/raid1/www/Hosts/bankrupt/CAR_Public/000501.MBX               C L A S S  A C T I O N  R E P O R T E R

                Monday, May 1, 2000, Vol. 2, No. 83


ADAM COM: Securities Suit Filed '96 in Georgia Is Pending
AUTODESK INC: Wolf Haldenstein Files Securities Fraud Case in CA
BANK PLUS: Announces Settlement Deal over ADC Credit Card Portfolio
CONSECO INC: Chairman and CFO Resign under Investor Pressure
GENERAL MOTORS: PA Suit Alleges Dealers' Ad. Expenses Hurt Consumers

GENERAL SEMICONDUCTOR: Faces IL Lawsuit over Acquisition of Next Level
GENERAL SEMICONDUCTOR: Securities Suits Filed & Re '95 Pending in IL
GIO: Australian Shareholders Sue for Rejecting AMP Takeover Offer
HMO: Aetna CEO Willing To Listen to Bids
HMO: Colson Hicks Files Suit against Humana over Incentives to Doctors

INMATES LITIGATION: Judge Orders Plankinton Juveniles Be Identified
KEYSTONE BANK: FDIC Asks to Be Sole Plaintiff in Civil Lawsuits
LOCKE LIDDELL: $ 22 Mil Settlement Serves as Warning to Other Law Firms
MORGAN STANLEY: Investors Can Sue Brokers in CA State Court
NATIONAL REAL: Limited Partner Sues General Partners in Wisconsin

PETSMART INC: AZ Ct Dismisses Securities Case over Flea & Tick Products
PETSMART INC: Settles Claims over OT Pay after Ct-Ordered Mediation
PETSMART INC: Mediation in May over Allegation Re Pet City Acquisition
STEPHEN CO: Decries Merit of Securities Lawsuit in Florida
TOBACCO LITIGATION: BAT Aust Criticizes GST and out-of-Ct Settlement

TOBACCO LITIGATION: Makers Throw Cold Water on Judge's Settlement Idea
TOBACCO LITIGATION: Philip Morris Seeks Class Cert. before Trial
TOSHIBA CORP: Says Restructuring costs and US Suit Force It in the Red


ADAM COM: Securities Suit Filed '96 in Georgia Is Pending
On April 25, 1996, a shareholders' class action lawsuit in Fulton County
Superior Court in Atlanta, Georgia was filed against A.D.A.M. Software,
Inc. and certain of its then officers and directors. The complaint
alleges violations of sections 11, 12(2) and 15 of the Securities Act of
1933, violations of the Georgia Securities Act and negligent
misrepresentation arising out of alleged disclosure deficiencies in
connection with our initial public offering of common stock which was
completed on November 10, 1995. The complaint seeks compensatory damages
and reimbursements for plaintiff's fees and expenses. We and the other
named defendants have filed a motion to dismiss the claim, which is

AUTODESK INC: Wolf Haldenstein Files Securities Fraud Case in CA
Wolf Haldenstein Adler Freeman & Herz LLP announces that it filed a
securities class action lawsuit in the United States District Court for
the Northern District of California on behalf of investors who bought
Autodesk Inc. (Nasdaq: ADSK) stock between September 14, 1998 and May 4,
1999 (the "Class Period").

The lawsuit alleges that Autodesk, certain executives of the Company and
its investment banker violated the securities laws and regulations of
the United States. The Company creates and sells PC design software and
multimedia tools for use in the architectural design, civil engineering,
surveying, mechanical design, mapping, film and video production, video
game development and Web content industries. The Complaint alleges that
to artificially inflate the price of Autodesk stock, Autodesk, certain
of its executives and their investment banker made very positive but
false statements about:

    * strong continuing demand for Autodesk's existing AutoCAD R14
      product line;
    * strong demand for all of its products in Europe;
    * Autodesk's successful diversification of its business due to the
      strong sales of its "vertical" products resulting in lessened
      dependence on its AutoCAD product line and thus the elimination
      of the AutoCAD "boom/bust" cycle;
    * the beneficial impact of Autodesk VIP upgrade program;
    * the lack of any negative impact on Autodesk's business due to Y2K
    * the successful development and testing and accelerated commercial
      release of its new R15/AutoCAD 2000 product; and
    * the limited dilutive impact of Autodesk's acquisition of Discreet
      Logic, all of which would result in the Company achieving F00 (to
      end Jan. 31, 2000) revenues in excess of $1 billion, earnings per
      share ("EPS") of $2.45-$2.55 and 20%-25% yearly EPS growth during

As a result of these positive, yet false statements, the price of
Autodesk stock was artificially inflated to a Class Period high of
$49-7/16 in January 1999. This enabled the Company to both successfully
complete the Discreet Logic acquisition in March 1999 as well as to sell
three million new Autodesk shares to the public at $41 per share for
over $120 million. On May 4, 2000, defendants stunned the investment
community by announcing that Autodesk F00 results were, in fact, going
to be much worse than earlier forecast based on poor sales of
R15/AutoCAD 2000 and weak sales in Europe. Upon the release of this
announcement the Company's stock price sank by almost 25% in one day to
a close of $22-1/4 and later to as low as $19-3/4.

Contact: Michael Miske, George Peters, Fred Taylor Isquith, Esq., Shane
T. Rowley, Esq., or Gregory M. Nespole, Esq., of Wolf Haldenstein Adler
Freeman & Herz LLP, 800-575-0735, or http://www.whafh.comor

BANK PLUS: Announces Settlement Deal over ADC Credit Card Portfolio
-------------------------------------------------------------------- The
Bank announces that on March 31, 2000 the Bank completed the sale of
five of its retail branches with $333 million of deposits in two
separate transactions. These sales were funded with $250 million of
multifamily loans, $59 million of cash and $4 million of other assets.
The $19.6 million net gain recorded includes the expenses of the
transactions and losses incurred in the disposition of mortgage loans
delivered in the transactions.

