.

Regulatory guidance on Real Estate Settlement Procedures Act violations
has been unclear, one mortgage insurance executive said. The law states
that no person can give or take a fee, kickback, or "thing of value" in
exchange for referring real estate-related business.

Mr. Graifman said he does not expect the suit to have any long-term
impact on insurers' profits. "There's definitely going to be legal costs
involved," he said, "and there's definitely going to be management
distraction and more scrutiny brought to private mortgage insurance. But
I don't see how this is going to impact the volume the industry gets or
how it gets distributed to individual companies in terms of market
share."

In fact, he said, "in a bizarre way this could have a positive impact,
because if companies are providing these services below cost to lenders,
there would actually be a positive impact on earnings" if the insurers
were legally prevented from continuing to do so.

"If one company provides a service like contract underwriting, they all
have to," Mr. Graifman said. "And if they're all legally prevented, they
all won't offer it. It's still a level playing field." (The American
Banker December 28, 1999)


NETWORK ASSOCIATES: San Jose Lawyer Robert Vatuone Is Lead Plaintiff
--------------------------------------------------------------------
Three months ago, the dozens of lawyers litigating the massive
securities class action against Network Associates considered retired
San Jose lawyer Robert Vatuone's application to serve as lead plaintiff
only long enough to snicker at it.

After all, Vatuone was just a lone investor in the anti-virus software
maker who claimed he lost $30,000 due to Network Associates' alleged
financial chicanery. And Vatuone was competing against giant
institutional investors such as the city of Philadelphia and foreign
equity funds, each claiming millions of dollars worth of losses. Not
only that, but the seminal Private Securities Litigation Reform Act of
1995 requires judges to pick institutional investors as lead plaintiffs
as often as they can.

But today, after a series of rulings by U.S. District Court Judge
William Alsup and the surprising responses to those orders by the
institutional investors, Vatuone stands as the lead plaintiff of In re
Network Associates Inc. Securities Litigation, 99-1729.

Alsup had initially appointed the city of Philadelphia as lead
plaintiff. But he refused to automatically appoint the city's law firm
of choice -- Philadelphia's Barrack, Rodos & Bacine -- as lead counsel,
a position potentially worth millions in attorney fees. Instead, Alsup
ordered the city to put the lead counsel designation out to bid.

Earlier this month, Philadelphia declined Alsup's offer to serve as lead
plaintiff, saying that it didn't want to lead the litigation if it
couldn't choose its own counsel. So Alsup solicited more applications
for the lead plaintiff position and received at least three from
individual investors such as Vatuone and one missive from lawyers
representing KBC Equity Fund agreeing with Philadelphia's position.

"KBC Equity Fund does not wish to entertain bids from other lawyers,"
wrote Randall Berger of New York's Kirby McInerney & Squire. "After due
deliberations by senior level personnel, it selected and has dealt
extensively with me and others of our office, and wishes to abide by its
right to select counsel. KBC Equity Fund would not, for example, engage
Weiss & Yourman, or other strangers." Berger concluded his Dec. 13
letter by arguing that KBC Equity Fund "is the most appropriate lead
plaintiff" but wouldn't serve if it couldn't choose its own counsel.

Two days later, Alsup appointed Vatuone as lead plaintiff. "Mr. Vatuone
is a lawyer with 40 years of experience and has practical know-how in
the selection of counsel, managing discovery, evaluating settlement
offers and law and motion practice," Alsup wrote. "Although other
candidates have somewhat larger losses than Mr. Vatuone, the above
factors convince the court that Mr. Vatuone should lead the class. Mr.
Vatuone, of course, will not be paid for his services except to the
extent costs and expenses are allowed by law. Mr. Vatuone must now
select counsel."

Alsup made his decision nearly two months after he held an all-night
hearing in which he closely questioned lead plaintiff candidates,
including Vatuone.

In fact, during that Nov. 4 hearing, Alsup acknowledged that Vatuone's
application was a long shot when stacked up against the institutional
investors. The judge asked the retired lawyer what advantage he had in
leading the litigation over a multi-billion dollar municipal retirement
fund:

Alsup: "There's no question that you have the background to be very
skilled at this sort of thing, but you can see that these institutional
investors have got, in terms of absolute dollars, a much bigger stake.
So what would you add to the mix . . . that an institutional investor
can't bring to the table?"

Vatuone: "Background, training as a boy, and many, many years training
with the Jesuits -- and the essence of that is service."

At that hearing, Vatuone was represented by Allen Ruby of Ruby &
Schofield and James McManis of McManis, Faulkner & Morgan -- two San
Jose firms that hope to win the lead counsel designation, as firms big
and small are now clamoring for Vatuone's business. They have just as
good -- if not better -- shot as the other firms, including Milberg,
Weiss, Bershad, Hynes & Lerach, of winning the lead counsel derby.

First, they enjoy a home-court advantage over the other firms. Vatuone,
as he told Alsup during the Nov. 4 hearing, is personal friends with
both McManis and Ruby. Vatuone and Ruby belong to the same American Inn
at Court chapter while Vatuone and McManis squared off several times as
courtroom adversaries while Vatuone was practicing. "They're excellent
trial attorneys," Vatuone told Alsup, "totally trustworthy."

And since the Ruby and McManis firms are much smaller than their
competitors - they have a combined 19 lawyers in both offices -- they
presumably could do the case more cheaply than their bigger brethren,
who are burdened with larger overhead. "I think we are in a good
position," McManis said. But, he added, "Bob Vatuone is going to make an
independent call on this."

If the McManis and Ruby firms do, in fact, become lead counsel, their
appointment would represent a stunning coup for the two tiny firms.
Securities class actions have long been dominated by a small clique of
big plaintiffs firms led by Milberg Weiss. Rarely, if ever, do outside
firms such as the San Jose outfits ever come close to cashing in on
these federal stock- drop suits.

