/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000120.MBX C L A S S A C T I O N R E P O R T E R Thursday, January 20, 2000, Vol. 2, No. 14 Headlines AMERITECH: CUB Alleges of Duping Phone Customers into Expensive Service FREEMARKETS INC: Kirby, McInerney Files Securities Lawsuit in PA HMO: 2 Doctors Sue Humana for Reducing Physician Payments Unfairly KNEPPER & MOGA: IL Suit against Law Firm over Debt Collection to Go on LAW SCHOOL: Admission Council Sued Again for Bias against the Disabled MANHATTAN INVESTMENT: Berman DeValerio Makes Securities Investigation MITSUBISHI MOTOR: Black Employees Charge of Racial Bias at IL Plant MOBIL OIL: Chronology Of the Aviation Fuel Crisis MOBIL OIL: Fuel Test Still Days Away; AOPA Expresses Disappointment NETWORK SOLUTIONS: Sp Ct Denies Thomas Petition over Registration Fees PAYDAY LENDER: Edelman, Combs Files Suit in Hammond V. Advance America SKECHERS U.S.A.: Wolf Haldenstein Files Securities Suit in California TOBACCO LITIGATION: Florida Jury Hears About Smoking Woman's Cancer TOYSRUS.COM: Sued Again over Late Deliveries of Net Ordered X’mas Gifts TRUCKING COS: Truck Drivers at CA Port Are Contractors, Ct Rules TYCO INTERNATIONAL: Alfred G. Yates Files Securities Lawsuit in Florida WAR VICTIMS: Foley Backs Japan; Treaty Bans Claims by Slave Laborers WORKERS’ UNIONS: 2 CA Suits Attack Compulsory Fees from Nonmembers Y2K LITIGATION: CA Ct Oks Quadramed to Force for Arbitration under Act * Lawmakers Again Propose Fee Limits for Copying Medical, Legal Records ********* AMERITECH: CUB Alleges of Duping Phone Customers into Expensive Service ----------------------------------------------------------------------- Chicago-area phone customers are being duped by Ameritech to buy service packages that cost them more than the basic rate, consumer advocates at the Citizens Utility Board charged in a complaint on January 18 to the Illinois Commerce Commission. CUB is asking the ICC to order Ameritech to stop what it calls deceptive practices and to pay refunds to overcharged customers. Ameritech derided CUB's allegations as "ludicrous and totally without merit," and characterized the complaint as a "publicity stunt." The consumer advocacy group said Ameritech has promoted confusion among its customers in order to mislead them. "Illinois has the most confusing telephone rate structure of any place in the country," said Martin Cohen, CUB's executive director, "and Ameritech takes advantage of the confusion to overcharge customers and line its pockets." Cohen said that two Ameritech calling packages -- CallPack and SimpliFive -- are easy to understand but are more expensive for most Illinois customers than the company's complex standard charges that vary by distance and time of day. SimpliFive charges customers a nickel a minute for calls made to locations morethan eight miles away. CallPak customers pay a set amount for a number of calls--such as $10 for 100 calls--and a fixed amount after that, such as a dime a call. Customers who make many lengthycalls to locations more than 15 miles away will save money with both of these plans, but only about 5 percent of Ameritech's customers fit that profile, said Cohen. An average customer could spend as much as $150 more each year on local phone service by selecting these plans, he said. The complaint doesn't seek an end to the offering of the two calling packages, but rather an end to Ameritech's promotion of them as money savers. Cohen said that although both plans have been available for years, CUB believes that Ameritech has stepped up a misleading campaign in the months since it was acquired by San-Antonio based SBC Communications Inc. Ameritech denied in a January 18 statement that it is promoting the plans more aggressively now, saying that its sales representatives are not encouraged to market special plans to customers who won't benefit. "Customers are more aware of calling plans today," said Ameritech's statement, "because of the explosion in plans offered in our industry." CUB's allegations echo consumer fraud charges lodged against Ameritech three years ago. In 1997 Ameritech paid $266 million to settle a class action suit that alleged the company was charging customers for its "Linebacker" service without their knowledge. That service, which cost $3 to $5 a month, is an insurance against the relatively rare occurrence of phone line damage inside a customer's residence. Ameritech executives said in 1997 that they chose to settle rather than pay the expense of defending themselves in a court, and they denied wrongdoing. While some Linebacker customers received cash settlements from that case, most received credits for service such as calls from payphones, three-way conference calls and the like. CUB won't settle for anything less than cash rebates to customers who've been overcharged due to misleading marketing of SimpliFive and CallPack, said Robert Kelter, a CUB attorney. (Chicago Tribune, January 19, 2000) FREEMARKETS INC: Kirby, McInerney Files Securities Lawsuit in PA ---------------------------------------------------------------- Kirby, McInerney Squire, LLP commenced a securities lawsuit on behalf of all purchasers of FreeMarkets, Inc. securities between December 10, 1999 and January 4, 2000 in the United States District Court for the Western District of Pennsylvania. The action asserts claims against FreeMarkets, Inc. and certain of its officers for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by reason of material misrepresentations and omissions. On December 10, 1999 FreeMarkets' shares soared 600% on its IPO, rising from $48 to $280 per share, and in subsequent weeks rose to a high of $341.87 per share. On January 4, however, FreeMarkets announced that it had lost all its business with General Motors, its second largest client. This news shocked the market, sending FreeMarkets' share price plummeting more than $60 in one day and causing its shares to lose over 45% of their value since January 3, 2000. The complaint alleges that FreeMarkets' officers and directors in fact knew of the impending loss of General Motors throughout the Class Period, but chose not to disclose this adverse information in their IPO prospectus so as not to endanger the company's IPO. As a result, investors who bought FreeMarkets common stock in the class period purchased their shares at inflated prices, prices that evaporated once the truth about the loss of General Motors finally became known to the public on January 4, 2000. For more details on this securities suit, you may contact Ira Press, Esq. Danielle Feman, Paralegal KIRBY McINERNEY SQUIRE, LLP, 830 Third Avenue 10th Floor New York, New York 10022, telephone: (212) 317-2300 or Toll Free (888) 529-4787 or via e-mail: kms@kmslaw.com HMO: 2 Doctors Sue Humana for Reducing Physician Payments Unfairly ------------------------------------------------------------------ Two doctors and the Broward County Medical Association sued Humana Inc. on January 18, saying that Florida's third-largest HMO routinely and unfairly reduces physician payments. The suit attacked a practice known as "downcoding," in which health maintenance organizations decide that a service, such as an office visit, was not as difficult as the doctor said it was, and lower the reimbursement. The medical association said that it had received more than 150 complaints from its 1,500 members and from doctors around the state who had been downcoded on a regular basis by HMOs, including Humana. "It's been a systematic effort by the insurance companies. Humana was, I think, the worst offender," said Vincent DeGennaro, a surgeon who is president of the association. The Florida Medical Association may join the suit later, its president said. Patients are not forced to pay more because of the payment cuts. But the association said doctors who are downcoded regularly may feel pressure to steer patients away from complex but necessary medical care, in fear they will not be paid for it. "These aren't a few individual doctors suing over a little bit of money, they're doing it to protect the practice of medicine," said Michael J. Ryan, a lawyer for the doctors. The lead attorney is state Sen. Walter "Skip" Campbell, D-Coral Springs, who has been active in HMO regulation. Humana spokeswoman Pam Gadinsky declined to comment on the suit. She said some doctors submit excessive bills and the health plan changes the coding to keep costs in line. "It's called right-coding, not downcoding," she said. "We are reviewing claims in the ordinary course of business. We are doing nothing wrong here. We are reviewing those claims that are billed by physicians at a higher-than-average frequency than other physicians." The suit is the third major legal action against Humana, a Louisville, Ky., company with 650,000 members in the state, $ 9.84 billion in revenue and $ 91 million profit in the year ending on Sept. 30. Two weeks ago, a Palm Beach County jury awarded $ 79.6 million to a 9-year-old Loxahatchee girl with cerebral palsy, saying Humana unfairly cut off special care coverage. Humana plans to appeal. In October, Humana was one of five HMOs named in a Mississippi class-action suit by patients. The suit accuses the health plans of denying care by paying incentives to doctors to reduce care. Another downcoding suit was lodged in August against United Healthcare by a doctors group. Physician complaints about downcoding began increasing early last year. The Broward medical association logged more than 130 from February to June, then stopped counting. One came from Seth Cutler, a Sunrise ophthalmologist who is being dropped by Humana on Jan. 31 and is a plaintiff in the suit with Harold Landa, an Oakland Park internist. The suit said Cutler billed Humana for office visits that he coded as so-called level five, meaning they involved lengthy or complex diagnoses. But routinely, the plan downcoded the bill to level two, three or four, and paid about $ 20 to $ 60 less per visit, his lawyers said. In July, Humana sent letters to 90,000 doctors in Florida, Texas and Kentucky, saying the company was challenging the high proportion of level four and five billings. Physician groups angry at the second-guessing complained to the Florida Department of Insurance, which warned Humana in September that automatic downcoding is illegal. Each case is supposed to be reviewed individually. (Sun-Sentinel (Fort Lauderdale, FL), January 19, 2000) KNEPPER & MOGA: IL Suit against Law Firm over Debt Collection to Go on ---------------------------------------------------------------------- A plaintiff who filed suit against a law firm after receiving what he determined was a misleading debt collection letter can continue with a class action seeking relief under the Fair Debt Collection Practices Act (FDCPA), the U.S. District Court for the Northern District of Illinois has held. The ruling denies the defendants' motion to dismiss for failure to state a claim. Miller v. Knepper & Moga, P.C. et al., No. 99 C 3183 (ND IL, Oct. 21, 1999). The law firm of Knepper & Moga, P.C. forwarded a form letter to plaintiff Jimmie Miller on Jan. 20, 1999, in order to collect a debt allegedly owed to a hospital. Miller subsequently filed a class action suit against the firm and its owners, James A. Knepper and Greg M. Moga III, in the U.S. District Court for the Northern District of Illinois. Miller asserted that the letter he received violated the FDCPA, 15 U.S.C. Sec. 1692 et seq., because it was a misleading or deceptive attempt to collect a debt. Miller took the position that the letter, while attempting to collect for the hospital, purported to represent his best interests. He further asserted that to the unsophisticated consumer, the letter suggested that the firm would offer advice and establish an attorney-client relationship. By suggesting that it would give the debtor advice and act in his or her best interests, the firm was undertaking representation of both the debtor and the creditor in violation of the FDCPA, Miller claimed. The defendants filed a motion to dismiss for failure to state a claim. They argued that the complaint did not state which section of the FDCPA was violated, and that the letter was not misleading under the unsophisticated consumer standard. The defendants also claimed that no one would believe that the letter represented the interests of any entity other than the hospital. The district court denied the motion. The judge stated that although the plaintiff did not cite the exact section of the FDCPA he claimed was violated, that fact was not fatal. The judge explained that a complaint does not have to identify the applicable statute or law at issue in order to raise a proper claim for relief. Further, the plaintiff's brief stated that Sec. 1692e(10) of the FDCPA was violated, the judge said, and an allegation that a debt collection letter was misleading under that section was a common claim. The judge went on to discuss the unsophisticated consumer standard, which protects the uninformed consumer while shielding debt collectors from liability for unrealistic interpretations of collection letters. The judge asked whether an unsophisticated consumer would know that the defendants were interested only in collecting for the hospital when, at the same time, they offered counsel to the debtors. After going through the letter in detail, the court held that the letter's wording created a claim for relief under the FDCPA. The defendants were not entitled to dismissal. (See Document Section C for the opinion.) (Professional Liability Litigation Reporter, December 1999) LAW SCHOOL: Admission Council Sued Again for Bias against the Disabled ---------------------------------------------------------------------- The Law School Admission Council has been hit with another suit alleging it discriminates against disabled students who need accommodations when they take the LSAT this time broadening the scope to include those with mental disabilities. Last month, the U.S. Justice Department filed suit against the Newtown, Pa.