The Company says that it is currently negotiating the sale of the MMG
portfolio and its credit card servicing operations located in Beaverton,
Oregon. This transaction may include an option for the purchaser to
acquire the ADC portfolio in the future. The prospective purchaser is
currently completing its due diligence and, as such, no assurances can
be given that the potential sale of these assets will be completed, or
if completed, at the prices or terms currently indicated.

If a decision is made to sell the ADC portfolio the Company expects,
based upon current information, that a valuation loss to reduce the
carrying value of the ADC portfolio to its estimated sales value could
approximate the percentage loss recorded on the MMG portfolio.

The Company has negotiated agreements in principle to settle the various
individual and purported class action lawsuits filed in Alabama relating
to the ADC credit card portfolio and is pursuing similar negotiations in
Mississippi. The Company recorded a $4.0 million charge in the first
quarter which represents the estimated settlement costs. The settlements
are subject to the execution of definitive settlement agreements by the
parties involved, confirmation by the various courts having jurisdiction
over these cases and approval or non-objection by the OTS. The Bank
points out that there can be no assurance that (i) settlement agreements
acceptable to the Company will be executed, (ii) the settlements will be
confirmed by the courts, (iii) the settlements will be acceptable to the
OTS and (iv) new lawsuits of a similar nature will not be filed in the

CONSECO INC: Chairman and CFO Resign under Investor Pressure
Bowing to investor pressure, Conseco Inc.'s two top executives are
stepping down from their posts at the troubled financial services
company. Chairman Stephen C. Hilbert said the company's recent problems
had impaired investor confidence in his and chief financial officer
Rollin M. Dick's leadership.

The company said David V. Harkins, a Conseco director and the president
of buyout specialist Thomas H. Lee Partners, has been elected interim
chairman and chief executive. A search will start immediately for a
permanent CEO and CFO. In addition, Thomas M. Hagerty, a managing
director of Thomas H. Lee Partners, has been elected to Conseco's board.
Lee Partners invested in Conseco in December. The Carmel-based financial
services company also announced on April 28 that first-quarter net
income dropped 73 percent to $77.4 million, or 22 cents a share, from
$287.8 million, or 87 cents a share, last year.

Conseco's market value has fallen by billions of dollars over the past
two years, prompting some investors to call for Hilbert's resignation.
''Both Rollie and I leave confident that this transition places the
company in very strong hands. Finally, as two of Conseco's largest
shareholders, we believe this step is the best way to restore an
appropriate value to the Conseco franchise,'' Hilbert, who co-founded
the company, said in a statement.

The company's stock took a hit April 20 when Moody's Investors Service
cut its ratings on Conseco's senior bonds to non-investment grade.
Moody's cited concerns about Conseco's flexibility as it tries to sell
its lending unit, Conseco Finance. Conseco had folded Green Tree
Financial Corp. into the division after buying the company two years ago
for $6 billion. Moody's decision was the latest shock to Conseco since
executives announced March 31 they plan to sell Conseco Finance. In an
April 28 statement, Harkins said selling Conseco Finance is ''our first
priority.'' ''The board continues to believe that selling Conseco
Finance and returning the company to its core insurance businesses will
produce the best results for Conseco shareholders,'' he said.

An executive committee of the board has been formed comprised of
Harkins, retired Indianapolis banker James Massey and former PSI Energy
president John Mutz to look for a new CEO and CFO. Candidates will be
considered both from within and outside the company, Conseco said.
Earlier this month, Standard & Poor's lowered the ratings on the
insurer's corporate credit, senior debt, preferred stock and commercial
paper. In documents filed April 14 with the Securities and Exchange
Commission, Conseco said it deducted $11.9 million from its profits last
year to cover possible repayment problems, as the shares lose value and
the loans become more difficult to pay back. Thirteen class-action
lawsuits have been filed in federal court against the company since it
announced its intention to sell Conseco Finance. The lawsuits all allege
Hilbert and other executives misled investors about the value of the
consumer finance division. (AP Online, April 28, 2000)

GENERAL MOTORS: PA Suit Alleges Dealers' Ad. Expenses Hurt Consumers
A class action lawsuit was filed April 26 in the Lancaster County Court
of Common Pleas against General Motors Corporation (NYSE: GM). The suit
seeks certification of a class of thousands of purchasers of GM vehicles
in Pennsylvania between September 1988 and April 1, 1999. Joseph F.
Roda, of the Pennsylvania firm of Roda & Nast, P.C., filed the lawsuit
on behalf of a Lancaster County resident who purchased a new 1998
Pontiac Grand AM.

The lawsuit alleges that General Motors, in violation of the
Pennsylvania Board of Vehicles Act, forced dealers to participate in
advertising at their expense. This forced participation caused dealers
to pass on the charge to buyers, and ultimately injured consumers.

Roda said that beginning in the 1960's and continuing through the early
1990's, many GM dealers formed associations to engage in the local
advertisement of GM products. Dealers who belonged to these associations
funded them through voluntary assessments that dealers paid when
purchasing new vehicles from GM. The assessments were in no fixed or set
amount, and payment of an assessment was not required for dealers to
purchase a GM vehicle.

Dealers originally paid these assessments directly to their
associations, but at the dealers' request, GM undertook to collect the
voluntary assessments when it sold dealers its vehicles, and then passed
the money along to the associations.

In the fall of 1998, GM implemented mandatory dealer participation in
its advertising. Under programs called "Marketing Initiatives," GM added
1% of the Manufacture Suggested Retail Price to the invoice price of new
GM vehicles. Dealers then passed the mandatory increase on to the buyer.
On April 1, 1999, GM terminated the 1% mandatory assessments because of
litigation brought by GM dealers against GM.

The lawsuit is brought under Pennsylvania's Board of Vehicles Act, 63
P.S. S818.1, et seq., which became effective January 1, 1984, and
provides that a manufacturer may not require a dealer to participate
monetarily in an advertising campaign.