But that may all change if Alsup's lead plaintiff and lead counsel
rulings, as expected, become the industry standard in federal courtrooms
across the country. "You may see a lot of people like Allen and me
coming into these cases," McManis said. (The Recorder December 28, 1999)



METLIFE: Policyholders Object to $1.6B Settlement for Fraudulent Sales
----------------------------------------------------------------------
A sizeable contingent of policyholders involved in a class-action
lawsuit against the Metropolitan Life Insurance Co. is objecting to a
proposed $ 1.6 billion settlement in the case.

About six million policyholders bought 7.3 million policies from the
insurance company, which is accused of engaging in fraudulent sales
practices. All of the policyholders would be eligible for general relief
under the settlement, or $ 778 million of additional term life
insurance. About 270,000 filed a claim for individual relief; $ 300
million is reserved for cash settlements, and $ 390 for additional
insurance.

But at a hearing in early December before U.S. District Judge Donetta
Ambrose in Pittsburgh, some policyholders argued that they are being
forced to agree to a settlement with little or no input and no recourse
for appeal. "The proposed settlement essentially repeats the very abuses
alleged against MetLife by the class members in the present complaint,"
wrote David Miller, a lawyer with Ricklefs & Co. in Boston, who
represents policyholder John Pentz Jr. For example, just as with the
original sales techniques that are the subject of the lawsuit, MetLife
provides overly technical information to the policyholders about the
proposed settlement, making it impossible for them to understand, Miller
argued. And because the settlement fund is capped, he says there is an
inherent irony: "The greater the number of class members proving that
MetLife engaged in objectionable practices, the smaller the benefit to
each class member."

The original complaint partially concerned a sales practice known in the
insurance business as "churning." That happens when agents persuade
customers to use excess money built up in one policy to pay for another
on the theory that they could get better coverage at little or no
expense to the policyholder.In reality, the customers had to pay
hundreds of dollars to keep the new policies, for which the agent was
paid a bigger commission. Additionally, policyholders also complained
that agents told them dividends would eventually pay for their
insurance, only to discover that when interest rates dropped, the
policyholders had to pay premiums to keep the insurance. The complaints
against MetLife led to similar lawsuits against other insurers.

The settlement before Ambrose would take care of dozens of lawsuits that
were filed by policyholders left out in the cold by other MetLife
agreements, including restitution to 40,000 people and a $ 1.5 million
fine following an investigation of the state's Insurance Department. In
another agreement, MetLife agreed to pay $ 20 million in fines and up to
$ 76 million in restitution to as many as 60,000 policyholders in a
settlement with the National Association of Insurance Commissioners.

"The original sales practices abuses stemmed from excessive commissions
paid by MetLife to its agents. Here, the proposed counsel fees are
exorbitant," Miller wrote. "Moreover, General Relief will provide an
actual, tangible benefit to only a subclass of the class members: those
who die during the next two to five years." According to Miller, the
lead counsel is not entitled to $ 120 million in fees, which he said
result from the application of an excessive multiplier of three. Miller
said fees of that size should be reserved for settlements "that achieve
extraordinary results on behalf of the class, which this settlement does
not."

Without the benefit of a lawyer, few policyholders would be able to
understand the options available to them under the settlement, Miller
said. He said the information mailed to them should be simplified from
its current 32-page form and should be available on the Internet.

Miller also believes the settlement repeats the original abuses by
providing no assistance to policyholders in maintaining insurance
coverage. He believes the General Relief fund should provide benefits
that increase in value the longer the person lives and provide the
greatest value to those who live longest. As proposed, there is a
possibility that policies will lapse because people won't be able to
afford premium payments that they were told would disappear, he said.

Robin Gill, a policyholder from Olney, Md., also appeared before Ambrose
and filed an amended declaration in opposition to the settlement. She
said the benefit that MetLife was offering was inflated at
16-and-one-half times the cost of comparable coverage available on the
open market, and procedural protections and substantive relief didn't
even meet what was available in other insurers' settlements. Another of
her objections is the settlement's plan to appoint a claims evaluator to
decide how much insurance or cash goes to each person who filed a claim.

MetLife has agreed to that provision on the condition that the
evaluator's word is final. But Gill says appeals were available in
similar cases involving Prudential, Sun Life, John Hancock, New York
Life, Phoenix Home Life, Transamerica, and Equitable of Iowa, and to
block such a move "offers no protection of an individual member's
claim." Ambrose is expected to issue a ruling sometime in January. (The
Legal Intelligencer December 27, 1999)


NETWORK SOLUTIONS: Suit Asks Supreme Court for Ruling on Internet Fees
----------------------------------------------------------------------
The Supreme Court has been asked to rule that "the dot-com people" who
register domain addresses on the World Wide Web used its monopoly power
to set fees so high they amount to an unconstitutional tax on Internet
users.

The accusation comes before the high court - which still lacks its own
Web site name - at a time when the question of taxing the Internet is
being debated by the Advisory Commission on Electronic Commerce. Federal
officials contend the widely used computer network is free from
government levies.

"Neither the Internet itself nor domain names have ever been under the
control of the United States government or otherwise been subject to
allocation or licensing by the government," U.S. Solicitor General Seth
P. Waxman said in the Justice Department reply for the Commerce
Department and federally-financed National Science Foundation.

Network Solutions Inc. is a Herndon company that calls itself "the
dot-com people" because it pioneered registration of the 5 million or so
Web addresses ending in ".com," ".net" or ".org."

Ten individuals and companies charge that Network Solutions charged 100
times more than its costs for that service and split fees with the NSF
under a tax plan that Congress ratified after the fact.