-based testing service alleging that it discriminated against students with physical disabilities who wanted extra time to take the test. Brought under Title III of the Americans with Disabilities Act, the suit says several students with cerebral palsy or rheumatoid arthritis who presented medical documentation along with their requests for extra time were rejected by LSAC even though their requests were never reviewed by anyone with appropriate medical expertise. Now, attorney David Ferleger has filed a class action suit on behalf of three students who say they were similarly denied their requests for testing accommodations. Although Ferleger's suit echoes many of the allegations made in the Justice Department's suit, it also promises to expand the scope of the case by adding claims from those with mental disabilities such as manic depression, attention deficit disorder, learning disabilities and narcolepsy. The suit says LSAC violated the ADA when it denied requests for accommodations either for extra time, a separate testing room or expanded breaks by flatly rejecting the student's medical evidence. By opening the door on mental disabilities, Ferleger's suit is sure to complicate the litigation because testing experts say it is much more difficult to devise an accommodation that will still yield an accurate test result. The DOJ limited its suit to LSAC's policies on accommodating students with physical disabilities, effectively dodging the more difficult question of how to accommodate those with cognitive or mental disorders. Ferleger's descriptions of one of his clients' disabilities illustrates just how complicated the suit has now became. In outlining the effects of bipolar disorder, Ferleger says the disability "affects ... thinking processes and substantially limits the major life activities of thinking, learning, concentration, expression and other basic life functions." But Ferleger insists that the students with mental disabilities start from the same position as those with physical disabilities since they all must request a testing accommodation and back up their requests with medical reports. "LSAC acts like a kingdom unto itself, making itself judge and jury about applicants' disabilities," Ferleger said. "By ignoring medical reports from students' own doctors, LSAC is shutting out some of America's great lawyers of the future." LSAC has vehemently defended its policies and criticized the DOJ suit as an attempt to expand the ADA beyond what Congress intended."The Justice Department appears to be more interested in making headlines than in enforcing the ADA in the manner that Congress intended," LSAC President and Executive Director Philip D. Shelton said in a recent statement. The statement said the DOJ's suit misstates the facts and seeks to impose new duties not required by the law."This is an attempt to regulate through intimidation. But even more worrisome for us is the false perception it creates for persons with disabilities who might be considering law school. LSAC has provided accommodations to thousands of disabled law school applicants and will continue to do so," Shelton said. (The Legal Intelligencer, January 19, 2000) MANHATTAN INVESTMENT: Berman DeValerio Makes Securities Investigation --------------------------------------------------------------------- Berman DeValerio & Pease LLP announced on January 19 that it is currently investigating certain persons and entities involved with the Manhattan Investment Fund, Ltd for possible violations of the federal securities laws. According to recent news reports, the Fund has misrepresented its financial condition to investors since its inception in 1996. Berman, DeValerio & Pease LLP has extensive experience in prosecuting investor class actions involving financial fraud, and has successfully prosecuted securities, antitrust and consumer class actions since 1982. The firm has been designated as lead counsel by federal and state courts across the country. Contact: Michael Lange, Esq. at Berman, DeValerio & Pease, LLP, One Liberty Square, 8th Floor, Boston, MA 02109, at 800-516-9926 or 617-542-8300, or by e-mail at mlange@bermanesq.com and for more information about the Berman, DeValerio & Pease LLP, you may visit the firm's website at http://www.bermanesq.com MITSUBISHI MOTOR: Black Employees Charge of Racial Bias at IL Plant ------------------------------------------------------------------- Black employees of Mitsubishi Motor Manufacturing of America have filed a class-action lawsuit in federal court accusing the Japanese automaker of allowing racial discrimination at its central Illinois assembly plant. Mitsubishi paid a record $34 million fine in 1998 to settle sex discrimination charges in a suit filed by female employees at the Diamond Star plant in Normal, Ill. Lawyers for nine black workers filed suit in U.S. District Court in Peoria, Ill., late January 18 claiming blacks had been denied promotions, raises and job training because of their race. The suit, which seeks unspecified damages, says black employees were given the least desirable and most difficult work assignments and were subjected to racial slurs and taunts on a daily basis. "One African-American employee even received a doll's head tied to a toy truck, burlesquing the racially motivated dragging death of James Byrd, an African-American, in Jasper, Texas," the suit charges. Some black employees said they were physically intimidated, that Ku Klux Klan symbols were scribbled on plant walls, and that their toolboxes were ransacked and power tools sabotaged. The suit comes a month after a three-member review board assigned to monitor Mitsubishi for the U.S. Equal Employment Opportunity Commission praised the automaker for ending sexual harassment and discrimination. In 1998, Mitsubishi settled a sex discrimination lawsuit filed by the EEOC on behalf of more than 300 women who claimed they were groped and subjected to lewd jokes while on the job. Some of the same attorneys involved in the sex discrimination lawsuit, who also represented 27 women who received $9.5 million in a separate settlement, filed the racial discrimination lawsuit. In September 1998, Mitsubishi paid $3 million to settle a disability discrimination case involving 87 workers. Mitsubishi spokeswoman Gael O'Brien said discrimination has no place at Mitsibushi. "We have policies and procedures to address any violations to our zero-tolerance policy," O'Brien told the Peoria Journal Star. "Our policies and procedures for investigating any complaints have been scrutinized both internally and by third