The same law also provides that any person who is injured by a violation
of the statute may sue for damages. The lawsuit contends that the retail
customers of the vehicles covered by the 1% mandatory assessments were
injured because they ultimately had to pay the 1% assessments, since the
dealers passed the assessments onto consumers by adding the assessments
to the retail price of the vehicles.

The lawsuit affects all persons who purchased a new vehicle from a
franchised Pennsylvania GM dealer manufactured or distributed by the
Chevrolet, GMC Truck, Cadillac, Oldsmobile, Buick, Pontiac and Saturn
Divisions of General Motors Corporation, and that was covered under a
Marketing Initiative. Vehicles purchased under the GMC Employee Purchase
Plan, by GM qualified fleet purchasers or by governmental agencies are
not included.

GM has faced litigation from dealers in several states, including
Pennsylvania, because of the 1% mandatory assessments.

Contact: Joseph F. Roda of Roda & Nast, P.C., 717-892-3000

GENERAL SEMICONDUCTOR: Faces IL Lawsuit over Acquisition of Next Level
An action entitled BKP Partners, L.P. v. General Instrument Corp. was
brought in February 1996 by certain holders of preferred stock of Next
Level Communications, which was merged into a subsidiary of GI in
September 1995. The action was originally filed in the Northern District
of California and was subsequently transferred to the Northern District
of Illinois.

The plaintiffs allege that the defendants violated federal securities
laws by making misrepresentations and omissions and breached fiduciary
duties to NLC in connection with the acquisition of NLC by GI.
Plaintiffs seek, among other things, unspecified compensatory and
punitive damages and attorney's fees and costs. In connection with the
Distribution, General Instrument (formerly NextLevel Systems, Inc.)
agreed to indemnify the Company with respect to its obligations, if any,
arising out of or relating to In Re General Instrument Corporation
Securities Litigation (including the derivative action), and the BKP
Partners, L.P. v. General Instrument Corp. litigation.

General Instrument was acquired by Motorola Inc. in January 2000.
Therefore, management is of the opinion that the resolution of these
matters will have no effect on the Company's consolidated financial
position, results of operations or cash flows.

GENERAL SEMICONDUCTOR: Securities Suits Filed & Re '95 Pending in IL
General Semiconductor Inc., the former conformed name of which is
General Instrument Corpioration, discloses in its report to the SEC that
a securities class action is presently pending in the United States
District Court for the Northern District of Illinois, Eastern Division,
In Re General Instrument Corporation Securities Litigation. This action,
which consolidates numerous class action complaints filed in various
courts between October 10 and October 27, 1995, is brought by
plaintiffs, on their own behalf and as representatives of a class of
purchasers of GI common stock during the period March 21, 1995 through
October 18, 1995. The complaint alleges that prior to the Distribution,
GI and certain of its officers and directors, as well as Forstmann
Little & Co. and certain related entities, violated the federal
securities laws, namely, Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, as amended , by allegedly making false and
misleading statements and failing to disclose material facts about GI's
planned shipments in 1995 of its CFT-2200 and DigiCipher II products.
Also pending in the same court, under the same name, is a derivative
action brought on behalf of GI. The derivative action alleges that the
members of GI's Board of Directors, several of its officers and
Forstmann Little & Co. and related entities had breached their fiduciary
duties by reason of the matter complained of in the class action and the
defendants' alleged use of material non-public information to sell
shares of GI common stock for personal gain.

GIO: Australian Shareholders Sue for Rejecting AMP Takeover Offer
In April 2000 insurance company GIO is subject to a class action over
losses of $A600m suffered by 68,000 Australian shareholders. The law
firm Maurice Blackburn Cashman is conducting the class action, which
alleges that the shareholders rejected a takeover offer of $A5.35 per
share by AMP Limited in August 1998, based on misleading advice by GIO's
board of directors. In 1998 and 1999 GIO was exposed to large claims
which pushed it into loss, so that AMP obtained GIO minority
shareholdings for $A2.75 per share in January 1999. Respondents are
claiming the class action cannot go ahead because the claims cannot be
grouped together. (World Reporter (TM), April 28, 2000)

HMO: Aetna CEO Willing To Listen to Bids
Aetna Inc. is not for sale, but the nation's largest health insurer will
consider any meaningful offers, chairman and chief executive William
Donaldson said. ''If there is a legitimate and compelling proposal
brought to our attention, we will take a look at it,'' Donaldson said at
the company's annual shareholders meeting held at its headquarters.

Last month, Aetna spurned a $10 billion takeover offer from Wellpoint
Health Networks and ING Group, and instead chose to split into two
publicly traded companies, one for its health insurance business and the
other for financial services. The company is also trying to sell a large
chunk of its international business. Aetna hasn't made a penny for its
stockholders in the past six years. Several large institutional
shareholders were upset the company spurned the $70 per share
Wellpoint/ING offer, which would have yielded a significant premium to
its current price.

Several shareholder activists said they agreed with Aetna's decision to
split into two companies, but stressed the company needs to move faster
to increase the value of their stock. ''We need some surgery here,''
said Evelyn Davis, a shareholder activist from Washington, D.C., who was
dressed in surgery scrubs. Aetna's stock has been under added pressure
since last fall, when the company became subject to several class action
suits filed by the same trial attorneys who won big settlements from the
tobacco companies.

The company has also had more difficulty than expected in turning around
the money-losing Prudential health care business which it bought last
year. Aetna has also been waging a public relations battle to maintain
its image as consumer-oriented company. Medical providers argue that the
company skimps on care. Donaldson, a Wall Street veteran who has been on
Aetna's board for two decades and took over as chairman in February,
said the firm will already be operating as two separate companies by
July. But he cautioned it will likely take longer to get the regulatory
approvals for the change to be approved. He said working as two
companies will ''unleash the entrepreneurial energies'' of its
employees. (AP Online, April 28, 2000)

HMO: Colson Hicks Files Suit against Humana over Incentives to Doctors
The national consumer law firm of Herman, Middleton, Casey & Kitchens
announced on April 28 that it has filed a nationwide class action
against Humana charging that the HMO paid incentives to doctors,
hospitals and other medical providers to minimize the quality and cost
of the treatment they provide to their patients.

