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/raid1/www/Hosts/bankrupt/CAR_Public/000124.MBX C L A S S A C T I O N R E P O R T E R Monday, January 24, 2000, Vol. 2, No. 16 Headlines AUTO INSURANCE: State Farm Files Direct Appeal Of $1.2 Billion Decision COMMISSIONAIRES LAY-OFF: Edmonton Police Service Shrug Off Mass Firings FORD MOTOR: Judge Separates Claim Re Competition from Consumer Fraud GUN MANUFACTURER: CA Sp Ct Takes Case V. Navegar Re Rampage in Pettit GUN MANUFACTURERS: Trade Group joins NRA to Raise Money for Politicians HMOs: LA Fd Ap Ct Agrees on 5 TX HMOs’ Nondisclosure of MD Incentives HOLOCAUST VICTIMS: Jewish Refugee Takes Switzerland to Highest Court INMATES LITIGATION: Judge OKs Deal for Missouri Inmates Abused in TX LEGATO SYSTEMS: Abbey, Gardy Files Securities Suit in California LEGATO SYSTEMS: Barrack Rodos Files Securities Suit in California LEGATO SYSTEMS: Berman, Devalerio Files Securities Suit in California LEGATO SYSTEMS: James V. Bashian Files Securities Suit in California LEGATO SYSTEMS: Kirby, McInerney Files Securities Suit LEGATO SYSTEMS: Shepherd & Geller Files Securities Suit in California MICROSOFT CORP: Alleged Collusion with Law Firms Overshadow Class Cert. MOBIL OIL: Company in Australia Could Face $66 Mil. Compensation Claims NET SPAM: Can. Prof. Compares Blacklist Threat to Digital Class Action NETWORK ASSOCIATES: Will Underdogs Be Lead Counsel in Securities Suit? TOBACCO LITIGATION: Philip Morris Will Fight Flight Attendants’ Suits TORONTO SUN: Reports on Suit over Misconduct Re SunShine Girl Photo UCAR INT’L: FSBA Announces Ct Approval of Settlement of Securities Suit ********* AUTO INSURANCE: State Farm Files Direct Appeal Of $1.2 Billion Decision ----------------------------------------------------------------------- State Farm Insurance Cos. asked the Illinois Supreme Court on January 20 to consider a direct appeal of a $1.2 billion circuit court decision in October against the insurer for knowingly using substandard parts in car repairs. It remains the largest award against a U.S. insurance company. The country's largest auto insurer, Bloomington-based State Farm wants to avoid the usual appeal process, which would include a trip to appellate court and would take considerably more time. As long as the decision from Downstate Williamson County circuit court stands, the insurer says, consumers risk paying higher prices for replacement parts, regulators are confused about how the decision meshes with state laws, and the decision encourages class-action lawsuits. Lawyers for the plaintiffs vowed to "vigorously oppose" the motion. "This case is so straightforward, I don't know why the state supreme court would ever consider it," said Michael B. Hyman, a lead counsel on the suit from the Chicago firm Much, Shelist, Freed, Denenberg, Ament & Rubenstein. Hyman likened State Farm to "Chicken Little chirping that the sky is falling, and it hasn't, and it's not going to." State Farm officials say the decision already is costing them. By using only repair parts made by original manufacturers, as the court ordered, the insurer says it is spending more on claims than it would have by continuing to use generic, or so-called "after-market," parts made by other companies. The American Insurance Association estimates the industry saves $800 million a year by using generic parts. Two states, Hawaii and Massachusetts, require insurers to make generic parts available to policyholders in order to create competition for car manufacturers. In November, State Farm expected repair parts expenses to total $267 million. Because they were forced to use original manufacturers' parts, that cost totaled nearly $272 million, said spokesman Steve Vogel. Generic parts typically accounted for about 10 percent of State Farm's crash part expenditures, Vogel said. Vogel conceded that some generic parts are lower in quality than original manufacturer parts, but says State Farm "makes every effort to use only parts that are of high quality." The parts are guaranteed, he said, and so few customers use the guarantee that the insurer doesn't track the total. In a smaller generic-parts case that State Farm settled in 1994, only 3,351 policyholders applied for awards out of a potential class of 263,000. Of those, 1,390 accepted monetary awards totaling about $100,000. About 622 took vouchers to have their cars fixed, but only half of those used the vouchers. The plaintiffs' lawyers in that case received $2.1 million from State Farm, Vogel said. Some consumer groups are on State Farm's side in the current lawsuit, including Ralph Nader's Center for Auto Safety. But others say many insurers deserve the lawsuits that have cropped up, several of them since the October decision against State Farm. "They knew the parts were bad, and they were telling people the parts were excellent," Bob Hunter, an insurance expert at the Consumer Federation of America, said of State Farm. "They should have been honest with consumers and said that the (generic) parts were not really as good as original parts," Hunter said. (Chicago Tribune, January 21, 2000) COMMISSIONAIRES LAY-OFF: Edmonton Police Service Shrug Off Mass Firings ----------------------------------------------------------------------- The Edmonton Police Service isn't concerned about recent mass firings of private-sector bylaw cops, an EPS spokesman said on January 20. Wes Bellmore said he has no reason to believe claims by about a dozen turfed Corps of Commissionaires rent-a-cops that they were dismissed without notice. "Obviously, we expect our contractors to follow fair practice when dealing with their employees," he said. "The indication from the Corps is the employees were given (sufficient notice). And that's the Corps' responsibility, not ours." But the ex-commissionaires, who worked under contract for EPS to enforce parking bylaws and operate photo radar, say the Corps is snowing the police. Lee Harmider, a 22-year-old father of one, said he and five other commissionaires got their pink slips on Christmas Eve without notice, verbal or written. "Personally, I wonder ... I had to write two parking tickets in one day on (the EPS co-ordinator of parking enforcement) back in October," he said. "Her permit had expired." Bellmore said the EPS is in negotiation with the Corps for a new bylaw enforcement contract - one that includes higher pay and longer experience requirements for bylaw commissionaires. "We don't know why those people were let go," he said. Several ex-commissionaires are shopping around for a lawyer to take class action against the Corps. The president of the Alberta Union of Provincial Employees said they shouldn't bother. "At $ 200 an hour, a lawyer's going to eat up whatever you can hope to win back from a lawsuit," said Dan MacLennan. "We'd be happy to give them a heads-up on what their legal rights are. Without some union help in these situations, you're usually out of luck." Ward 6 Coun. Dave Thiele said he was surprised to learn that the commissionaires were being laid off. "Instead of laying these people off for no good reason, why not allow them the first opportunity (to retrain) and if they don't want to, let that be their decision," he said. (The Edmonton Sun, January 21, 2000) FORD MOTOR: Judge Separates Claim Re Competition from Consumer Fraud -------------------------------------------------------------------- What do you do when a massive class action ignites an arduous, six-month