parties, and these policesare working." (United Press International, January 19, 2000) MOBIL OIL: Chronology Of the Aviation Fuel Crisis ------------------------------------------------- A chronology of the aviation fuel crisis published in the AAP Newsfeed on January 19, 2000: December 23: Engine failure in an aircraft taking off from Moorabbin sparks fuel contamination fears. Other aviation incidents also being investigated in relation to fuel contamination. December 24: Civil Aviation Safety Authority (CASA) orders owners of piston-engine planes using Mobil 100/130 avgas after November 21 to drain and flush fuel systems. January 7, 2000: Mobil recommends customers not fly after further reports of rough running and engine failure in aircraft already cleared to fly. Planes checked and a second contaminant is discovered. January 8-9: CASA suggests caution in flying based on Mobil's advice that CASA merely order additional fuel system cleaning. January 10: CASA issues grounding directive for planes fuelled with Mobil avgas between November 21 and December 23. About 5,000 light planes grounded bringing most of general aviation to a halt. January 11: Costs tipped to hit $100 million. CASA defends its delay in grounding aircraft. Acting Prime Minister John Anderson calls for mediation between Mobil and the general aviation industry for financial assistance for affected companies. Labor and the Australian Democrats call for an independent inquiry. January 12: Companies begin standing down staff. CASA begins trialling a fuel purity test. Mr Anderson rejects calls for inquiry apart from the Australian Transport Safety Bureau investigation. January 13: CASA director Mick Toller says he is not satisfied Mobil's fuel test is reliable. January 14: Mr Anderson says Mobil has a moral obligation to assist affected companies. He writes to banks and airports to help aircraft operators. January 15: Commonwealth Bank establishes an emergency rescue package for aircraft company customers. Regional and rural airports say they are hurting. The industry says the crisis is costing $50 million a month. January 16: Mr Anderson announces petrochemical expert Professor David Trimm will assess the accuracy of Mobil's fuel test. January 17: Mr Anderson announces he had given Mobil until the next day to come up with an assistance package. January 18: Mobil announces $15 million package. Class action is launched in the Federal Court in Sydney. Fuel test is delayed when Professor Trimm discovers a new substance in the fuel. January 19: CASA says the test could take another week to finalise. (AAP Newsfeed, January 19, 2000) MOBIL OIL: Fuel Test Still Days Away; AOPA Expresses Disappointment ------------------------------------------------------------------- A test to clear 5,000 grounded light planes has been delayed several days by the discovery of a mystery white gunk in contaminated Mobil aviation fuel. The Civil Aviation Safety Authority (CASA) is examining aircraft in Western Australia - which has been largely unaffected by Australia's worst ever fuel contamination crisis - in the hope of finding the white goo in fuel tanks there. Finding the substance in WA would mean it was unrelated to the contamination problem and the clearance test could go ahead. Petrochemical expert David Trimm - called in to validate Mobil's fuel test - discovered the white substance on January 18, the second white-coloured goo found, meaning piston-engined aircraft must remain grounded. Professor Trimm said he expected the test would be available within days, but could not give the green light until he knew whether or not the a second white substance was harmless. He was 99.5 per cent certain the test would detect the presence of the original black contaminant - ethylene diamine (EDA) - and the first white substance - formed by reaction between carbon dioxide and EDA. Prof Trimm began analysing the first sample of the new mystery white gunk at the University of New South Wales where he heads the School of Chemical Engineering and Industrial Chemistry. He believed the goo was unrelated to the contamination. "My gut feeling is that it's not connected with the problem," he told reporters. "I think it is something else (but) I do not dare take the risk of validating the test until I know." Planes would have to be re-tested after they were given the all-clear as traces of contaminant may become absorbed in the surfaces of fuel tanks, and slowly leach out. He said the test still had minor technical problems. In the test, avgas is extracted with water and EDA transferred into the water. A drop of the water is placed on filter paper with the reagent fluorescamine. EDA then showed up by a fluorescent glow under UV light. But Prof Trimm said the water used must also be tested separately first. CASA director Mick Toller said the authority was rounding up fuel samples. "It's safe to say that basically that's an excellent test for checking aircraft which have been contaminated after they've been cleaned and it gives us all the necessary indicators to say which aircraft should be cleaned." Mr Toller warned frustrated pilots against home remedies. "It is a great temptation ... to get the garden hose out and to wash the system out and I think that's a dangerous process to go through," he said. Aircraft Owners and Pilots Association (AOPA) president Bill Hamilton said the delay was tremendously disappointing. "We expected to have good news by January 18 afternoon - it was bad news," he told ABC Television. The lack of a fail-safe test to check which light planes were free of contamination and safe to fly was tremendously disappointing, the Aircraft Owners and Pilots Association (AOPA). Mr Hamilton said the $15 million compensation package announced by Mobil was merely immediate relief. "It's disaster relief, like bushfire or flood relief, no more than a starting point," he said. "The $15 million that Mobil has offered so far is purely immediate for relief, (for) people who've really got their backs against the wall." Mr Hamilton said AOPA was holding talks with Mobil on longer-term relief. "We'll also propose what AOPA has called the aviation recovery trust as something we're encouraging Mobil to fund, an industry trust to help get everything back on its feet both in the short term and in the long term," he said. Mr Hamilton said a class action, started this week, was a measure of aircraft operators' sheer frustration after almost a month of fuel problems. Among those affected by the crisis were very small airlines using piston-engine aircraft, charter operators, crop dusters, fire and rescue services, flying schools and clubs and private pilots. Mr Hamilton said the fuel crisis would take longer than a week to resolve. Opposition Leader Kim Beazley urged all banks to follow the Commonwealth Bank's lead in assisting aircraft owners and operators. He said