The lawsuit, pending before Judge Fred Moreno of the Southern District
of Florida, joins dozens of others filed throughout the United States
and transferred to Miami by the Federal Judicial Panel on Multi-district

The lawsuit, brought on behalf of Humana subscribers across the US,
charges that Humana rewarded health care providers who chose cheaper
methods of treatment and diagnosis and who failed to disclose to
patients other more costly and often more appropriate - methods of
treatment. The complaint also states that Humana failed to pass the
discounts it obtained for itself on to its subscribers. "Humana rewarded
doctors who did not refer their patients to specialists and who did not
require expensive diagnostic tests," said Mike Eidson of Colson Hicks
Eidson of Miami, who filed the class action with the Herman Middleton
firm. "Humana contracts also include gag clauses' prohibiting medical
providers from discussing alternative treatments with the patients."

Contact: Colson Hicks Eidson, Miami Karen M. Guggenheim Director of
Communications & Public Affairs 305/373-5400 ext 228

INMATES LITIGATION: Judge Orders Plankinton Juveniles Be Identified
A judge ruled last Thursday April 27 that the six juvenile inmates who
filed a federal lawsuit alleging abuse at the State Training School in
Plankinton have to be identified to the state.

The Youth Law Center, which has offices in San Francisco and Washington,
D.C., had declined to name the four girls and two boys, claiming they
will face retaliation from the state Department of Corrections. The
center filed the suit on the youths' behalf. "There have been instances
where the executive branch of government has singled out young
individuals in these facilities," Mark Soler, president of the center,
said in a court hearing on the suit. "(Anonymity) is an important
protection for the children, because this lawsuit is about the abuse of
children by staff at this facility."

But James McMahon, representing the state, said there had been no
specific charges. "There's no allegation that there's been any
retaliation. And I will state on the record that we will not retaliate,"
he said. "It's not contemplated."

U.S. District Judge Lawrence Piersol issued the ruling that the names be
revealed. He vowed to act quickly if evidence of retaliation surfaces.
Piersol also said during the hearing that he will make a surprise visit
to the State Training School. The state had requested that Piersol
visit, saying the facility has changed since Score's death. "We're going
to have an unannounced court visit," Piersol said. "We will do that."

The trial is to start Nov. 28.

The center filed the lawsuit in February. Practices at the Plankinton
facility have been under scrutiny since July, when 14-year-old Gina
Score of Canton died of overheating after a forced run at the school's
boot camp program. David and Viola Score have named former and current
corrections officials and Sioux Valley Hospital as defendants in a civil
suit over their daughter's death.

The juvenile complainants represented by the Youth Law Center allege
abuses such as naked inmates being shackled to their beds, female
inmates being stripped by male guards and inmates being locked in
isolation for long periods.

Their lawsuit seeks an injunction against such practices and names
Corrections Secretary Jeff Bloomberg and State Training School
Superintendent Owen Spurrell as defendants.

Piersol delayed a decision on granting class-action status in the case
so that the state can depose and question the six inmates. Class-action
status would mean any decision in the case applies to all current and
future juvenile inmates. But the judge said the case appeared to fit
class-action criteria. (The Associated Press, April 28, 2000)

KEYSTONE BANK: FDIC Asks to Be Sole Plaintiff in Civil Lawsuits
Attorneys for the Federal Deposit Insurance Corporation argued last
Friday April 28 that two class action lawsuits filed over the failed
Keystone Bank should be dismissed and the FDIC be allowed to take over
as the plaintiff.

Government lawyers told U.S. District Judge David Faber the FDIC should
be the sole plaintiff because it has the authority to recover the money
and distribute it to the various parties. However, lawyers pursuing the
lawsuits argued they should be allowed to proceed without the FDIC.
Faber, who is presiding over the criminal trial of two former Keystone
executives in federal court in Bluefield, heard the arguments in
Charleston. He did not say when he would issue a ruling.

Meanwhile, a sixth lawsuit over the failed McDowell County bank's
practices was filed last Thursday April 27 in U.S. District Court in
Bluefield. The lawsuit by U.S. Bank Trust National Association, based in
St. Paul, Minn., seeks to recover $363,478 from Keystone Mortgage Corp.,
the loan-handling subsidiary of the closed First National Bank of
Keystone. The lawsuit also names as defendants West Virginia-based
United National Bank and Compu-Link Inc. of Lansing, Mich. Keystone sold
home improvement and mortgage-type loans to United, which planned to
"bundle" and sell them. Compu-Link was to service the "bundled" loans,
overseeing payments and account balances, according to the lawsuit. U.S.
Bank, as trustee for the loans, received the principal and interest
payments each month from Compu-Link, the lawsuit said. Keystone had
agreed to buy back any loans which did not meet certain criteria,
including variable rates and loans in default, the lawsuit said. When
United discovered some loans in 1999 that didn't meet the criteria, it
demanded that Keystone buy them back. Keystone sent United a $363,478
check on Aug. 17, the lawsuit said. By the time the check reached U.S.
Bank, federal regulators had closed the bank, saying they could not
account for $515 million in assets, the lawsuit said. The check was
returned to U.S. Bank marked "bank closed."

Five other lawsuits have been filed in federal court over the bank's
practices. Michael Graham, former president of Keystone Mortgage, and
Terry Church, former senior vice president of the First National Bank of
Keystone, are being tried jointly in federal court on charges of
conspiracy and obstructing a federal investigation that led to the
bank's closure in September. Jury deliberations began last Thursday
April 27 and are scheduled to resume last Friday April 28. (The
Associated Press, April 28, 2000)

LOCKE LIDDELL: $ 22 Mil Settlement Serves as Warning to Other Law Firms
Locke Liddell & Sapp's agreement to pay $ 22 million to settle a suit
alleging it aided a client in defrauding investors is expected to serve
as a warning to other firms that they must take action when they learn a
client's alleged wrongdoing may be harming third parties. The
Dallas-based firm agreed April 14 to settle a suit stemming from its
representation of Russell Erxleben, a former University of Texas star
football kicker whose foreign currency trading company was allegedly a
Ponzi scheme. Erxleben pleaded guilty last November to federal
conspiracy and securities-fraud charges and is to be sentenced in May.