The plaintiffs seek damages of more than $100 million and charge Network
Solutions' monopoly violates anti-trust laws.

"Even Congress cannot be exempted from the Constitution. It's a
quintessential tax," said Washington lawyer William H. Bode, who
represents plaintiffs in the lawsuit dismissed while seeking
certification as a class action against Network Solutions and NSF.

"It's our contention that both the $30 fee they've since dropped and the
remaining $70 charged for initial registration and the $35 fee to renew
domain names are unconstitutional taxes to the extent that they exceed
the cost of providing the service," Mr. Bode said in an interview.

"The Constitution does not allow Congress to retroactively ratify a tax,
so therefore it's dead on arrival," he said, estimating that the NSF has
received and is spending $65 million collected without authority.

The government contends Congress had the constitutional power to ratify
the $ 30 fee paid to NSF even if it was a tax, as District Judge Thomas
F. Hogan ruled before throwing the case out in a decision the U.S. Court
of Appeals for the D.C. Circuit affirmed on May 14.

Mr. Waxman said that fee is no longer collected. The appeals court
rejected claims the $70 portion became a tax by violating a federal law
called the Independent Offices Appropriations Act since no government
agency provided the money involved. Congress could have imposed a tax in
advance, Mr. Waxman said, and could do so retroactively.

"The registration services for which the challenged fees were charged
were not provided 'by an agency' but rather by Network Solutions, a
private company," Mr. Waxman wrote in a brief. He asked the Supreme
Court to turn away the appeal and leave Network Solutions free to
collect $70 for registration and $35 for renewing domain addresses.

The company currently is experimenting with a plan that subcontracts
U.S. registration to 50 other firms, while it continues to handle
international registrations at a charge per address of $500 for one
country and $4,250 for exclusive, worldwide use.

It will remain in charge of the database that manages Internet addresses
for at least four years, under an agreement it reached with the federal
government in September.

Network Solutions' attorney, Michael L. Burack, argued in his brief that
fees charged by the company for registering Internet addresses are not
subject to terms of the Independent Offices Appropriations Act. He said
the IOAA law applies a profit limit of 15 percent to pricing goods or
services sold by a government agency. Mr. Burack says the link to NSF
does not raise Network Solutions' transactions to those of a government
agency.

"No court has ever construed the IOAA to apply to fees for services
provided by private parties," Mr. Burack said in asking the justices not
to take the case for argument and a decision on its merits.

"The company's cost of registering is less than a buck. Every time you
renew, when there is no cost at all, they charge 35 bucks," Mr. Bode
responded.

Network Solutions would face no threat to its dominance of Internet
communications unless four justices vote to hear the appeal at a case
conference, probably in late January. (The Washington Times December 28,
1999)


PUERTO RICO: Thousands May Sue for Redress for Secret Police Dossiers
---------------------------------------------------------------------
When Gov. Pedro Rossello publicly apologized earlier this month to
victims of state spying here, he hoped to close a painful chapter in the
history of this U.S. commonwealth.

But those who are seeking retribution for victims of snooping by the
secret police say that is likely to take many more years and
significantly more money than Rossello offered.

"It is appropriate that as we reach the end of the 20th century, we will
close this embarrassing chapter in our history and start the new century
with only the memory of this unjust and shameful practice," Rossello
said in announcing his executive order on Dec. 14.

He offered $ 6,000 to victims of the so-called carpetas, or subversive
dossiers campaign, who had sued the government, and $ 3,000 to those who
had announced their intention to sue. Those who accept must release the
commonwealth from liability for keeping the secret files and using the
information to discriminate against people.

Lawyers for carpetas victims seeking redress in court say the order
excludes most of the thousands of Puerto Ricans, largely
pro-independence supporters, who were spied upon by a commonwealth
police intelligence unit. Over half a century the police unit built up a
vast network of informers--everyday people like the victims themselves.
Other governmental and private institutions also provided information
for the files.

The practice is widely believed here to have had the blessing, if not
the encouragement, of federal authorities on the island. The files
themselves, containing seized U.S. mail, FBI agents' signatures and
requests for information from Customs Service officials, confirm that
they were at least aware of the practice.

Information in the carpetas allegedly was used to deny employment or
take other punitive actions such as unlawful arrests against Puerto
Ricans from every walk of life, from students and teachers to farmers
and cab drivers, lawyers and artists. "The government has lost an
historic opportunity, and the executive order's impact on the case will
be negligible," said Charles Hey Maestre, one of the lead attorneys for
carpetas plaintiffs.

So far, more than 1,300 lawsuits have been filed against the
commonwealth government seeking more than $ 1 billion in damages. Many
of the plaintiffs have consolidated their cases, with one of the largest
being sponsored by the non-profit Puerto Rican Civil Rights Institute,
which has 59 named plaintiffs and about 1,000 more who have announced
their intention to file under class action status.

Hey Maestre said that if the case ever attains class action status, more
than 100,000 Puerto Ricans could qualify and--based on the one
settlement reached so far, $ 45,000 for Jose Caraballo Lopez of
Mayaguez--the government's financial liability could mushroom.

David Noriega, the former representative and gubernatorial candidate for
the Puerto Rican Independence Party who filed the first carpetas lawsuit
in the late 1980s, called Rossello's apology "a very important step in
the healing of wounds and the path to reconciliation."

But Hey Maestre said the order's limits--for example, it applies only to
those whose carpetas exceed 50 pages and to single families rather than
individual family members--cut out most potential beneficiaries.

While hundreds of carpetas victims could benefit from Rossello's
executive order, Hey Maestre said it is not "a genuine attempt to fairly
compensate the thousands of Puerto Ricans who for decades suffered the
effects of political persecution."

The governor's order is estimated to apply to about 2,000 of the more
than 100,000 people on whom the commonwealth kept secret dossiers.
Commonwealth officials said the number of people covered and their
compensation from a $ 5.7 million fund are realistic.