Mobil's package was a good start but not enough. Mr Beazley said the government could offer limited assistance to the industry but it was up to Mobil and the banks to resolve the issue. Commercial law firm Ebsworth & Ebsworth, which launched a Federal Court class action on behalf of aircraft operators, said many affected people were not covered by Mobil's package. Partner Simon Liddy said an aerial photographer had approached the firm and farmers relying on aircraft to transport perishable goods were suffering financially. "It is in no-one's interest to have a long drawn-out legal process. We are hopeful that fair compensation will be delivered quickly to those affected," Mr Liddy said in a statement. Meanwhile, the Civil Aviation Safety Authority's (CASA) handling of the avgas crisis will come under scrutiny on January 20 when the Senate Transport Committee grills officials. The Civil Aviation Safety Authority (CASA) said a test developed to detect contamination in fuel systems had proven inadequate for a second mystery white substance uncovered on January 18, leaving up to 5,000 of the piston-engined aircraft grounded. CASA aviation safety director Mick Toller said the test would show if an engine was clean but said petrochemical expert Professor David Trimm had found the test did not show what substances might still be present in dirty engines. (AAP Newsfeed, January 19, 2000) NETWORK SOLUTIONS: Sp Ct Denies Thomas Petition over Registration Fees ---------------------------------------------------------------------- Network Solutions, Inc. (NASDAQ: NSOL), the world's leading registrar of domain names, acknowledged on January 18 the U.S. Supreme Court's denial of a petition by William Thomas, et al, challenging the company's right to charge fees for its registration services. The Court's denial ends a series of legal actions that started in October 1997. "The Supreme Court's denial of the Thomas petition is consistent with a line of Federal District Court decisions including decisions from the Second, Seventh, Ninth and District of Columbia Circuits validating Network Solutions' key Internet functions," said Jim Rutt, chief executive officer, Network Solutions, Inc. "Consistently, the courts have affirmed Network Solutions' role in providing Internet infrastructure and domain name registration services and charging fees for such services. We are extremely pleased with this decision as it relates to both Network Solutions and the National Science Foundation." About the Thomas Case On October 17, 1997, Network Solutions was served with a class action suit by six named plaintiffs. The suit alleged anti-competitive activities and cited various alleged violations by the National Science Foundation and/or Network Solutions. The suit sought restitution of all registration fees paid by all registrants and the elimination of the 30 percent Intellectual Infrastructure Fund, which was discontinued April 1, 1998. Federal District Court Judge Hogan dismissed the entire case in the District of Columbia District Court, issuing a final judgment on August 18, 1998. On October 23, 1998, the plaintiffs filed a notice of appeal from the final order. The judgment of the Court of Appeals was entered on May 14, 1999. The petition for a writ of certiorari was filed in the U.S. Supreme Court on October 6, 1999. All briefs were filed by December 8, 1999. On January 18, 2000, the U.S. Supreme Court denied the petition for a writ of certiorari. Founded in 1979, Network Solutions, Inc. (NASDAQ: NSOL) pioneered the development of registering Web addresses ending in .com, .net, .org and .edu and is the world's leading Registrar with more than 6.5 million net registrations. Network Solutions additionally plays a critical role in the infrastructure of the Internet through its Registry services. Network Solutions' Registry customers include all the Registrars of domain names ending in .com, .net and .org. For more information, see the website http://www.networksolutions.com PAYDAY LENDER: Edelman, Combs Files Suit in Hammond V. Advance America ---------------------------------------------------------------------- The Chicago law firm of Edelman, Combs & Latturner says on January 19 it has filed a class action lawsuit against another Indiana high-interest "payday lender," ADVANCE AMERICA CASH ADVANCE CENTERS OF INDIANA, INC. The complaint alleges violation of the Truth in Lending Act and the Indiana Uniform Consumer Credit Code in connection with a series of 280% to 500% "payday loans." The case is Wallace v. Advance America, 2:00CV123JM (N.D.Ind.). It was filed in the federal district court in Hammond. The Indiana Uniform Consumer Credit Code (i) prohibits lenders from charging interest of more than 36% per annum interest, (ii) allows a flat fee not exceeding $33, and (iii) prohibits lenders from using multiple agreements to obtain more finance charges than would otherwise be permitted. Plaintiff alleges that by imposing a finance charge that purports to be justified by the $ 33 exception to the general 36% limitation on a series of two-week loans -- producing finance charges in the hundreds of dollars and an effective annual percentage rate of over 280% -- Advance America violated the Uniform Consumer Credit Code. A survey conducted by the Indiana Department of Financial Institutions disclosed that the average payday loan borrower "rolls over" her loan about 10 times, so that the loan actually remains outstanding 5-6 months (5,350 borrowers obtained 54,508 loans and rollovers, with the average loan/rollover lasting 13.67 days). The average annual percentage rate was 498.73%, or more than 10 times the 36% maximum. The average finance charge was $27.29 for each loan or rollover, showing that the lenders tried to use the $33 exception on each loan/rollover. One borrower "rolled over" her loan 66 times, or for about three years. A survey conducted by the Illinois Department of Financial Institutions produced similar results. "Payday lenders" are thus well aware of the fact that borrowers generally will not pay their loans off in two weeks. Similar lawsuits are pending against Ace Cash Express, E-Z Payday Loans, and Fast Cash USA in federal district court in Indianapolis. Rowings v. Ace Cash Express, Inc., IP 99-1887-C-B/S; Livingston v. Fast Cash USA, Inc., IP99-1226-C-B/S; Rowings v. DSA, Inc., d/b/a E-Z Payday Loans, IP 00-0060-C-B/S. Contact: Daniel A. Edelman of Edelman, Combs & Latturner, 312-739-4200, 800-644-4673, or fax, 312-419-0379 SKECHERS U.S.A.: Wolf Haldenstein Files Securities Suit in California --------------------------------------------------------------------- Wolf Haldenstein Adler Freeman Herz LLP, commenced a securities class action in the United States District Court for the Central District of California on behalf of all persons who purchased or otherwise acquired Skechers' common stock issued in