Locke Liddell's settlement comes on the heels of an $ 8.5 million
settlement by Houston's Sheinfeld, Maley & Kay and attorney Lee Polson.
The two settlements, minus attorneys' fees and expenses, are expected to
bring investors a recovery of more than 60 cents on the dollar. And if
those large settlements don't get lawyers' attention, the American Law
Institute is considering making a lawyer's duty to a third party clear
in its Restatement of the Law Governing Lawyers.

The Texas disciplinary rules state that a lawyer may disclose
confidential client information in order to prevent the client from
committing a criminal or fraudulent act. Jim George, an Austin lawyer
who is a member of the ALI, said he favors making it clear that a lawyer
must tell people if a client is hurting them. "It's a very simple legal
proposition a lawyer can't help people steal money," said George, of
George & Donaldson.

George represents investors who lost $ 34 million they placed in
Erxleben's Austin Forex International. Daniel N. Matheson III, a former
Locke Liddell partner who represented Erxleben, said in his deposition
that he knew in March 1998 that $ 8 million in AFI's losses hadn't been
reported to investors. AFI, which was founded in September 1996, shut
its doors in September 1998. A few days later, Texas securities
regulators seized its accounts and put the company into receivership.
Harriet Miers, co-managing partner of Locke Liddell, said the firm
denies liability in connection with its representation of Erxleben.
"Obviously, we evaluated that this was the right time to settle and to
resolve this matter and that it was in the best interest of the firm to
do so," Miers said.

The Locke Liddell settlement covers partner Curtis Ashmos of Austin and
former partners Daniel Matheson and Jane Matheson. Other defendants,
including an accounting firm and an Austin businessman, remain in the
case. The settlement agreement bars lawyers for the plaintiffs from
talking to the media about the settlement. Judge Paul Davis of Travis
County, Texas's 200th District Court agreed April 17 to certify a class
for settlement purposes.

If investors whose losses total more than $ 300,000 opt out of the
settlement, Locke Liddell can walk away from it, according to the
agreement. Janet Mortenson, the court-appointed receiver for Austin
Forex, testified that settlement was reached after two long days of
mediation. She said that investors would benefit from getting quick
payment. Had the case been certified as a class action, Locke Liddell
would have filed an interlocutory appeal, which could have delayed the
case from going to trial for at least a year, Mortenson said. Mortenson
also defended the 24.5 percent contingent fee being paid to Bickerstaff,
Heath, Smiley, Pollan, Kever & McDaniel in Austin, Texas, for
representing her. She said she had no money to pursue the claims against
the law firms and was turned down by several firms because of the
complexity of the case. "This is a perfect example of the
appropriateness of contingency fees," Mortenson said.

Bickerstaff partner Michael Shaunessy was the lead lawyer for Mortenson.
By filing the malpractice case on behalf of both Mortenson and the
investors, the plaintiffs' lawyers avoided a legal fight over who was
the proper party to file suit. The case came together after Davis ruled
that Mortenson owned the legal privilege and work product of Erxleben's
lawyers. Documents, including lawyers' notes contained in the boxes that
were turned over to Mortenson, formed the basis of the suit, which was
filed last October.

                                Test Case

The case was viewed as a test of the Texas Supreme Court's April 1999
ruling that a lawyer can be sued by a nonclient for negligent
misrepresentation. In McCamish Martin Brown & Loeffler v. Appling
Interests, however, the court made it clear that a lawyer could be
liable only when the lawyer invites the nonclient to rely upon the
lawyer's opinions and misrepresentations.

Kathy Patrick, who represented Locke Liddell, questioned Mortenson at
the fairness hearing about the state of the law on lawyers' duty to
third parties. Mortenson agreed that the case was on the "frontier of
Texas law." Patrick, of Houston's Gibbs & Bruns, also pointed out that
Locke Liddell had credible defenses, including evidence that Erxleben
may have concealed his conduct from his attorneys. Before the
settlements, Mortenson had recovered only about $ 300,000 in cash, four
cars and a $ 75,000 skybox for UT football games. As alleged in the
petition, Erxleben traded on his football reputation to solicit
investors. He allegedly represented that each investor's account was
maintained separately and that trading profits were allocated
appropriately. But the plaintiffs claim the funds were placed into a
single account and traded together as one large pool of money. The suit
alleges that Erxleben sometimes misappropriated funds for his personal
use and would allocate profits to individual investor accounts at his
own discretion, often favoring some investors over others. The petition
alleges the lawyers allowed AFI to sell unregistered securities, signed
off on brochures and promotional materials that contained
misrepresentations, and knew about the company's growing losses for
months before state securities regulators began investigating. This
story originally appeared in the Texas Lawyer. (The Legal Intelligencer,
April 26, 2000)

MORGAN STANLEY: Investors Can Sue Brokers in CA State Court
Securities brokers who allegedly put their interests ahead of their
customers can no longer rely on federal pre-emption to avoid lawsuits
under California's unfair competition law, the First District Court of
Appeal ruled Thursday April 27. The decision in Roskind v. Morgan
Stanley Dean Witter & Co., 00 C.D.O.S. 3259, widens the scope of
California's consumer protection law and, both parties say, will have a
significant impact on the future of securities litigation in the state.