Puerto Rico Justice Secretary Jose Fuentes Agostini said in an interview
last week that discussion of the carpetas case began after President
Clinton signed an executive order apologizing and offering monetary
compensation to Japanese Americans who had been detained during World
War II.

"The governor felt that the government of Puerto Rico, as an entity,
needed to ask forgiveness from the people of Puerto Rico even though
what had occurred had occurred under previous administrations," Fuentes
Agostini said, adding that shortly after taking office in 1993 Rossello
also made government agency heads sign sworn statements pledging not to
compile carpetas. "He has been the only one who ever did anything about
this issue in Puerto Rico."

But not everyone is pleased. "After all those years of persecution, the
government is saying, 'Here, take this $ 6,000 and shut up,' " said
Oscar Guzman Cruz, 51, a high school teacher who is part of the Civil
Rights Institute case. "I'm a hard-working person. There was no reason
to spy on me."

Guzman traces his carpeta to his friendship with Carlos Soto Arrivi, one
of two young independence supporters killed by police in 1978. The
police said the two youths were "terrorists" trying to blow up the
communications equipment, but evidence showed they had been lured to a
hill with radio and television transmission towers and were kneeling
there when they were shot.

The investigation into their deaths brought to light the secret
dossiers, which Puerto Rico's Supreme Court outlawed in 1987, the same
year the infamous Police Intelligence Unit was dismantled.

When the dossiers were released in 1992, many islanders--including
school teachers, union leaders and writers--were shocked to learn that
friends, neighbors and family members had secretly spied on them for
years.

One client of Hey Maestre, a 16-year-old high school student, had books
and other materials confiscated in Puerto Rico after attending an
international socialist youth activity in Finland. He claims authorities
then expelled him from school and blocked his admission to college.

The carpetas also were used in child custody hearings and employment
interviews. And in some cases, entire families were drawn into the web
of state spying because one member was considered "subversive." That's
the case with Ramonita Velez, 44, whose 7-year-old son in 1979 was taken
for a ride in a police helicopter to be questioned about his relatives.
"It turned my life upside down," said Guzman, who discovered in his
carpeta that his principal, colleagues and former students spied on him.

But not all victims of the practice believe in seeking redress from the
courts. "I've never thought about a lawsuit because that's the people of
Puerto Rico's money we are talking about," said Marilyn Perez, 39, who
has a carpeta but is not suing. The mother of three also said she has
never read her dossier all the way through. "I glanced it over, then put
it down. It was so repugnant," she said. Perez, who has worked as a
journalist for Spanish-language media in New York and San Juan for
years, describes herself as a "refugee" because she believes public
administration, in which she has a graduate degree, is her true calling.
"Despite all the applications I made, I could never get a job with the
government," she said.

                          Background - Puerto Rico

1508: Spanish colonization begins.

1873: Slavery abolished.

1898: Puerto Rico gains autonomy under Spanish rule; U.S. troops take
      island during Spanish-American War; U.S. military government
      takes over.

1900: Civilian colonial administration established.

1917: U.S. citizenship granted to Puerto Ricans.

1937: 37 killed in anti-U.S. protest in Ponce.

1946: First Puerto Rico-born governor, Jesus T. Pinero, appointed.

1948: Puerto Ricans elect governor for first time (Luis Munoz Marin).

1952: Commonwealth administration adopted for island.

1968: First pro-statehood governor, Luis A. Ferre, elected.

1993: Retaining commonwealth status edges out statehood in local
      plebiscite; independence a distant third.

1998: U.S. House passes bill authorizing new plebiscite on island's
      status; goes to Senate for consideration. Senate refuses to allow
      formal recognition of a Puerto Rican vote. (Source: Associated
      Press, published in The Washington Post December 28, 1999)


STORAGE TECHNOLOGY: Colo. Ct Hears Proposed Settlement for ADEA & ERISA
-----------------------------------------------------------------------
On October 3, 1995, certain former employees of the Registrant filed
suit in the United States District Court for the District of Colorado
(the "Court"), Civil Action No. 95-B-2525, against the Registrant,
alleging in the amended complaint that the Registrant violated the Age
Discrimination in Employment Act of 1967, as amended ("ADEA") and the
Employee Retirement Income Security Act of 1974 ("ERISA"), between the
period of April 13, 1993 and December 31, 1996. The plaintiffs sought,
among other things, compensatory damages in an unspecified amount,
including the value of back pay and benefits; reinstatement as employees
of the Registrant, or, alternatively the value of future earnings and
benefits; and exemplary damages. On November 26, 1997 and November 9,
1988, respectively, the Court granted the plaintiffs' request to proceed
as a class action on the ADEA claims and the ERISA claims. Approximately
1,300 persons were eligible members of the ERISA class, including
approximately 400 persons who were also eligible members of the ADEA
class. The Registrant filed an answer denying all claims and filed
motions for summary judgment and decertification of the classes.

On December 15, 1999, at a preliminary fairness hearing (the
"Preliminary Hearing"), the Registrant and the plaintiffs presented the
Court with a Proposed Settlement Agreement (the "Agreement"), which
would result in the Registrant paying $5 million into an escrow account
(the "Escrow Account") to fund the settlement. The Registrant and the
plaintiffs also presented to the Court the reasons why the Agreement was
"fair and reasonable" to all members of the plaintiffs' classes. At the
Preliminary Hearing, the Court preliminarily determined that the
Agreement met the standard of "fairness and reasonableness." The
Agreement states that it shall not be construed as an admission by the
Registrant that it violated any law. The Registrant has already fully
funded the Escrow Account, from which all sums due pursuant to the
Agreement will be paid. The Company will recognize a pre-tax expense of
$5.0 million during the fourth quarter of 1999 in connection with this
Agreement.