trial and ends with a hung jury? The answer: Tee it up again. Neither side is talking settlement of Howard v. Ford Motor Co., No. 763785-2, in which plaintiffs allege that Ford violated California consumer protection laws by concealing an alleged design defect from consumers. The plaintiffs allege that the automaker placed ignitions too close to engines, which caused vehicles to stall. The plaintiffs are 3.5 million Ford owners who bought cars in California from 1983 to 1995. The case is the first of a series of similar suits to be tried in five other states. In all, plaintiffs total more than 20 million Ford owners and are represented by a team led by Jeffrey L. Fazio, special counsel to Hancock, Rothert & Bunshoft in San Francisco. In the California trial, the jury answered only two questions, splitting 7-5 and 8-4 in favor of the plaintiffs, before calling it quits. Lawyers on both sides said that jurors encouraged them to try the case again. Ford spokesman Jim Cain asserted that 10 of the 12 jurors told defense lawyers that they didn't believe the ignition design to be a safety defect. They said that it was more of a quality problem and that Ford could have been more aggressive about recalls, Mr. Cain said. Although jurors didn't say that they were overwhelmed by the scope of the case, the panel's inability to reach a verdict indicates that it shouldn't have been a class action, asserted Ford in-house counsel Donald J. Lough, who said that he coached defenders at O'Melveny & Meyers L.L.P., Snell & Wilmer L.L.P. and Wheeler, Trigg & Kennedy. Because the panel faced 2,000 questions about 350 products, "it comes as no shock that the jury was unable to agree," Mr. Lough said. And although the jury never reached the question of damages, those favoring the plaintiffs were inclined to award them as little as one-tenth of the $ 1.3 billion they sought, Mr. Lough said. Although the result has no effect on the cases in other states because statutes are different in each jurisdiction, "the important message we got from the jury trial is that the plaintiffs could not prove their case. If they could not prove it in California, it's likely they couldn't prove it in others," Mr. Lough said. But just as the defense heard positive feedback from jurors, so did the plaintiffs' lawyers, said Mr. Fazio. He said that at one point, the panel was "one juror away" from a finding of Ford's liability, but the foreman refused to believe that the carmaker would hide a safety problem from consumers. The plaintiffs' lawyer said that jurors favoring his clients told him that those for the defense refused to listen and reconsider their votes. Of the changes he plans for retrial, Mr. Fazio said that he will review the verdict form, which jurors said seemed to have little to do with "what the lawyers were talking about." Moreover, he said, he will rethink the evidence and streamline what to admit. "I think what we do is be more careful next time," he said. A different judge will preside at retrial because Alameda County Judge Michael Ballachey plans to retire. But before the judge leaves the bench and hands the case to a successor, he will decide a key question in the case, which was put to him during a bench trial that immediately followed the mistrial. The judge is considering the claim that Ford is liable for the same alleged conduct under California's unfair competition law. The claim is separate from the consumer fraud part of the case, which went to the jury. (The National Law Journal, January 10, 2000) GUN MANUFACTURER: CA Sp Ct Takes Case V. Navegar Re Rampage in Pettit --------------------------------------------------------------------- The California Supreme Court has agreed to decide whether a gun manufacturer can be held responsible for Gian Luigi Ferri's infamous and deadly shooting rampage through the Pettit & Martin firm nearly seven years ago. It is at least the fifth gun case that the court has agreed to review in the last three years cases that range from the definition of an illegal assault rifle to the constitutionality of a California law banning certain weapons. The court has not issued a single opinion on the matter. Every justice except Justice Stanley Mosk voted to review a controversial California First District Court of Appeal ruling that allowed Ferri's victims to sue gun maker Navegar Inc. for negligence. It was the first appellate court anywhere to rule against gun makers on criminal misuse of a firearm. Written by Justice J. Anthony Kline and joined by Justice James Lambden, the majority court of appeal opinion held that Navegar had a duty not to increase the risks of its otherwise legal product. Kline wrote that Navegar negligently increased the likelihood its gun would harm by marketing the product to criminals with such boasts of the gun's "excellent resistance to fingerprints. "Justice Paul Haerle vehemently dissented and accused the majority of "an egregious exercise in judicial legislation." Navegar's lead attorney, Ernest Getto of Los Angeles' Latham & Watkins, seized on Haerle's dissent in his successful petition for review. Kline's opinion, Getto wrote, "ignored well-settled law holding that in the absence of a special relationship, one generally has no duty to control the conduct of another." Getto went on to essentially accuse Kline and Lambden of legal acrobatics in reaching their conclusion. Kline's opinion relied, in part, on Knight v. Jewett, a seminal assumption of risk case which stated that sports participants "generally do have a duty to exercise due care not to increase the risks to a participant over and above those inherent in the sport." Kline argued that Knight's reasoning extended to the gun case. "Manufacturers and distributors of firearms," Kline wrote, "can be expected to refrain from affirmatively increasing the inherent risk of danger posed by the furnishing of their product." But Getto pointed out in a footnote that "Knight was never cited in any briefs or discussed at any hearing below, including oral arguments before the Court of Appeal." But lead plaintiffs attorney Dennis Henigan, of the Washington D.C.-based Handgun Control Inc., countered in a telephone interview that "capable judges often make their own contributions." And while Getto argued that a dozen other courts across the country, including three state Supreme Courts and four federal circuits, have ruled in favor of gun makers, Henigan countered that the California case is different. The previous cases, Henigan said, were product liability cases that argued that the guns' harm outweighed their benefits. In this case, the plaintiffs are arguing that a specific manufacturer engaged in a specific pattern of conduct namely its marketing program that led directly to Luigi's July 1, 1993, rampage through the 101 California St. building in downtown San Francisco. On that day, Luigi armed himself with two semiautomatic weapons made by Navegar and opened fire in the Pettit firm where he had been a disgruntled client. Luigi killed eight people and wounded six others before killing himself. A year later, family members of the dead and surviving victims sued Miami-based Navegar. But San Francisco Superior Court Judge James Warren tossed the case in 1997, ruling that selling guns was not inherently dangerous. Merrill v. Navegar Inc. is the most recent of five controversial gun cases the California Supreme Court has agreed to hear. The first four cases deal exclusively with the