San Francisco attorney Joseph Tabacco Jr., a partner with Boston-based
Berman, DeValerio, Pease & Tabacco, hailed the decision as a victory
that will allow Californians to sue securities brokers for overreaches
and abuses. He said the ruling also makes clear that a breach of a
broker's fiduciary duty is also a basis for a cause of action under the
unfair competition law, Business & Professions Code sec. 17200. "It
seems to suggest that there is not one reason why sec. 17200 wouldn't
apply in a securities fraud case," Tabacco said. But Jonathan Dickey, a
Gibson, Dunn & Crutcher partner who represented Morgan Stanley, said the
ruling was flawed and would punish companies doing business in
California. He also predicted that it will spark a renewed interest in
tort reform. "It rewrites a lot of law with respect to pre-emption,"
Dickey said. The ruling also butts heads with an unpublished 1995 ruling
by the Ninth Circuit U.S. Court of Appeals which held that California's
unfair competition laws are pre-empted entirely by federal securities

The suit claims Morgan Stanley Dean Witter & Co. engaged in unfair
business practices and breached its fiduciary duty to its clients by
"trading ahead" -- selling its own stock before processing client sell
orders. Morgan Stanley demurred, arguing that federal securities laws
pre-empted those claims, and prevailed on that point before S.F.
Superior Court Judge David Garcia. But relying on the California Supreme
Court's 1999 decision in Diamond Multimedia Systems Inc. v. Superior
Court, 19 Cal. 4th 1036, the First District panel held that federal
securities laws are intended to complement rather than pre-empt state
law. Justice Lawrence Stevens wrote that the California Legislature
specifically granted courts a wide berth with respect to unlawful or
unfair business practices. "It would be impossible to draft in advance
detailed plans and specifications of all acts and conduct to be
prohibited, since unfair or fraudulent business practices may run the
gamut of human ingenuity and chicanery,"

Joined by Justice Barbara Jones and S.F. Superior Court Judge Richard
Kramer, sitting by assignment, Stevens said the decision by the Ninth
Circuit was contrary to state law and not binding. The plaintiff in the
case, James Roskind, claims he put in an order to sell 14,000 shares of
Netscape Communications Corp. stock when the shares were trading at
about $68. But he contends Morgan Stanley opted to sell its own shares
first, delaying Roskind's transaction for 77 minutes. As a result,
Roskind claims his shares sold at $65.50, for a loss of about $34,000.
Two other customers who faced a similar experience joined Roskind in his

Dickey said that a federal scheme is already in place to deal with
securities issues, and noted that Roskind had already received a
settlement from an earlier complaint to the National Association of
Securities Dealers. Dickey said the plaintiffs' lawyers are attempting
to turn what is essentially a one-customer complaint into a nationwide
class action encompassing anyone who has done business with Morgan
Stanley. He said his client is in the process of deciding whether to
appeal. Reporter Kevin Livingston's e-mail address is
klivingston@therecorder.com (The Recorder, April 28, 2000)

NATIONAL REAL: Limited Partner Sues General Partners in Wisconsin
On May 25, 1999, a limited partner who owns interests in four
partnerships, the general partners of which are John Vishnevsky,
National Development and Investment, Inc., and E.C. Corp. (The same
general partners as in National Real Estate Ltd. Partnership, filed a
complaint in the Waukesha County Circuit Court of the State of Wisconsin
on behalf of a putative class of all of the limited partners in the
defendant partnerships.

The complaint was filed against Mr. Vishnevsky, National Development and
Investment, Inc., many partnerships for which those general partners
serve as general partners, and various individuals and entities who are
alleged to exercise control over the partnerships and/or perform
services for the partnerships. The complaint asserts putative class
claims and derivative claims under the Wisconsin Uniform Limited
Partnership Act alleging, among other things, that the general partners
wasted partnership assets and breached their fiduciary duties to the
partnerships and their limited partners by charging excessive fees and
expenses in managing the affairs of the partnerships.

In addition to money damages, the plaintiff is seeking to wind up the
affairs of the partnerships and an accounting of the partnerships to be
supervised by a receiver to be appointed by the court. The case has not
been certified to proceed as a class action. Defendants have filed
motions to dismiss plaintiff's claims; those matters have not been
decided. Although National Real Estate Limited Partnership Income
Properties II, was not named in the original complaint, this Partnership
has since been added as a defendant. The general partners believe the
allegations are without merit and are vigorously defending the lawsuit.

PETSMART INC: AZ Ct Dismisses Securities Case over Flea & Tick Products
On January 6, 1998, the Company was served with a complaint entitled
Miller v. Parker, et al in the Federal District Court for the District
of Arizona, Phoenix Division by a putative class of investors in
PETsMART, Inc. securities. The lawsuit alleged, among other things, that
the Company and its officers and directors issued materially false
financial statements about the Company's flea and tick product
inventory, financial condition, sales and use tax obligations, and
results of operations.

Several additional complaints by putative class representatives alleging
substantially the same allegations were also filed in the District of
Arizona. On May 18, 1998, the District Court entered an order
consolidating the securities class action litigation into a single
action entitled in Re PETsMART, Inc. Securities Litigation,
CIV-98-20-PHX-ROS (JBM), amended complaint in the District Court. The
Company and the individual defendants filed a motion to dismiss the
consolidated amended complaint, and on June 3, 1999, the Court entered
an order granting the motion to dismiss. The Plaintiffs filed a notice
of appeal, but they subsequently stipulated to dismiss their appeal.
Accordingly, the action has been fully and finally resolved.

PETSMART INC: Settles Claims over OT Pay after Ct Ordered Mediation
On March 18, 1998, a lawsuit was filed in Federal District Court in the
Middle District of Florida entitled Cavucci et al v. PETsMART, Inc.
(Case No. 98-CV-340). This class-action complaint alleges unspecified
damages based on various alleged violations of the Fair Labor Standards
Act (FLSA), including alleged failures to pay overtime premiums. On May
12, 1998, the Company answered the complaint denying all material

The court entered an order of procedure and schedule for trial on July
20, 1998 which outlines all discovery and trial dates. On November 30,
1998, PETsMART filed four motions for partial summary judgment on
Plaintiffs claim that four in-store management positions were improperly
classified as exempt under FLSA. These motions were denied. On or about
July 30, 1999, Plaintiffs filed a motion seeking Class Certification and
Court-Supervised Notice to Potential Collective Action Members. The
Court denied this motion on September 28, 1999. The Court ordered the
parties to participate in a mediation on December 15, 1999, during which
the parties reached a settlement. In January 2000, the lawsuit was
dismissed with prejudice.