Based upon the results of the Preliminary Hearing, the Registrant
reasonably anticipates that on or about March 8, 2000, the Court will
hold its "final fairness hearing," at which time each plaintiff will be
given an opportunity to state his or her objections to the Agreement.
Assuming that the Court issues a final order that the Agreement is fair
and reasonable, the Escrow Account will be distributed to the plaintiffs
and their attorneys. The Registrant anticipates that such funds will be
distributed in the first half of 2000.


TOBACCO LITIGATION: Fl. Sp. Ct. Allows Jury to Consider Lump-sum Award
----------------------------------------------------------------------
Rejecting a last-ditch attempt by tobacco companies to forestall the
risk of massive punitive damages in a Florida class-action case, the
Florida Supreme Court on December 27 said it will allow the jury to
consider a potentially crippling lump-sum award to as many as hundreds
of thousands of sick or deceased smokers.

The ruling helped drive tobacco stocks, already beaten down by
litigation fears, into even lower territory.

The court's decision upstaged the industry's filing on December 27 of a
motion to dismiss the multibillion-dollar lawsuit that the Justice
Department filed against it in September.

In papers filed in U.S. District Court in Washington, cigarette makers
asked federal Judge Gladys Kessler to throw out the government's suit,
which seeks recovery of more than $ 20 billion per year purportedly
spent by the government to treat smoking-related ailments of federal
employees, military veterans and Medicare recipients.

In their 83-page brief, the companies said the U.S. is not legally
entitled to recover the funds and is demanding reforms the industry
already agreed to in its $ 246 billion in settlements with the states.
The companies are saying, "Lay off, enough's enough," one tobacco lawyer
said.

But Wall Street only had eyes for the Florida ruling, which shaved
already depressed tobacco share prices to near or below 52-week lows.
Industry leader Philip Morris fell $ 1.94 to close at $ 21.50; No. 2 RJ
Reynolds Tobacco Holdings slipped 56 cents to $ 16.75, a new 52-week
low; and Loews Corp., owner of Lorillard Tobacco, skidded 94 cents to $
60.50. All trade on the New York Stock Exchange.

Eager to put the best face on the Florida setback, William S. Ohlemeyer,
a vice president and associate general counsel at Philip Morris, said
the state's high court had not ruled on the merits of the industry's
position but only refused to intervene until the trial is over.

In the initial phase of the long-running trial, the six-member jury
found that the industry had conspired to conceal the hazards of smoking
and could be held liable for a host of smoking-related ailments
afflicting a vast class of Florida smokers that might number in the
hundreds of thousands.

In phase two of the trial, which resumes Jan. 18 in Miami's Dade County
Circuit Court, the jury is considering the specific claims of three
cancer victims who have been designated class representatives. But Judge
Robert Kaye has also told jurors to determine whether to award a lump
sum of punitive damages for the entire class before determining how many
members it has or how much compensatory damages they are owed.

December 27’s ruling "gives this jury the opportunity to vent the same
anger that they showed at the end of phase one," said Martin Feldman, a
tobacco analyst with Salomon Smith Barney.

Should jurors award punitive damages, the industry, in order to appeal,
could be required by the court to post a bond covering the full amount
of damages plus interest for the period of the appeal. And if the
damages were in the tens or hundreds of billions of dollars, the
companies would probably be unable to post the bond. That could force
them to abandon the appeal and seek a settlement on harsh terms.

"While the result is disappointing, it is not surprising" given the
usual reluctance of appellate courts to intervene in an ongoing trial,
Ohlemeyer said in a prepared statement. He also said he didn't believe a
bond would be required during an appeal.

In its lawsuit filed Sept. 22, the Justice Department is seeking damages
under two cost-recovery statutes and the federal racketeering law known
as RICO.

The suit contends that the industry conspired for decades to conceal the
risks of their products, thus increasing the number of people who became
addicted to smoking and boosting the health-care burden of the
government.

In its December 27 filing, the industry said the government has relied
on legal theories "that have never been recognized by any court before,"
and "that it has never asserted before."

Moreover, the companies said that in trying to force them through the
lawsuit to change their business practices, the government had "totally
failed" to acknowledge that the reforms it seeks are already in place
thanks to settlements with the states.

Justice lawyers declined to comment. "We gladly will respond when our
response is due" in February, said Justice spokeswoman Kara Peterman.

Judge Kessler tentatively has set a trial date of January 2003, leading
to speculation the case will be settled by then.

Mary Aronson, a Washington-based legal and financial analyst, said such
a settlement might resolve not only the federal lawsuit but also the
battle over the authority of the Food and Drug Administration to
regulate tobacco.

It might also include creation of a compensation fund to settle lawsuits
by sick smokers, she said. The industry is looking to "bring
predictability to its stocks, and the government, I'm sure, is not
particularly enamored with having to spend the next three years
preparing" for trial, Aronson said. (Los Angeles Times December 28,
1999)

According to Agence France Presse of December 28, 1999, tobacco giant
Philip Morris said that the industry would continue to file appeals
against the class action lawsuit. "Today's Florida Supreme Court
decision ... is a procedural decision, and not a decision on merits of
Philip Morris's legal position," said a statement from William
Ohlemeyer, vice president and associate general counsel at Philip
Morris.

Tobacco makers said they did not feel bound by the Supreme Court's
decision. "Today's two-line order will not affect the earliest possible
appeal of any verdict in the case," Ohlemeyer's statement said.

Experts said the class action lawsuit could cost the industry between
200 and 500 billion dollars.

In a separate action, tobacco manufacturers appealed on December 27 to
the US Supreme Court to reject a lawsuit filed by the Justice Department
in September seeking billions of dollars in federal health care costs,
alleging that the industry misled the public about the dangers of
smoking.