Roberti-Roos Assault Weapons Control Act of 1989 that banned certain assault weapons. Beginning in 1996, the state Supreme Court agreed to consider James Dingman's conviction on possession of an illegal assault rifle. In Dingman's case, the court is to decide if a rifle becomes an illegal assault rifle when a 30-bullet detachable magazine is added. Also pending before the court are two other assault rifle cases, one which will determine the legality of so-called "knock-off" assault rifle brands that aren't explicitly named in the assault rifle ban. The other case will determine if a buyer needs to be aware he is buying an illegal assault rifle to be convicted under the ban. In 1998 the court agreed to take up the most significant case Kasler v. Lungren which will decide the constitutionality of California's assault weapons ban. The California Third District Court of Appeal struck the ban down in March 1998. This story originally appeared in The Recorder. (The Legal Intelligencer, January 21, 2000) GUN MANUFACTURERS: Trade Group joins NRA to Raise Money for Politicians ----------------------------------------------------------------------- The beleaguered gun industry is firing back at political foes with what it hopes will be a silver bullet: its first financial contributions to candidates who oppose tougher federal regulation of firearms. The National Shooting Sports Foundation, a trade group for makers of guns, ammunition and hunting equipment, announced sponsorship of a new political action committee at its annual show in Las Vegas. Until now, the mainspring of the powerful gun lobby in Washington has been the National Rifle Association, a gun owners' organization. The gunmakers' political action committee, named SHOT -- which stands for Shooting, Hunting and Outdoor Trades -- is planning to add bang to the NRA's bucks by raising its own millions of dollars. Soon, fundraising pitches will go out to 2 million recent firearms buyers and to employees of the National Shooting Sports Foundation's member companies, foundation president Robert Delfay says. Republicans are "most of the strongest supporters of the hunting and shooting traditions," but friendly Democrats also will be favored, Delfay says. NRA Executive Vice President Wayne LaPierre hailed the development, saying gunmakers are reacting to pressure in Congress and the courts for gun control. "They were simply not very political up until now," LaPierre says. "They were businesspeople, making a lawful product. But when you get mugged once or twice, you say, 'I'm going to be punching back.' " LaPierre says the Clinton administration is leading a drive aimed at confiscating "every rifle, shotgun and pistol in America." With more than 3 million members, the NRA will spend as much as $ 30 million on TV ads this year to target gun-control advocates. "We certainly believe that this is going to be settled in the November election," LaPierre says. "It's fair to say our efforts will be coordinated with the NRA's," Delfay says. One goal for the gunmakers: defeating a renewed attempt by the White House and congressional Democrats to pass legislation requiring trigger safety locks on guns and background checks of buyers at gun shows. The Senate passed the bill last year, but the House blocked it. President Clinton will promote the measure again in his State of the Union speech, White House spokesman Jake Siewert says. Siewert says it's "unfortunate" that the firearms industry has created a new political arm. "Congress is already too beholden to special-interest money on gun control," he says. In court, the industry is defending itself against a wave of civil lawsuits brought by cities and counties, aimed at redesigning guns for greater safety and changing industry marketing practices to keep guns away from kids and criminals. Gun manufacturers were incensed late last year when Housing and Urban Development Secretary Andrew Cuomo said his department would organize a class-action lawsuit by local housing authorities if the industry failed to negotiate a settlement of the cities' claims. A negotiating session that had been scheduled in Las Vegas was canceled after gun companies refused to allow administration officials to attend. "If there's some sort of political motivation behind this, then we're not interested in furthering the administration's political agenda," Delfay says. The industry's hardening line indicates that it is unwilling to work with Clinton and is concentrating on helping to elect a Republican president. "As that guy in the movie Network said, we're mad as hell, and we're not going to take it anymore," Delfay says. Dennis Henigan, legal director of the Center to Prevent Handgun Violence, says the industry is "obviously well-funded" despite its complaints that the lawsuits threaten its solvency. "They are obviously going to be as aggressive as they can be in battling us in Congress as well as in the courts." In organizing their PAC, "some elements of the gun industry have politicized the issue of gun violence," Cuomo says. "The administration's efforts have nothing to do with politics. They have everything to do with saving lives by reducing murders, suicides and gun accidents." (USA Today, January 21, 2000) HMOs: LA Fd Ap Ct Agrees on 5 TX HMOs’ Nondisclosure of MD Incentives --------------------------------------------------------------------- IAC-ACC-NO: 58548753 In a decision that echoes a case coming before the Supreme Court next month, a New Orleans federal appeals court upheld a ruling that managed care plans do not have to reveal physician incentive arrangements to their members. Enrollees of five Texas HMOs charged that the plans breached their fiduciary duties under ERISA and state law by failing to disclose physician compensation arrangements (Mary Ellen Ehlmann vs. Kaiser Foundation Health Plan, No. 98-11020, 5 th Cir.). The five health plans are Kaiser Foundation Health Plan of Texas, NYLCare of Texas Inc., Prudential Health Care Plan Inc., CIGNA Healthcare of Texas Inc. and Aetna U.S. Healthcare Inc. Harris Methodist Health Plan was originally included in the lawsuit, but in February 1998 it settled with members, agreeing to disclose compensation arrangements. The decision "is yet another blow to the viability of the recent class actions brought against HMOs," said David Simon, Aetna's chief legal officer, in a written statement. The class-action lawsuit sought a refund of all premiums and an injunction requiring HMOs to include information about incentive arrangements such as with- holds and referral funds in member handbooks or physician directories. The suit charged that as ERISA fiduciaries, health plans are required to disclose all material information, whether or not the enrollee specifically requests it. It also alleged that financial incentives to withhold care are harmful to patients, and that a conflict of interests exists between a plan's fiduciary duty to its enrollees and its drive for profits. The court held that it is up to Congress to decide what health plans are required to do as ERISA fiduciaries. "In enacting the specific disclosure provisions of ERISA, Congress has made the modifications it deems appropriate," the appeal court said. Ehlmann also argued that ERISA was enacted before managed care and its accompanying incentives to limit care became commonplace. But the court held that "Congress and the Department of Labor are surely aware of these changes and have chosen not to