Skechers' June 9, 1999 initial public offering (IPO), or thereafter on the open market prior to July 6, 1999. Defendants commenced the IPO pursuant to a Registration Statement and Prospectus that failed to disclose material facts concerning Skechers' then current business and operations and artificially inflated the value of Skechers' common stock. By doing so, defendants were able to complete the IPO and obtain approximately $70 million in proceeds. Defendants' conduct also caused considerable damage to the Class when the truth concerning Skechers' business and operations was finally revealed to the market. The action asserts claims for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities and Exchange Commission, as well as sections 11, 12(2) and 15 of the Securities Act of 1933, by reason of material misrepresentations and omissions during the Class Period concerning claims asserted against the Company by a competitor. For more details on this securities suit, you may contact Wolf Haldenstein Adler Freeman Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0735 (Gregory Nespole, Esq., Michael Miske via e-mail at nespole@whafh.com or through their website at http://www.whafh.com TOBACCO LITIGATION: Florida Jury Hears About Smoking Woman's Cancer ------------------------------------------------------------------- A Florida housewife "bought into" the glamour of cigarette advertising at age 11 and died of cancer that spread from her lungs to her brain, bones and liver, her attorney said on January 18 in opening statements of her damage case. Attorneys for the tobacco industry offered two types of cancer not caused by smoking as the culprit in Angie Della Vecchia's case, the third life story to be heard by a jury that decided in July that cigarettes are a defective and dangerous product. An estimated 500,000 sick Florida smokers hope to be awarded as much as $ 300 billion in punitive damages if the jury rules in favor of compensatory damages in the landmark class-action case. "Angie Della Vecchia bought into the misrepresentations, the misstatements of fact" by the tobacco industry, said Stanley Rosenblatt, attorney for the smokers. "She simply was in awe of grown-up smoking ... That's what the tobacco companies wanted her perception to be and they succeeded." (Press Journal (Vero Beach, FL), January 19, 2000) TOYSRUS.COM: Sued Again over Late Deliveries of Net Ordered X’mas Gifts ----------------------------------------------------------------------- A second lawsuit has been filed against Paramus-based Toys"R"Us Inc. and its Internet division, Toysrus.com Inc., over late delivery of Christmas gifts ordered over the Internet. The suit, which seeks class-action status, was filed in Superior Court in Hackensack by a Princeton law firm representing a Toysrus.com customer in Alabama. The suit follows one filed this month on behalf of a Washington State resident. It also is seeking class-action status on behalf of all customers who did not receive their purchases by the guaranteed delivery time. The latest suit accuses Toysrus.com of making"no effort to meet their self-imposed guaranteed deadline when it became readily apparent that the plaintiffs would not receive their orders." Toysrus.com had guaranteed that all orders placed on the Web site before Dec. 14 would be delivered by Christmas. The lawsuit seeks refunds, litigation costs, and "further relief as this court may deem just and proper"for the Toysrus.com customers. Rebecca Caruso, spokeswoman for Toys"R"Us, said that company executives have not seen the latest lawsuit, but that the Washington State suit"has no merit... and we certainly have no reason to believe that this one does, either."Because she hasn't read the suit, "it would not be appropriate for me to discuss specifics,"Caruso said, adding,"When it comes to our dot.com business... we're continually looking at ways to improve the 1 NEW3 business and serve our guests." The Toysrus.com site reportedly had sales of $ 39 million from Nov. 1 to Dec. 25. Total Internet retail sales for the last quarter of 1999 are estimated at $ 7 billion, three times the total from the last quarter of the previous year, according to Harris Interactive, a market research firm in Rochester, N.Y.. As Internet shopping becomes more widespread, the focus is shifting from mostly marketing, that is, luring customers to the Web site, to service issues such as delivery. For example, the spring convention of Shop.org, a trade association of 300 on-line retailers, is devoted to "back-end solutions, the whole subject of delivery," a spokesman said. He noted that the point-and-click environment of Internet commerce creates expectations of speedy service that did not exist with mail-order sales. (The Record (Bergen County, NJ), January 19, 2000) TRUCKING COS: Truck Drivers at CA Port Are Contractors, Ct Rules ---------------------------------------------------------------- In a ruling that could hamper efforts to unionize truck drivers at the nation's ports, a three-judge panel has found that drivers who haul goods from Los Angeles harbor are independent contractors and not trucking company employees. The complex class-action lawsuit was filed by Los Angeles attorney Fred Kumetz on behalf of hundreds of drivers, mostly immigrants from Mexico and Central America. It alleged that three major trucking companies improperly classified drivers as independent contractors to avoid paying for state benefits. The lawsuit also claimed that the companies overcharged drivers for insurance. A private panel of retired judges, sitting for the Superior Court of Los Angeles and the Workers' Compensation Appeals Board under a special fast-track arrangement, sided with the trucking companies in ruling that the drivers were properly classified as independent contractors. The case had been closely watched across the country because nearly all ports classify drivers the same way. And the ruling has stopped labor campaigns in their tracks because independent contractors cannot form or join unions. At the Los Angeles port alone, there have been at least three significant efforts to unionize truck drivers in the last 20 years. All failed due to the independent contractor classification. "This has monumental significance for any city that has a port," said attorney Bob Millman, who represented Intermodal Container Service Inc., Interstate Consolidation Inc. and Cartage Service. "It would not be economically feasible to treat these people as drivers. The cost of goods would just go skyrocketing." Evidence introduced at trial showed the drivers named in the suit took in about $ 40,000 to $ 70,000 a year but also spent thousands on insurance, fuel, equipment and maintenance. One of the named drivers, Luis Montoya, testified that he preferred being an owner-operator because he could make more money that way. Kumetz said that he would