PETSMART INC: Mediation in May over Allegation Re Pet City Acquisition
In December 1996, Richard Northcott, the former chairman of Pet City
Holdings plc, became a member of the Company=92s Board of Directors in
connection with the Company=92s acquisition of Pet City. Certain former
Pet City affiliates thereafter made allegations that the Company had
misled the shareholders of Pet City at the time of acquisition
concerning the Company=92s business, finances and prospects. On
September 30, 1997, shortly after the receipt of the allegations by the
Company, Mr. Northcott resigned as a director of the Company. No
litigation has been filed with respect to this matter. The Company
believes that the allegations, which have been made, are without merit
but claims that there can be no assurance that these former affiliates
will not initiate litigation seeking monetary damages or an equitable
remedy. A mediation has been scheduled to occur on May 3, 2000.

STEPHEN CO: Decries Merit of Securities Lawsuit in Florida
Following the Company's April 1, 1999 press release describing its
accounting overstatement, the Company, as well as certain of its
officers, were named as defendants in a class action suit filed in the
United States Federal District Court, Southern District of Florida. The
lawsuit alleges, among other things, certain violations of Federal
securities laws and seeks an unspecified amount of damages.

The Company has agreed to indemnify its officers in respect of this
matter and believes it has meritorious defenses against these

In its report to the SEC, the Company relates the matter in the lawsuit.
The Company says that subsequent to the year ended December 31, 1998,
the Company discovered that the method used to determine its cost of
sales during interim periods had resulted in the overstatement of its
gross profit and net income for the second and third quarters of 1998.
This accounting overstatement, the Company claims, was due, in part, to
the significant change in the sales mix of the business as a result of
the Morris Flamingo acquisition, coupled with the decline in sales and
gross profit margins of certain products. This error in the calculation
of the Company's gross profit also contributed to an overstatement of
the inventory level of approximately $5,000,000 as compared to the
reported September 30, 1998 inventory level.

TOBACCO LITIGATION: BAT Aust Criticizes GST and out of Ct Settlement
British American Tobacco Australasia (BAT) has warned the GST will make
late 2000 a difficult period for the company. Despite profits in the
first three months of the year being on target, the tobacco company's
chief executive Gary Krelle said the full year financial result might
not reach expectations. Mr Krelle said price rises on cigarettes caused
by the 10 per cent GST introduced on July 1 would crimp consumer demand.

BAT said other government taxes and excise increases on tobacco and the
growing prominence by illegal tobacco suppliers was also having an
impact on the company's profits. BAT is Australia's largest tobacco
manufacturer. Its brands include Winfield, Benson & Hedges, Holiday,
Dunhill and Lucky Strike. BAT chairman Nick Greiner, in an address to
shareholders at the meeting, attacked the government taxes, describing
them as "excessive".

Mr Greiner also used his speech to target class actions, pointing to the
recent Nixon class action which was dismissed by the Federal Court. "In
Australia, litigation is also being used as a tool to further hinder the
operation of the tobacco business," Mr Greiner said. "... We will not be
intimidated by these actions and we will defend ourselves. Settling
these cases out of court is absolutely not an option," Mr Greiner said.

BAT was formed last September when the merger between W.D. & H.O. Wills
and Rothmans was approved by Australian regulatory bodies. This merger
was instigated by a global merger between both companies' parents. Mr
Greiner said the blending of the two Australian companies was moving
ahead. "I'm proud to report that the achievement of merger synergies is
already well ahead of schedule, and we expect that at least 80 per cent
of these synergies will be reflected in our 2001 profits," Mr Greiner

BAT's New Zealand business was also performing on target, he said. "The
business in the South Pacific including Papua New Guinea, Fiji and the
Solomon Islands is developing into a very exciting prospect," Mr Greiner
said. (AAP NEWSFEED, April 28, 2000)

TOBACCO LITIGATION: Makers Throw Cold Water on Judge's Settlement Idea
Cigarette makers threw cold water on an ambitious proposal by a federal
judge in Brooklyn to craft a global settlement of major anti-tobacco
suits, telling the judge in writing last Thursday April 27 that they do
not think talks would be fruitful and would invite a flood of
opportunistic new claims.

But some observers said U.S. District Judge Jack B. Weinstein, renowned
for crafting sweeping settlements in complex cases such as Agent Orange,
is unlikely to take no for an answer and will probably insist on
exploratory talks before a mediator or special master. At issue is
Weinstein's order seeking talks to settle the six big anti-tobacco suits
in his court, along with major tobacco cases elsewhere in the U.S.,
including a multibillion-dollar suit by the Justice Department and the
landmark Engle class-action case in Florida that is about to enter a
crucial punitive-damages phase.

In his order issued April 18, Weinstein asked lawyers in the six cases
to respond within 10 days. In letters to the court late Thursday, Philip
Morris and R.J. Reynolds Tobacco, the two leading cigarette makers, said
they thought the effort would prove a waste of time because a global
truce could not be fashioned that would pass Supreme Court muster. We
must respectfully decline to enter into the negotiations Your Honor
proposes," said the letter signed by RJR attorney Theodore M. Grossman.
The exercise would be futile, according to the letter, in light of past
Supreme Court rulings that thousands of disparate injury claims "cannot
be aggregated for . . . settlement purposes." Second, Grossman wrote,
the company could wind up triggering more claims by sending "a false
signal to potential litigants that R.J. Reynolds proposes to settle
claims for personal damages; it does not."