supplement ERISA's disclosure requirements." Next month, the Supreme Court will hear arguments in Pegram vs. Herdrich, which charges a health plan and physician with breaching fiduciary duty because of their use of cost control mechanisms (MCW 1/3/00, p. 2). (Managed Care Week, January 10, 2000) HOLOCAUST VICTIMS: Jewish Refugee Takes Switzerland to Highest Court -------------------------------------------------------------------- A Jewish wartime refugee, sent to a Nazi death camp after Switzerland turned him and two cousins away at the border, took his case to the highest court on January 21 asking for compensation and an admission of Swiss guilt. In a quiet, unemotional voice, 73-year-old Joseph Spring told the court how he had survived the horrors of the Holocaust in Auschwitz but his two cousins had perished in the gas chambers. ''An apology is enough if you accidentally step on somebody's toe when you're dancing, but it's a different matter when the active collaboration of Swiss border guards sends people to their deaths,'' Spring told the one-day Federal Tribunal. ''Justice in my case means recognition that a crime was committed against me.'' Spring is also asking for 100,000 Swiss francs (dlrs 63, 300). Spring recalled how he had hoped that the neutral Alpine country would offer refuge to him and his cousins Sylver and Henri Henenberg after their flight through Nazi-occupied France. He and Sylver were still in their teens and Henri had a doctor's certificate testifying he had tuberculosis. On their first attempt to enter western Switzerland through the mountain crossing of La Cure they were turned back. On their second attempt, border guards actually handed them over to the Germans, along with their identity papers proving they were Jewish. Three weeks later they were put on to a long train consisting of closed cattle trucks with 850 others and sent to Auschwitz. Once there, the cousins were separated, with Henri and Sylver joining the line of the sick. ''The last time that I saw Henri and Sylver was when Sylver threw my portion of our bread ration to me. An SS man closed the door to the gas chamber behind them and they perished along with many others,'' Spring said. ''In the history of our state, Swiss officials have never committed a greater injustice against anyone as they did against Joseph Spring,'' said his lawyer, Paul Rechsteiner. Spring, who survived Auschwitz and emigrated to Australia in 1946, took his appeal to the court after Switzerland's governing federal council ruled in June 1998 that the border authorities' refusal to allow Spring into the country did not constitute complicity to genocide. Surrounded by Germany, Nazi-occupied France and Nazi-allied Italy, neutral Switzerland took in nearly 30,000 Jews during World War II. But it turned away just as many. ''The question I keep asking myself is: How did we threaten the Swiss state by trying to cross the border in November 1943? Why was it necessary for Swiss officials to sentence us to death?'' Both Spring's lawyer and the Federal Tribunal judges drew heavily on a recently published report by an international panel of experts headed by historian Jean-Francois Bergier, which condemned Switzerland's wartime refugee policy. The Bergier report said that Switzerland turned back thousands of Jews even though it knew they would face almost certain death at the hands of the Nazis. One of the judges hearing Spring’s case, Karl Hartmann, said that despite the wrongs there was no legal basis for awarding damages. He said modern refugee laws did not exist at that time and that too long had lapsed for Spring to have a valid claim against the government. Another judge, Alain Wurzburger, disagreed. He said regardless of legal arguments the court should award Spring the 100,000 francs either on ethical grounds or, failing that, as expenses. He pointed out that Spring had formally waived his rights to claim compensation from a dlrs 1.25 billion class action settlement reached between the two big Swiss banks and lawyers of Holocaust survivors in 1998. This is meant to cover claims of victims and their heirs in return for them dropping any other compensation demands. ''The decision will be of huge importance not only for Joseph Spring, but also for Switzerland, its reputation and its honor,'' said Rechsteiner. (AP Worldstream, January 21, 2000) INMATES LITIGATION: Judge OKs Deal for Missouri Inmates Abused in TX -------------------------------------------------------------------- An attorney representing Missouri inmates who were abused in Texas jails says he hopes a $2.2 million settlement will teach state officials some lessons. The settlement wraps up all state and federal lawsuits filed or contemplated by any of about 2,100 prisoners sent from Missouri to Texas from 1995 through 1997 under the Texas Cell Lease Program. The inmates will share $1.1 million, with their portion depending on the severity of injuries they suffered. Another $800,000 will go for attorneys' fees and $300,000 will cover costs for the litigation. Sylvester James of Kansas City, the lawyer for about 200 of the 700 Missouri inmates who had filed lawsuits, said on January 20 he was satisfied with U.S. District Judge Nanette Laughrey's Jan. 14 order approving the settlement of the class-action case. He said the state of Missouri, while not held liable for any of the damages, should learn from the case. ''Don't contract with private prison companies, because they have every incentive in the world to not feed your people right, not clothe them right, not give them medication, because every time they do it costs them money,'' said James, who received a copy of the order on January 19. Capitol Corrections Resources Inc., a private jail management company, will contribute $2.1 million the limit of its insurance coverage to the settlement. The rest will be paid by other defendants, including the company that transported the inmates to Texas. The state of Missouri admitted no liability and will not contribute to the settlement. In negotiations, the state stuck to its policy of never paying to settle any prison claims ''even if they are meritorious,'' Laughrey wrote. Missouri's stance is a sore point for some of the inmates. They contend Missouri officials ignored credible reports of their treatment in Texas, and acted only after the public broadcasts of videotapes showing them being bitten by guard dogs and shocked with stun guns. The videotapes were made Sept. 18, 1996, at Texas' Brazoria County Jail and on March 2, 1997, at the jail in Gregg County. Missouri agreed under the settlement to a five-year moratorium on sending prisoners to Texas or to any CCRI-run jails anywhere except in very narrow circumstances. In addition, Missouri agreed to forego its legal right to seize whatever settlement money the inmates eventually receive. And the state agreed to take steps to ensure that no Missouri inmate be housed in any facility that employs anyone convicted of prisoner abuse. (AP Online, January 21, 2000) LEGATO SYSTEMS: Abbey, Gardy Files Securities Suit in California ---------------------------------------------------------------- Abbey, Gardy & Squitieri, LLP gives notice that a class action entitled Limond v. Legato Systems, Inc., Louis C. Cole and Stephen C. Wise, (No. C 00-20073 EAI) has been commenced in the United States District Court for the Northern District of California on behalf of all persons who purchased shares of Legato