probably appeal the case and that there have been conflicting opinions from the state Workers' Compensation Appeals Board and National Labor Relations Board. "It's extremely confusing," he said. "That's why we need a published opinion from the Court of Appeals or the California Supreme Court that will enlighten everybody as to what the law is." Millman said the case is likely to "have a major chilling effect" on efforts by labor unions to organize port drivers. The International Brotherhood of Teamsters has been gearing up for a large-scale organizing drive that would coordinate actions at ports nationwide. Ed Berk, a lead organizer in that effort, said he hadn't yet read the preliminary ruling handed down, but said he was moving ahead with scheduled meetings with drivers. "I don't think they're going to throw in the towel on this one court case," he said. (Los Angeles Times, January 19, 2000) TYCO INTERNATIONAL: Alfred G. Yates Files Securities Lawsuit in Florida ----------------------------------------------------------------------- The Law Office of Alfred G. Yates Jr. filed a class action lawsuit in the United States District Court for the Southern District of Florida on behalf of all persons who purchased or otherwise acquired common stock of Tyco International, Ltd. between December 10, 1998 through December 8, 1999, inclusive. The complaint alleges that Tyco mislead investors by misrepresenting the financial condition and business prospects of the Company in order to inflate the price of the Company's stock. When Tyco finally revealed its true financial predicament, the price of the stock dropped significantly, harming investors. Plaintiffs also allege that prior to the disclosure of the adverse facts, certain insiders took advantage of the inflated stock price by selling 1.5 million shares of Tyco common stock to the investing public, reaping over $170 million in insider trading profits. For more information on the above mentioned securities lawsuit, you may contact Alfred G. Yates, Jr., Esq., 519 Allegheny Building, 429 Forbes Avenue, Pittsburgh, Pennsylvania 15219, telephone toll free at 800-391-5164, or 412-391-5164, or via e-mail at yateslaw@aol.com or fax at 412-471-1033. WAR VICTIMS: Foley Backs Japan; Treaty Bans Claims by Slave Laborers -------------------------------------------------------------------- U.S. Ambassador Thomas Foley backed Japan's position that the treaty formally ending World War II bans claims for compensation from Americans used as slave laborers in Japan. A number of U.S. prisoners of war accuse some of Japan's biggest companies of using them as wartime forced labor and are suing for compensation. Many of the veterans filed claims in California after a 1999 state law extended the deadline for such actions. But on January 17, the Japanese Foreign Ministry said the peace treaty allows for no further discussion of compensation. Foley said on January 18 that the ministry's comments are not likely to raise tensions between the two countries. He said there was much suffering during the war, but the treaty with Japan explicitly renounces claims against Japan an accord different from the one allies reached with Germany. The companies include Kawasaki Heavy Industries, Mitsui and Co., Mitsubishi International Corp., Nippon Steel Corp., Showa Denko and Ishihara Sangyo Kaisha Ltd. The companies say the issue of reparations was covered in the 1951 peace treaty signed in San Francisco. The companies also say the statute of limitations has long since run out. Germany is setting up a fund to compensate victims of Nazi forced labor. Up to 2.3 million people, mostly non-Jews from Eastern Europe, forced to work under the Nazis could be eligible for payments. German firms that used slave and forced labor sought the fund largely to receive protection from class-action lawsuits. (AP Online, January 19, 2000) WORKERS’ UNIONS: 2 CA Suits Attack Compulsory Fees from Nonmembers ------------------------------------------------------------------ The National Right to Work Foundation launched an attack on the use of compulsory union fees for political activities on two fronts on January 18, filing separate class action suits in federal court in Sacramento and San Francisco. One lawsuit was filed against union, state and city officials on behalf of about 160 San Francisco firefighters, the other on behalf of 10,000 employees of the California State University and University of California systems who have refused to join their unions. Both suits challenge the unions' right to take union fees from nonmembers, alleging it violates the First Amendment by forcing employees to pay for the union's political activities. They also say employees have not been given the required information and audits detailing how the fees are spent. U.S. District Judge William Shubb in Sacramento refused to grant a January 18 temporary restraining order to block withholding from employee paychecks without a full hearing. Attorneys for the employees will still seek to overturn the law and ask for a preliminary injunction February 7. The Virginia foundation, a nonprofit that advocates against compulsory unionism, filed about 50 similar lawsuits nationwide last year. It was successful last month in blocking the California State Employees Association from taking about $1.2 million in monthly fees from more than 30,000 state employees. Randy Wanke, a spokesman for the foundation, said it was coincidence that the suits were both filed on January 19, but that it illustrates how prevalent the problem is. "The court has said these individuals do not have to pay for a union's political activities," he said. "It seems like at every turn you have people trying to skirt these rules to bankroll their political activities." Unions for both the firefighters' and university employees' unions were authorized to take a portion of fees from nonmembers starting this month. Firefighters Local 798, which represents about 1,700 firefighters and paramedics, reached an agreement with the city last July allowing it to deduct a portion of union fees from nonmembers' salaries starting this month. The contribution is estimated at about 80 percent of the $598 annual member dues. Tyrone Pruitt, president of the San Francisco Black Firefighters Association, and one of 11 firefighters bringing the suit, said he is not anti-union. Rather, he said, the local and national unions that their money would support do not represent their interests. "It is not a money issue. It is about the principle. It is about the issues," he said. "They are sending that money to national groups that are fighting the very issues we are trying to help across the country to establish diversity." The union maintains that all firefighters should pay dues because they get the benefits negotiated by the union. Union officials did not return repeated phone calls and