According to the tobacco industry, the government's lawsuit overlooks
the historical, 206-billion-dollar compensation agreement they signed
with 46 states in 1998, designed to preclude similar legal actions in
the future.

US tobacco makers included in the Florida case are Philip Morris Inc.,
R.J. Reynolds Tobacco Co., Brown and Williamson, Lorillard, Liggett,
British-American Tobacco, as well as the Council for Tobacco Research
and the Tobacco Institute.


UICI: Scott & Scott LLC Files Securities Lawsuit
------------------------------------------------
Scott & Scott LLC (nrothstein@scott-scott.com) announced on December 27
that a class action has been commenced against UICI (NYSE:UCI-news;
Class Period 4/16/99-12/9/99).

The complaint charges UICI and certain of its officers and directors
with violations of the federal securities laws by making
misrepresentations about UICI's business and earnings growth in its
CreditServ division. The complaint alleges that in order to inflate the
price of UICI's stock, the defendants caused the Company to falsely
report its results for the first, second and third quarters of 1999
through the use of unjustifiable assumptions to calculate its reserves
for credit card losses, thereby materially overstating its net income
and EPS in at least the first three quarters of 1999. On December 9,
1999, UICI's scheme unraveled as it was forced to reveal that it would
record a charge in the fourth quarter of 1999 of $79 million
attributable to increased charges to reserves for credit card losses and
a write-down of certain assets associated with its ACE Credit Card
program which began in the fourth quarter of 1998. This revelation
caused trading in UICI stock to be halted on the New York Stock Exchange
and ultimately the stock plummeted to $9-7/8 per share, a decline of 66%
from its Class Period high.

Contact: Neil Rothstein, Esq. of Scott & Scott, LLC 800/449-4900, or
800/404-7770, or 619/338-3887. E-mail at nrothstein@scott-scott.com


WASHTENAW MORTGAGE: MS Ct Dismisses Lawsuit over Yield Spread Premium
---------------------------------------------------------------------
Rose et.al. v. Washtenaw Mortgage Co.,Case No.4:98cv33-B-B, U.S.
District Court for the Northern District of Mississippi. On February10,
1998, Washtenaw was named as a defendant in a class action lawsuit
alleging that the yield spread premium payments from Washtenaw to
mortgage brokers were either payments for the referral of business, or
duplicative payments. The suit sought unspecified damages. On June2,
1998, plaintiffs filed a motion for class action certification. On
August4, 1998, Washtenaw filed a motion to stay the action, citing the
order denying class certification in Chandler and on September11, 1998,
the court ordered all proceedings stayed pending a final judgement in
Chandler. The case was dismissed in November1999.


WASHTENAW MORTGAGE: Sued in Alabama & Georgia over Yield Spread Premium
-----------------------------------------------------------------------
Pelican Financial was incorporated on March 3, 1997 under the laws of
the State of Delaware and registered as a bank holding company with the
Board of Governors of the Federal Reserve System. Pelican Financial was
formed to acquire Washtenaw and Pelican National, a newly organized
national bank. On June 22, 1997, Pelican Financial acquired all the
common stock of Washtenaw in exchange for 600,000 shares of the
Company's $0.10 par value common stock. The transaction has been
accounted for as a pooling of interests and, accordingly, the
consolidated financial statements include the accounts of Washtenaw
prior to the acquisition by Pelican Financial. Pelican Financial had no
operations prior to the acquisition of Washtenaw. As of the acquisition
date, Washtenaw had recorded revenues of $3,460,376 and a net loss of
$326,299. There were no material intercompany transactions between
Washtenaw and Pelican Financial prior to the acquisition. Washtenaw's
fiscal year-end has been changed from January 31 to December 31 to
conform to Pelican Financial's fiscal year-end.

Chandler, et.al. v. Hilton Mortgage Corporation and Washtenaw Mortgage
Co.,Civil Action No.94-A-1418-N, U.S. District Court for the Middle
District Alabama ("Chandler").

On November4, 1994, Washtenaw was named as a defendant in a class action
lawsuit relating to its method of calculating finance charges in lending
disclosures required by the Federal Truth in Lending Act ("TILA"). The
complaint was subsequently amended to remove the TILA claim and add a
claim under the Real Estate Settlement Procedures Act ("RESPA"), a
request for declaratory judgement, and a fraud claim. The amended
complaint alleges that the yield spread premium payments from Washtenaw
to mortgage brokers were either payment for the referral of business, or
duplicative payments. The suit seeks unspecified damages. On July29,
1998, the court denied class certification. However, at the request of
the plaintiff, the court has permitted plaintiff to refile the motion
for class certification. Pelican Financial believes that Washtenaw is
and has been in compliance with applicable federal and state laws.

Hearn, et.al. v. Washtenaw Mortgage Co.,Case 4:98-CV-78 (JRE), U.S.
District Court for the Middle District of Georgia. On February19, 1998,
Washtenaw was named as a defendant in a class action lawsuit alleging
that the yield spread premium payments from Washtenaw to mortgage
brokers were either payments for the referral of business, or
duplicative payments. The suit seeks unspecified damages. On June22,
1998, Washtenaw filed its answer denying all liability, asserting
affirmative defenses, and further asserting that a class should not be
certified. There have been no additional proceedings in this matter
other than limited discovery. Pelican Financial believes that Washtenaw
is and has been in compliance with applicable federal and state laws.