Systems, Inc. ("Legato") (Nasdaq: LGTO) common stock between October 20, 1999 and January 20, (the "Class Period"). In brief, the Complaint charges that Legato and certain of its officers and directors, violated the federal securities laws. The Complaint alleges that during the Class Period defendants made materially false and misleading statements regarding, among other things, the financial condition of Legato. The Complaint alleges that in order to inflate the price of Legato's stock, defendants caused the Company to falsely report its financial results for the third quarter of 1999 by improperly recognizing revenue. On January 20, 2000 defendants, revealed that the Company's earnings would fall short of meeting expected earnings for the fourth quarter of 1999 and that it was restating its third quarter results. The complaint also alleges that during the Class Period, while in possession of material undisclosed information defendants sold millions of dollars worth of Legato stock. After defendants' disclosure the price of Legato stock plummeted 63% to $29 per share in after hours trading. During the Class Period defendants made no corrective statements. Contact: James J. Seirmarco E-mail: jseirmarco@a-g-s.com or Nancy Kaboolian E-mail: nkaboolian@a-g-s.com of ABBEY, GARDY & SQUITIERI, LLP, 800-889-3701 (toll free) or 212-889-3700 LEGATO SYSTEMS: Barrack Rodos Files Securities Suit in California ----------------------------------------------------------------- Counsel for Class Plaintiff, Barrack, Rodos & Bacine, notifies on January 21 that a class action has been commenced in the United States District Court for the Northern District of California on behalf of all persons who purchased the common stock of Legato Systems, Inc. (Nasdaq: LGTO) ("Legato" or the "Company") between October 21, 1999 and January 19, 2000, inclusive (the "Class Period"). The complaint charges Legato and certain of its officers with violations of the federal securities laws by making misrepresentations about the Company's business, earnings growth, and financial statements, as well as its ability to continue to achieve profitable growth. The complaint alleges that during the Class Period, the individual defendants (Louis C. Cole, Kent D. Smith, Stephen C. Wise and Nora M. Denzel), who controlled and were senior officers of Legato, engaged in a scheme to conceal Legato's badly flagging growth to prevent the decline in the price of Legato stock in order to: (i) use Legato's artificially inflated stock as currency to fund the Company's acquisition of companies in stock-for-stock transactions; and (ii) receive $11.5 million in insider trading proceeds. The complaint alleges that, as Legato continued to report "record" profits and defendants created the fiction that they were achieving 150% growth in net income, the price of Legato stock reacted, rising to a Class Period high of $ 79-1/4 on December 23, 1999. The complaint charges defendants with profiting from Legato's fiction of record profits and purported growth, selling over 178,000 shares in just six days for total proceeds of $11.5 million. To inflate the price of Legato's stock, according to the complaint, defendants caused the Company to falsely report its results for the third quarter of 1999 and continued to attempt to improperly recognize revenue throughout the Class Period. On January 19, 2000, Legato revealed that it would restate its third quarter earnings and that it would fall desperately short of meeting its forecasted earnings for the fourth quarter 1999. This revelation caused Legato stock to be halted on Nasdaq and ultimately to plummet to $29 per share in after-hours trading, a decline of 63% from its Class Period high. Contact: Maxine S. Goldman, Shareholder Relations Manager, at Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103, at 800-417-7305 or 215-963-0600, fax number 888-417-7306 or 215-963-0838, or by e-mail at msgoldman@barrack.com LEGATO SYSTEMS: Berman, Devalerio Files Securities Suit in California --------------------------------------------------------------------- A securities class action was filed on January 20 against Legato Systems, Inc. ("Legato" or the "Company") (Nasdaq: LGTO) on behalf of all persons who purchased the common stock of Legato between October 20, 1999 and January 19, 2000, inclusive (the "Class Period"). The lawsuit, which seeks class action status, is brought in the United States District Court for the Northern District of California for violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The action charges that Legato and certain of its officers and directors violated the federal securities laws by issuing a series of materially false and misleading statements concerning the Company's business, financial condition and earnings. Specifically, the Company improperly recorded revenue on three contracts during the third and fourth quarters of 1999. As a result of these materially false and misleading statements and omissions, the complaint alleges that the price of Legato common stock was artificially inflated during the Class Period. Moreover, the Individual Defendants and other directors of the Company sold their stock at artificially inflated prices during the Class Period for proceeds of over $14 million. Contact the lawyers at Berman, DeValerio & Pease LLP to discuss your rights and interests: Jennifer L. Finger, Esq., Michael G. Lange, Esq., Jeffrey C. Block, Esq., Berman, DeValerio & Pease LLP, 800-516-9926, One Liberty Square, Boston, MA 02109, E-Mail: bdplaw@bermanesq.com or Ritu Patel, Esq. Joseph J. Tabacco, Esq., Berman, DeValerio, Pease & Tabacco, 425 California Street, Suite 2025, San Francisco, CA 94104, Telephone: 415-433-3200. Their website is at http://www.bermanesq.com LEGATO SYSTEMS: James V. Bashian Files Securities Suit in California -------------------------------------------------------------------- The law offices of James V. Bashian, P.C. gives notice on January 20 that a class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of those persons and entities who purchased the common stock of Legato Systems, Inc. ("Legato" or the "Company") between October 21, 1999 and January 19, 2000, inclusive (the "Class Period"). The complaint charges Legato and certain of its officers and directors with violations of the Securities Exchange Act of 1934 Sections 10(b) and 20(a), and Rule 10b-5 promulgated thereunder. Contact: James V. Bashian P.C., New York James V. Bashian, Esq. Oren Giskan, Esq. Tel: 212/921-4110 or 800/556-8856 E-mail: lojvb@worldnet.att.net or osgiskan@aol.com LEGATO SYSTEMS: Kirby, McInerney Files Securities Suit ------------------------------------------------------ The law firm of Kirby McInerney & Squire, LLP has been retained to bring a class action lawsuit on behalf of all purchasers of Legato Systems, Inc. (Nasdaq: LGTO) securities between October 21, 1999 and January 19, 2000 (the "Class Period"). The action will charge Legato and certain of its officers with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by reason of material misrepresentations and omissions. As the complaint will allege, Legato Systems made misrepresentations about its financial statements (which it has now admitted it will restate), revenues, and its earnings growth rate. On the basis of the company's false statements and misrepresentations, Legato's stock price soared as high as $79.25 during the class period, allowing the company to use its inflated stock as a currency