a spokesman in the mayor's office said he could not comment because they haven't see the suit yet. The university employees are also facing forced deductions this month under a new law, passed last fall, that allows unions to deduct a "fair share" of fees from the paychecks of about 75,000 nonunion employees. Labor leaders had lobbied legislators and the governor for the law, arguing that it is only fair to expect everyone to pay for the representation that the unions provide for all 93,000 employees even though only 20.5 percent of the employees are dues-paying members. Under the law, the 74,000 employees not currently paying dues would either have to join the union or have fees equaling 67 to 95 percent of the standard union dues deducted from their paychecks. Full union dues are about $450 to $550 annually for employees. Even a reduced share of that means annual revenue of about $45 million for the 20 unions representing employees at the two university systems. However, Dylan Carp, a staff attorney for the Right to Work Foundation, contends that the employees were never given a say. The unions, he said, would base the fees on their 1998 expenditures but have failed to show how much was spent on various activities. "It permits the state and the unions to take money from dissenting nonunion employees to pay for the union's political activity," Carp said. "The Supreme Court has held that the union can only charge nonunion employees for the union's activities for collective bargaining." Anne Giese, counsel for CSEA, said that the union is preparing to send out audits of its expenditures to all of the affected employees. (The San Francisco Chronicle, January 19, 2000) Y2K LITIGATION: CA Ct Oks Quadramed to Force for Arbitration under Act ---------------------------------------------------------------------- A defendant in a Year 2000 lawsuit has the right, under the Y2K Act, to force the plaintiff to arbitrate the dispute, a federal judge in California has ruled, granting the defendant's motion to stay pending the completion of alternative dispute resolution procedures. Preferred MSO of America-Austin LLC v. Quadramed Corp., No. 99-7705 AHM (CD CA, Nov. 3, 1999). Plaintiff Preferred MSO of America-Austin LLC filed a class action lawsuit in state court against Quadramed Corp. in January 1999. The suit accused Quadramed of refusing to fix Y2K problems in its DOS-based EZ-CAP software program and instead forcing customers to upgrade to a Windows version. Shortly after the Y2K Act was signed in July 1999, Quadramed removed the suit to federal court and moved for a stay pending arbitration. The Y2K Act includes provisions to encourage the resolution of Y2K disputes without litigation, and specifies certain procedures plaintiffs must follow in order to file suit. MSO argued that it should not be required to go along with Quadramed's desire for alternative dispute resolution (ADR), because the offer was only for MSO's individual claims, not those of the class, and because Quadramed has repeatedly refused to repair the software. However, U.S. District Judge A. Howard Matz found the Y2K Act requires the plaintiff to participate in ADR. Such a requirement comports with the act's purpose of minimizing Y2K litigation, the judge said. He rejected MSO's attempt to force Quadramed to engage in ADR on the class claims, saying: To condition a defendant's right to the statutorily-mandated ADR mechanism upon his willingness to negotiate claims of yet-to-be-certified class members might invite abuse; some plaintiffs seeking to avoid the application of this feature of the Y2K Act might routinely sue on behalf of an ostensible class, hoping either that a defendant would not seek ADR or that the terms of any settlement would be more favorable. Judge Matz entered a 60-day stay, starting from Aug. 19, 1999, the date when Quadramed first requested arbitration. The judge tolled the 60-day period from Sept. 7, 1999 (the date MSO rejected the ADR request), until Nov. 3, the date of the order on the motion for a stay and to compel arbitration. (See Document Section C for the opinion. Call 877-595-0449 for the 18-page complaint.) (Computer & Online Industry Litigation Reporter, December 7, 1999) * Lawmakers Again Propose Fee Limits for Copying Medical, Legal Records ----------------------------------------------------------------------- Lawmakers are trying again this year to cap fees for copying medical and legal records after last spring's legislation was quashed by a California-based health care information technology company, officials said on January 18. Lawmakers in both the Senate and House introduced legislation to restrict fees for copying medical records to a $ 25 handling charge for processing a request and 37 cents per page. The bills are Senate Bill 1350 and House Bill 3112. Both bills would apply the same maximum charges to records of attorneys, as well as health care practitioners, clinical psychologists and clinical social workers. The charge for copies made from microfiche or microfilm could not exceed $ 1 per page. Last spring's proposal -- Senate Bill 480 -- was agreed on by several health care and attorney groups, but stalled in the Senate after lawyers for San Rafael, Calif.-based QuadraMed opposed it, according to Jim Collins, executive director of the Illinois Trial Lawyers Association. Besides ITLA, the failed measure was negotiated and agreed on by the Illinois State Bar Association, Illinois State Medical Society, Illinois Hospital Association and Association of Health Information Outsourcing Services, representing businesses that copy medical records. Collins suggested that the failed measure would have passed but for QuadraMed's opposition. Officials with the remaining groups could not be reached for comment. Collins said he couldn't say whether the new measures stood a better chance of winning passage, but suggested that a recent appeals court decision and rumors that some lawyers are considering a class-action suit against QuadraMed have changed the legislative climate. The 1st District Appellate Court ruled that section 16 of the Workers' Compensation Act (820 ILCS 305/16) does not require a person issuing an Illinois Industrial Commission subpoena to pay any per-page copy fees or retrieval fees. Ernestine Clayton v. Ingalls Memorial Hospital, No. 97-L-51313. Collins said some lawyers in Illinois were considering a class-action law suit against QuadraMed for charging outrageous" fees. Collins referred questions to Cleveland, Ohio-based attorney Tim Collins, who handled a similar suit. Tim Collins, who is not related to Jim Collins, could not be reached for comment. Legislation is available online at http://www.legis.state.il.us(Chicago Daily Law Bulletin, January 18, 2000) ********* 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. 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