Despite its negative tone, the industry response was seen by some as a
call for the judge to put his cards on the table and show how the legal
and logistical obstacles could be overcome. For the cigarette makers,
the prospect of settling the Brooklyn cases alone has limited appeal.
Five federal appeals courts, including the U.S. 2nd Circuit Court of
Appeals that sits over Weinstein, have dismissed lawsuits of the type
pending before him. Therefore, tobacco firms believe they can win the
cases at trial, or at least reverse any defeat on appeal. But a truce
resolving all of the most-threatening cases--which the industry tried
but failed to achieve in 1997 negotiations with the states--has remained
a cherished goal.

Despite the negative response from the industry, discussions may be just
beginning, said Vincent Fitzpatrick, who represents a group of 20 Blue
Cross and Blue Shield plans that sued tobacco firms to recover billions
of dollars spent treating sick smokers. He predicted the judge will
require the industry to take part in talks, "and will seek to allay . .
. their fears that a global settlement may not stand up." (Los Angeles
Times, April 28, 2000)

TOBACCO LITIGATION: Philip Morris Seeks Class Cert. before Trial
Philip Morris Inc. has asked the U.S. Court of Appeals for the Second
Circuit to overrule U.S. District Judge Jack B. Weinstein, who decided
that the National Asbestos Workers Medical Fund's case for health care
costs should proceed without class certification. Philip Morris fears
that thousands of potential plaintiffs could proceed with suits even if
the company prevails at trial. In Re Philip Morris Inc. et al., No.
00-3004, reply brief (2d Cir., Mar. 13, 2000); see Tobacco Industry LR,
March 24, 2000, P. 11.

Calling Judge Weinstein's ruling a "blatant violation of Rule 23,"
Philip Morris says the decision runs counter to numerous interpretations
of the rule by federal courts. Fed. R. Civ. P. 23 provides the criteria
for class certification.

The underlying case revolves around the attempt by the National Asbestos
Workers Medical Fund and six other union health funds to recover health
care costs related to treating its members for smoking-related diseases.
National Asbestos brought suit in U.S. District Court in New York
against Philip Morris Inc. and six other tobacco producers, The Council
for Tobacco Research, The Tobacco Institute Inc. and Hill & Knowlton
Inc., a public relations firm with a longstanding relationship with the
tobacco industry.

Philip Morris insists that Fed. R. Civ. P. 23(c)(1) does not mandate
waiting until after a trial to certify the plaintiff class. The
petitioners noted language in Navarro-Ayala v. Hernandez-Colon, 91 F.2d
1235 (1st Cir., 1995), which reads: "It was an egregious omission for
the district court not to have determined explicitly, as soon as
practicable after this action commenced, whether it could be maintained
as a class action and, if so, the proper description of the class." In
Navarro-Ayala, the court resolved a Fed. R. Civ. P. 23(c)(1) issue.

In the instant case, the respondents pointed out that unless Rule 23
strictly prohibits a district court from deferring a decision on class
certification until after trial, the appeals court should let the
district judges decision stand. They insist that Rule 23 gives the trial
judge discretion in determining class certification questions and that
appellate courts have let district courts hold decisions on class
certification until after trial. The health care funds insist that it is
well-established practice in federal class action practice to defer
determination of class certification until the record is more fully
developed at trial in appropriate cases.

Philip Morris argues that none of the cases cited by the health care
funds addresses the case of a district court's refusal to decide class
certification prior to trial when it is requested by a party. The
petitioner says that fundamental fairness demands defendants learn as
soon as practicable who is in the class of plaintiffs and how many
member it has. Philip Morris cites Siskind v. Sperry Retirement Program,
47 F. 3d 498 (2d Cir., 1995) which states, "fundamental fairness
requires that a defendant be told promptly the number of parties to whom
it may ultimately be liable to pay damages."

Representing Philip Morris are Kenneth J. Parsigian, Paul E. Nemser and
Christopher D. Moore of Goodwin, Proctor and Hoar in Boston.
Representing National Asbestos Workers Health Fund are Sally M. Tedrow,
Louis P. Malone III and Todd B. Castleton of O'Donoghue & O'Donoghue in
Washington, D.C., and E. David Hoskins, John C.M. Angelos and David L.
Palmer of the Law Offices of Peter G. Angelos in Baltimore. (Tobacco
Industry Litigation Reporter, April 14, 2000)

TOSHIBA CORP: Says Restructuring costs and US Suit Force It in the Red
Japan's Toshiba Corp. said last Friday April 28 that restructuring costs
and a class-action lawsuit in the United States forced it deeper into
the red in the year to last month. "The economic environment ...
remained tough throughout the period, despite signs of recovery in the
domestic economy from the last quarter of fiscal year 1999," the
computer and electronics giant said in a statement. "The group continued
to implement extensive restructuring of its organisational structure and
business portfolio, and to maximize efforts to secure profitability."

The Toshiba group's net loss stood at 28 billion yen (266 million
dollars) in the year to March, compared to a 13.9-billion-yen loss in
the previous 12 months. However, the figure beat the market consensus
that Toshiba would lose 35.8 billion yen. Toshiba registered a pre-tax
loss of 44.8 billion yen against a profit of 11.2 billion yen in the
year to March 1999. Sales were up 8.5 percent at 5,749.4 billion yen,
the first rise in three years, Toshiba said. "However, substantial other
expenses, including settlement of a class-action suit in the US and
restructuring in the semiconductor and home appliance business" resulted
in the losses, it said.

Toshiba warned in October that the US settlement over an alleged glitch
in its personal computers would blow out group net losses for the fiscal
year. The lawsuit was brought by two American owners of Toshiba personal
computers who said the microcode in the floppy disc controllers was
faulty. For this year to March 2001, Toshiba said it would post a net
profit of 100 billion yen, with pre-tax profit seen at 180 billion yen
on estimated sales of 6,100 billion yen. (Agence France-Presse, April
28, 2000)


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

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