for acquisitions, and allowing company officials to receive over $11 million from insider sales. On January 20, 2000, however - only one week after the CFO assured concerned analysts that Legato's revenues and earnings would meet expectations - the company shocked the investment community when it announced that it would restate its third quarter earnings downwards (due to improper recognition of revenues) and miss its fourth quarter estimates. Suddenly faced with accounting improprieties, revised lower earnings and revised and lowered growth rates, Legato's share price plummeted over 44% in one day, shedding more than $23 per share, and has declined more than 62% from its Class Period high. Contact: Jeffrey H. Squire, Esq. Ira M. Press, Esq. Robert Feinstein, 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 E-Mail: kms@kmslaw.com LEGATO SYSTEMS: Shepherd & Geller Files Securities Suit in California --------------------------------------------------------------------- The Law Firm of Shepherd & Geller, LLC announced on January 20 that it has filed a class action in the United States District Court for the Northern District of California on behalf of all individuals and institutional investors that purchased the common stock of Legato Systems, Inc. ("Legato" or the "Company") (Nasdaq:LGTO) between October 21, 1999 and January 19, 2000, inclusive (the "Class Period"). The complaint charges that the Company and certain of its officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's business, earnings growth and financial statements. As a result of these false and misleading statements the Company's stock traded at artificially inflated prices during the class period. Prior to the disclosure of the above mentioned adverse facts, certain insiders took advantage of the inflated stock price by selling $11.5 million in Legato common stock to the investing public. Additionally, the defendants used the Company's artificially inflated stock price to finance certain acquisitions in stock-for-stock deals. When the truth about the Company was revealed, the price of the stock dropped significantly. Contact: Shepherd & Geller, LLC, Boca Raton Jonathan M. Stein, 561/750-3000 Toll Free: 1-888-262-3131 E-mail: jstein@classactioncounsel.com or Shepherd & Geller, LLC, Media, Pa. Scott R. Shepherd, 610/891-9880 Toll Free: 1-877-891-9880 E-mail: sshepherd@classactioncounsel.com MICROSOFT CORP: Alleged Collusion with Law Firms Overshadow Class Cert. ----------------------------------------------------------------------- Allegations of collusion between Microsoft Corp. and two high-profile California law firms threaten to overshadow arguments for certifying a class action against the software giant in San Francisco Superior Court. The pretrial maneuverings have attorneys barking like alpha male sled dogs to become lead counsel in litigation that accuses Microsoft of unfair business practices. Eugene Crew of Townsend and Townsend and Crew filed his case, Lingo v. Microsoft, 301357, last February. That was nine months before at least 23 other lawsuits were filed in California against Microsoft. The November cases followed U.S. District Judge Thomas Penfield Jackson's findings of fact in the federal antitrust action, United States v. Microsoft, 1999 WL 1001107. Crew argues that his firm should be designated lead counsel if his class action is certified since it was filed first and has been shepherded to the point of trial. A pretrial status conference is scheduled for Feb. 4. Judge Stuart Pollak is scheduled to hear arguments on January 21 on certifying the class action, but the battle over lead counsel may elbow its way to the forefront. In court papers, Crew alleges that Microsoft lawyers sought to manipulate which firm or firms would be designated lead counsel. He argues that Microsoft wants a "quick settlement" of the case to the detriment of class members and to the enrichment of other lawyers seeking the role of lead counsel. "Frankly, counsel for plaintiffs were astonished by the frenzy of 'follow-on' complaints filed" after Jackson's findings of fact, Crew said. "We wondered what could motivate so many others to file new complaints when this action had been pending for almost a year and was steadily moving forward. We became particularly concerned about two law firms -- Milberg Weiss and Lieff, Cabraser -- that began filing numerous identical complaints in different California venues." In a counterpunch, Stephen Bomse, who represents Microsoft in San Francisco, accused Crew of worrying more about being named lead counsel than completing coordination of the many cases. "While plaintiffs purport to defend their position as an effort to protect the interests of the alleged class, in fact, it is a rather thinly veiled effort simply to promote their own primacy as counsel," said Bomse, a partner at Heller Ehrman White & McAuliffe. "Indeed, the logic of plaintiffs' position is difficult to discern except as an exercise in unvarnished self- interest." In his court papers, Crew related a strange scenario involving a series of telephone calls his firm received from a Microsoft lawyer and two attorneys -- one from Milberg Weiss Bershad Hynes & Lerach, and the other from Lieff, Cabraser, Heimann & Bernstein. "On Dec. 15, 1999, we received a telephone call from Len Simon, a partner at the Milberg firm," said Crew, adding that Simon was asked why his firm had filed duplicative lawsuits. "He replied that his firm expected to support venue in San Francisco provided his firm was assured a prominent role in the control of work to be done in the litigation," said Crew. "He acknowledged that his firm had filed numerous complaints in other counties merely so Milberg could support venue outside San Francisco in the event it was not promised a controlling position in the San Francisco litigation." Simon also told Crew that he had been communicating with Steve Berman, a Seattle attorney who represents Microsoft. Simon told Crew he and Berman had a "special relationship." "Just before Mr. Simon hung up, we received a telephone call from Microsoft's lawyers in Redmond, Wash. -- Steve Berman and in-house counsel Richard Wallis," Crew recalled. "Mr. Berman insisted that plaintiffs include both the Milberg firm and the Lieff firm in the control of plaintiffs' class action legal strategy." And then, "shortly after that call was concluded, we received a telephone call from Robert Lieff of Lieff, Cabraser," Crew added. "He bragged that he, too, had a special 'relationship' with Mr. Berman after working together on other plaintiffs' cases and he anticipated a 'quick settlement' if the Lieff firm were to be given a prominent role in the management of and control of plaintiffs' action. "After looking into Lieff's special relationship with Mr. Berman further, we discovered that both had participated in other class action settlements that were highly criticized in the press as unfair to the class members," said Crew. He attached as an exhibit a Wall Street Journal article that appeared July 24, 1998. The newspaper article told of a class action brought by Berman and Lieff, Cabraser in a Louisiana-Pacific products liability case and their settlement of allegations of defective house siding. "The lawyers got $26 million in fees," the Journal said. "Many of the homeowners, it now appears, got seriously short-changed." In a sworn declaration, attorney Richard Grossman, a Townsend partner, said the phone calls