WEYERHAEUSER CO: $105M Settlement Announced for Cemwood Roofing Shakes
----------------------------------------------------------------------
A proposed $105 million Settlement has been reached between Weyerhaeuser
Company Limited, formerly known as MacMillan Bloedel Limited, and
MacMillan Bloedel (U.S.A.), Inc. and plaintiffs in the class action
lawsuit, Richison, et al. v. Weyerhaeuser Company Limited, et al., No.
005532 (Cal. Super. Ct., San Joaquin County), to settle claims with
respect to roofing shakes manufactured by American Cemwood Corporation.
Plaintiffs and the Class have not settled with either Cemwood (with the
exception of punitive damage and civil penalty claims) or the vast
majority of Defendants' insurance carriers. Weyerhaeuser Company Limited
recently acquired MacMillan Bloedel Limited and MacMillan Bloedel
(U.S.A.), Inc., its wholly owned subsidiary. American Cemwood
Corporation is a wholly-owned subsidiary of MacMillan Bloedel (U.S.A.),
Inc.

The class action involves all persons who owned, own or acquire property
on which Cemwood shakes are or have been installed, and live in one of
the following states: Alaska, Arizona, Arkansas, California, Delaware,
Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Michigan, Minnesota, Missouri, Montana, Nebraska,
Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio,
Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming. This
class action does not include property in the state of Colorado.

Plaintiffs, on behalf of the Class, seek compensatory damages against
Defendants based upon theories of negligence and strict liability for
damages resulting from installation of defective Cemwood shakes on their
homes or other structures. Defendants have denied and continue to deny
each and every allegation and all charges of wrongdoing or liability of
any kind. The proposed partial Settlement creates a fund in the
guaranteed principal amount of $105 million dollars, plus any interest
that accrues on the fund prior to distribution. Each member of the Class
who files a timely and valid claim form and whose property has suffered
qualifying damage will receive a portion of the Settlement fund
contingent upon the number of shakes owned, the total number of claims
made, and the ultimate class recovery. The Settlement Fund to be
distributed to the Class will be net of legal fees and expenses and
other Settlement costs.

Class Counsel Bill Bernstein, Esq. of Lieff, Cabraser, Heimann &
Bernstein LLP, San Francisco, California, stated that "although this is
a partial settlement of the litigation, it provides significant, fair
and expeditious relief for homeowners." Class Counsel William M. Audet,
Esq. of Alexander, Hawes & Audet, LLP, San Jose, California, added that
"we intend to vigorously prosecute claims against the non-Settling
Defendant on behalf of Class Members."

The American Cemwood Corp. building products included in this Settlement
were manufactured and marketed under the brand names of Cemwood Shakes,
Permatek Shakes, Permatek II Shakes, Trieste Tiles, Pacific Slate, Royal
Shakes and Cascade Shakes. These shakes are unique building products
composed of 2/3 Portland cement and 1/3 wood fiber that are formed to
look like a cedar shake, slate or tile roofing product. Some shakes may
be stamped with "A/C," "Permatek," the letter "T," or the letter "P."

The last day for potential class members to comment on, object to, or
exclude themselves from this proposed Settlement is May 5, 2000. A
Fairness Hearing regarding the proposed Settlement will be held on May
26, 2000. For more information and a complete notice package,
individuals should call toll free 1-800-708-3266.


* Industries Call on Congressional Allies for Legislation to Curb Suits
-----------------------------------------------------------------------
According to USA Today, business and its political allies are mobilizing
to stifle the hottest trend in the nation's courts: sweeping lawsuits
against entire industries by coalitions of cities, states, the federal
government and high-powered trial lawyers. Tobacco, handguns and HMOs --
the first industries to undergo the legal assault -- are trying to cut
the lawsuits off at the courthouse door.

In the latest action, cigarette makers asked a federal court on December
27 to dismiss the federal government's lawsuit seeking billions of
dollars for the cost of treating smoking-related illnesses. Plaintiffs,
saying they can get no satisfaction in Congress or state legislatures,
are seeking billions in damages for alleged past harms and detailed
prescriptions for future industry conduct. "The era of big government
may be over, but the era of regulation through litigation has just
begun," former Labor secretary Robert Reich wrote approvingly in USA
TODAY earlier this year.

Industry has been fighting back by getting its allies in Congress and
state legislatures to introduce bills aimed at banning or restricting
the lawsuits. In general, the disputes pit corporations and Republicans
against trial lawyers and Democrats:

* Tobacco

  Tobacco companies succumbed when states sued en masse, using legal
  theories that avoided the traditional "personal responsibility"
  defenses the cigarette makers had successfully raised against
  individuals.

  A year ago, major tobacco companies agreed in settlements to pay $
  246 billion to the states and the District of Columbia over 25 years
  to defray the costs of treating smoking-related diseases. The Justice
  Department filed its own suit last month to recoup Medicaid outlays.

* Handguns

  Led by New Orleans in October 1998, 29 cities and counties have
  riddled handgun makers with suits modeled on the tobacco complaints.
  Although three of the actions have been dismissed, gun manufacturers
  quickly began talks with big-city mayors that could lead to a
  settlement requiring more safety devices on guns and factory cutoffs
  of dealers who cater to criminals.

  To step up settlement pressure, the U.S. Department of Housing and
  Urban Development (HUD) threatened this month to sponsor a class-
  action lawsuit against the gun industry by public housing
  authorities.

* Managed care

  In October and November came civil complaints against managed-care
  organizations.

  Connecticut Attorney General Richard Blumenthal, a Democrat, sued an
  HMO to end the alleged practice of limiting doctors and patients to
  an approved list of drugs. Pascagoula, Miss., lawyer Richard Scruggs,
  a veteran of asbestos and tobacco wars, brought class-action fraud
  suits against seven HMOs.

                          Courthouse sieges

Conservative legal observers say more industries face courthouse sieges
unless the trend is squelched. "If the gunmakers lose, alcohol is bound
to be in trouble," says Eugene Volokh, a UCLA Law School professor.

Alabama Attorney General Bill Pryor, a Republican, says carmakers
selling to drunks or speed-loving teenagers might be vulnerable to
"negligent marketing and distribution" claims that have met some success
in gun lawsuits.

Multiple suits by governments can rock an industry with mountainous
legal defense bills that make surrender inevitable, critics say. Four
small gun manufacturers said they were forced into bankruptcy by
litigation costs. Gun industry insurers are balking at coverage. "It's
extortion by litigation," Pryor says.

            How Pro-Business Forces Are Counterattacking

Legislatures in 14 states, Texas the largest, have passed laws barring
cities and counties from suing industries for indirect harm.

Sen. Mitch McConnell, R-Ky., introduced the Litigation Fairness Act in
June. It would give companies more defenses against government lawsuits.

Sen. Kit Bond, R-Mo., chairman of the subcommittee overseeing HUD's
budget, sent letters to HUD Secretary Andrew Cuomo and Attorney General
Janet Reno last week, demanding an explanation of their legal authority
to organize the proposed class-action handgun lawsuit. An attempt in
Congress to deny the Justice Department funds for its tobacco suit
failed late in this year's budget process.

The Second Amendment Foundation, a gun-rights group based in Bellevue,
Wash., sued the U.S. Conference of Mayors Nov. 30 in a Washington, D.C.,
federal court, alleging a conspiracy to violate gun buyers'
constitutional rights by ganging up with lawsuits.

                            Campaign donations

Plaintiffs say they must go to court because legislators who are plied
with campaign donations shield the suppliers of certain products and
services from changing socially harmful ways of doing business. "The
courts provide the only available forum because Congress is blocked by a
powerful and determined minority," says Richard Daynard, chairman of the
Tobacco Products Liability Project at Boston's Northeastern University.

In 1998, a massive tobacco-settlement bill that would have raised
cigarette taxes collapsed in Congress.

This year, despite the public outcry over the Columbine High School
massacre, Congress passed no gun-control bills. The House passed a
bipartisan bill that would enable patients to sue HMOs for shoddy
medical care, but House Republican leaders appointed foes of the bill to
serve on a conference committee that will try to reconcile differences
with a weaker Senate bill.

The tobacco industry has given members of Congress, mainly Republicans,
more than $ 25.5 million in individual and party contributions since
1993, the Center for Responsive Politics says.

The NRA-led gun lobby also has spent big on Capitol Hill, $ 7.2 million
since 1993. Managed-care organizations, under increased legislative
threat, have contributed $ 11.7 million since 1993.

Overwhelmed, advocates of business changes are now litigating instead of
lobbying. "Industry lobbyists have no clout with the court," New York
University law professor Stephen Gillers says. "They can't take judges
and juries out to dinner or get them tickets to Knicks games."

                         Historical precedent

There's precedent for seeking court help when legislatures seem
indifferent. The private desegregation suits of the 1950s bypassed a
Congress dominated by white Southern barons.

What's new is that plaintiffs include tight alliances of governments. As
if they were accident victims, governments increasingly hire pit-bull
private lawyers to handle their cases on a contingency-fee basis.

At the center of the government lawsuits are litigators like Scruggs,
53. He is the brother-in-law of Senate Majority Leader Trent Lott,
R-Miss., a foe of trial lawyers.

Scruggs helped persuade Mississippi Attorney General Michael Moore to
file the first state lawsuit against Big Tobacco. Later, Scruggs
coordinated the work of state-hired private lawyers.

The huge fees awarded to the tobacco plaintiff lawyers -- $ 12 billion
so far -- are a sore subject for business leaders. "I think the trend's
about personal gain," says Karen Ignani, president of the American
Association of Health Plans. Scruggs says trial lawyers need sizable
fees for the war chests needed to take on their next industrial targets.
"It's a cheap shot to blame lawyers," Gillers says. "It is hard-wired
into the system that if there's a large group of injured people, lawyers
try to figure out a judicial remedy. That's how our law grows," Gillers
says. (USA TODAY December 28, 1999)


* The National Law Journal Names David Boies Lawyer of the Year
---------------------------------------------------------------
The National Law Journal(R), the nation's leading weekly legal
newspaper, named antitrust maven David Boies its 1999 Lawyer of the
Year, adding one more victory to the antitrust expert's repertoire. In
the December 27th issue, the NLJ calls Mr. Boies, who was thrust into
the spotlight as lead trial attorney for the Justice Department's
landmark antitrust suit against Microsoft Corp., "the Michael Jordan of
the courtroom, an arena where he employs singular gifts -- a steel-trap
mind, a laser-sharp memory, a head for chess and a skill with words to
raise the level of the game for all involved."

Mr. Boies' stellar trial advocacy skills and proven results won him the
NLJ's Lawyer of the Year honor. The paper highlights the week of Nov. 1,
when Mr. Boies ratcheted up four huge wins, including getting seven of
the world's largest drug companies to agree to pay $1.17 billion to
settle an antitrust class action that charged them with conspiring to
fix vitamin prices. It is the largest settlement in an antitrust class
action. The week was capped off by the Microsoft ruling, in which U.S.
District Judge Thomas Penfield Jackson's fact-findings ruled heavily in
favor of the Justice Department.

Mr. Boies has enjoyed a spate of media attention for his legal victories
this year, including his induction into Vanity Fair magazine's 1999 Hall
of Fame, its annual photo album of stars; a feature in People magazine;
and an hour-long interview with Charlie Rose on his television program.
Runners up for the 1999 Lawyer of the Year were all of the lawyers who
fight to exonerate innocent death row inmates; and Michael Greve and
Michael McDonald, who founded the Center for Individual Rights, a
conservative group dedicated to furthering libertarian and conservative
causes.

The full text of the stories is available in the latest issue of The
National Law Journal and online at http://www.nlj.com


                               *********


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.

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