unnerved him. "We were alarmed by Microsoft's efforts to control the management of plaintiffs' legal team and to have it stacked with two firms that appeared to be colluding with Microsoft," Grossman said. Joseph Saveri, a Lieff, Cabraser partner, acknowledged in a telephone interview that his firm has worked with Berman before on other class actions. But describing the ties as a "special relationship is too strong a word," he said. Instead, he said it was more like "a good working relationship." "It's important to have a good working relationship with a defendant's counsel," he added. Berman declined to discuss the case. He referred calls to Microsoft's corporate public relations office. Jim Cullinan, a Microsoft spokesman, said the issue of which law firm to designate as lead counsel is not a matter for the software maker to decide. He said Berman was one of several outside counsel working on class actions naming Microsoft as a defendant, but that the lawyer did not speak for Microsoft on such issues. "It's rhetoric from plaintiff's counsel, and I don't think there's any validity to it," Cullinan said. "I don't think it's something Microsoft wants to get in the middle of." He also reiterated Microsoft's position on the class actions that have been filed against it, saying "we think there is no basis for these lawsuits." But Jessica Pers, another Heller Ehrman partner, said in court papers that Microsoft did indeed have a position and was opposed to "the request that Townsend and Townsend and Crew should be appointed liaison counsel." Heller Ehrman also told the Judicial Council, which is charged with determining what judge should coordinate the many lawsuits, that Microsoft wanted the cases to be consolidated in San Diego County superior court. Milberg Weiss' home office is located in San Diego. "Unlike San Francisco, the coordination site proposed by other plaintiffs, San Diego offers a neutral forum untainted by the pervasive anti-Microsoft sentiment generated and stoked by Microsoft's aggressive competitors in the San Francisco area," Heller Ehrman partner Robert Rosenfeld told the council. "Similarly, in San Diego, the choice of lead and liaison counsel can be made on the merits, free of the jockeying for position already occurring in San Francisco...." The Judicial Council ignored Heller Ehrman's proposal and gave San Francisco Presiding Judge Alfred Chiantelli the task of assigning a motion judge to determine how to consolidate the many cases. That could be Judge Pollak. In a telephone interview, Milberg Weiss' Simon acknowledged that his firm is seeking to be designated lead counsel. He said there is nothing sinister in that. "We're trying to get a lead role in the California cases," Simon said. "We think we deserve it because we're good lawyers." He said Berman called him to discuss issues, since the two were familiar with each other from Berman's former activities as a plaintiffs attorney. "Defense counsel calls plaintiffs' counsel all the time," Simon said, in order to proceed in the most "efficient" manner. He denied that early settlement talks between Milberg Weiss and Microsoft had occurred. He said his firm filed at least one lawsuit against Microsoft in San Francisco. Simon also accused Crew of violating court rules for asking Pollak to be named lead counsel without notifying all plaintiffs counsel who have filed lawsuits against Microsoft in California. Crew said neither Milberg Weiss nor Lieff, Cabraser have pending litigation before Pollak. He said that means they have no standing to argue the lead counsel issue before the judge. Simon responded: "Well, I'm going to court, and let's see if he Pollak lets us talk." (The Recorder, January 21, 2000) MOBIL OIL: Company in Australia Could Face $66 Mil. Compensation Claims ----------------------------------------------------------------------- Mobil Oil Australia Ltd. could face compensation claims of more than Australian dlrs 100 million (U.S. dlrs 66 million) stemming from Australia's aviation fuel contamination crisis, light aircraft operators said. Up to 5,000 small aircraft in Australia's eastern states have been grounded by aviation authorities for 11 days because of fears batches of aviation gasoline made by Mobil could block engine systems. Lawyers for operators say they will lodge a class action suit against Mobil, a subsidiary of U.S.-based Mobil Exxon Corp., in Federal Court, claiming damages for business losses the industry estimates amount to Australian dollars 5 million (U.S. dlrs 3.3 million) a day. Aircraft Owners and Pilots Association president Bill Hamilton said on January 21 that the class action would be filed Monday, January 24, but that he hoped the matter would be settled out of court. (AP Worldstream, January 21, 2000) NET SPAM: Can. Prof. Compares Blacklist Threat to Digital Class Action ---------------------------------------------------------------------- A blacklist threat to Internet providers has proven cyberspace can be self-policed, says a city computer guru. "You can do the equivalent of a digital class-action suit. It's wonderful," said Randy Goebel, a computing science prof at the University of Alberta. Recently, a group of news server managers who monitor spam, the unsolicited, anonymous ads that have been swamping Usenet news groups, said it was issuing a "Usenet Death Penalty" against Excite@Home. The U.S.-based firm provides high-speed Net access to millions across North America. The approximately 70,000 customers of Alberta providers Shaw@Home and Rogers@Home would have been affected as well. The penalty was to block any message, including innocent ones, from going on public bulletin boards maintained by Usenet. "The Usenet administrators said, 'We'll fight back. We'll threaten @Home and say we're not going to allow your clients to participate in Usenet discussions because you allowed your clients to send out spam," said Goebel. The threat worked. The level of spam had dropped to some of the lowest levels in more than a month, and a 30-day stay was issued on the "death penalty." Goebel said somehow the @Home providers decided they couldn't alienate their regular client base. "Control can be in the hands of the users. They forced change in a big company." (The Edmonton Sun, January 21, 2000) NETWORK ASSOCIATES: Will Underdogs Be Lead Counsel in Securities Suit? ---------------------------------------------------------------------- Three months ago, the dozens of lawyers litigating the massive securities class action against Network Associates considered retired San Jose, Calif., lawyer Robert Vatuone's application to serve as lead plaintiff only long enough to snicker at it. After all, Mr. Vatuone was just a lone investor in Network Associates who claimed that he had lost $ 30,000 because of the anti-virus software maker's alleged financial chicanery. And he was competing against giant institutional investors such as the city of Philadelphia and foreign equity funds, each claiming millions of dollars worth of losses. Moreover, the seminal Private Securities Litigation Reform Act of 1995 requires judges to pick institutional investors as lead plaintiffs as often as they can. But after a series of rulings by U.S. District Judge William Alsup and the surprising responses to those orders by the institutional investors, Mr. Vatuone stands as the lead plaintiff in In re Network Associates Inc. Securities Litigation, No. 99-1729. Now the strong possibility looms for more underdogs to come out on top. Many believe that Mr. Vatuone may pick two small law firms as lead counsel. That would be yet another surprise because small firms get picked as lead counsel in securities class actions about as often as lone investors. Judge Alsup first appointed Philadelphia lead plaintiff. But the judge 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, the judge ordered the city to put the lead counsel designation out to bid. 'After Due Deliberations' Earlier in December, Philadelphia declined the chance to serve as lead plaintiff, saying that it didn't want to lead the litigation if it couldn't choose its own counsel. So Judge Alsup solicited more applications for the lead plaintiff position and received at least three from individual investors such as Mr. Vatuone and also 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." Mr. Berger concluded his Dec. 13 letter by arguing that KBC Equity Fund "is the most appropriate lead plaintiff" but would not serve if it couldn't choose its own counsel. Two days later, Judge Alsup appointed Mr. Vatuone 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," Judge 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." Judge Alsup made his decision nearly two months after he held an all-night hearing on Nov. 4 in which he closely questioned lead plaintiff candidates, including Mr. Vatuone. "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." At that hearing, Mr. 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 Mr. Vatuone's business. They have just as good, if not better, a shot as the other firms, including Milberg, Weiss, Bershad, Hynes & Lerach, of winning the lead counsel derby. Mr. Vatuone, as he told Judge Alsup during the Nov. 4 hearing, is personal friends with Messrs. Ruby and McManis. If the McManis and Ruby firms do become lead counsel, their appointment would represent a stunning coup for the two tiny firms. 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 Judge 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," Mr. McManis said. (The National Law Journal, January 10, 2000) TOBACCO LITIGATION: Philip Morris Will Fight Flight Attendants’ Suits --------------------------------------------------------------------- Philip Morris said on January 20 that it will vigorously defend individual lawsuits filed in Miami by flight attendants seeking compensation for alleged health injuries as a result of exposure to work-related environmental tobacco smoke (ETS). "These newly-filed cases raise ETS claims similar to those rejected by jurors in two recent trials against the tobacco industry. In addition, punitive damages cannot be sought or awarded in these cases because of an earlier settlement with members of the Broin class-action lawsuit," said John J. Mulderig, an associate general counsel with Philip Morris. "There have been trials in Indiana and Mississippi where jurors - after hearing and considering all of the evidence - ruled that the plaintiffs' injuries were not the result of exposure to ETS," Mulderig said. "As part of our efforts to pass comprehensive national legislation relating to tobacco issues, the tobacco industry settled the Broin class-action lawsuit by agreeing to fund a $300 million medical research facility and pay the flight attendants' attorney $46 million in attorneys' fees plus expenses. That settlement has no bearing on the merits of the individual claims of the flight attendants," said Mulderig. "We agreed to that settlement for reasons that had nothing to do with the validity of the claims brought in the class-action lawsuit; it had everything to do with our efforts to pass the comprehensive national legislation relating to tobacco issues," he added. The settlement provided no money to any of the flight attendants who were members of the class but allowed them instead to file individual suits to be decided on the merits of each case through separate trials. However, the settlement specifically prevents any flight attendant who was a member of the class from seeking or recovering punitive damages from any of the tobacco company defendants. TORONTO SUN: Reports on Suit over Misconduct Re SunShine Girl Photo ------------------------------------------------------------------- Legal action has started against The Toronto Sun related to allegations of misconduct during SunShine Girl photo sessions. The notice of action was filed in court on January 20 and names Sun Media, The Toronto Sun and photographer Norm Betts. The class-action suit, which names Vanessa Fehringer as the plaintiff, is seeking $ 10 million in damages. Fehringer was photographed as a SunShine Girl in 1997. Betts, who had been with The Sun since it was founded in 1971, resigned on January 19. (The Toronto Sun, January 21, 2000) UCAR INT’L: FSBA Announces Ct Approval of Settlement of Securities Suit ----------------------------------------------------------------------- The Florida State Board of Administration ("FSBA"), the employee pension fund for Florida state and county employees, announced that the settlement of the action it initiated against UCAR International, Inc. (NYSE:UCR) ("UCAR" or the "Company"), was approved by the Honorable Janet Bond Arterton of the United States District Court for the District of Connecticut on January 19, 2000. This action, in which the FSBA acted as the Lead Plaintiff, was brought under the federal securities laws as a class action on behalf of investors in UCAR from the date of the Company's initial public offering in August 1995 through March 1998. The action alleged violations of the federal securities laws arising out of UCAR's failure to disclose the extent to which its growth, profit margins and earnings were the product of an illegal price fixing conspiracy. The settlement approved by the Court provides for the payment of $40 million and the appointment of a new director with significant antitrust experience to the Board of Directors of UCAR. The FSBA is pleased that its selection for the Board, Mary Cranston, Firm Chair of the Law Firm of Pillsbury, Madison & Sutro, LLP, has been agreed to by UCAR and will be nominated for an opening on the Board of Directors at the upcoming annual meeting of shareholders. The FSBA's Executive Director Tom Herndon stated, "We are pleased that UCAR has agreed to appoint Mary Cranston to its Board of Directors as part of this settlement. Ms. Cranston, an officer of the American Bar Association Antitrust Section and chair of the Antitrust and Trade Regulation Section of the California Bar, is a highly regarded antitrust lawyer whose experience and commitment will benefit UCAR and its shareholders for years to come. We are also pleased that the Court has approved a settlement providing for the appointment of a new director to UCAR's Board, which we believe is a ground-breaking development in the area of shareholder litigation and shareholder rights generally." To participate in the settlement, claims must be submitted on or before March 6, 2000. Claim forms should be sent to David Berdon & Co., LLP, P.O. Box 3218 Grand Central Station, New York, NY 10163. The FSBA was represented in the UCAR litigation by Michael J. Pucillo of Burt & Pucillo, LLP, in West Palm Beach, Florida. Contact: Burt & Pucillo, LLP, West Palm Beach, Fla. Michael J. Pucillo, 1-800-349-4612 or 561/835-9400 ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk and Peter A. Chapman, editors. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *