/raid1/www/Hosts/bankrupt/CAR_Public/000503.MBX                 C L A S S   A C T I O N   R E P O R T E R

                  Wednesday, May 3, 2000, Vol. 2, No. 86


AMERICAN AGRISURANCE: AK Ct OKs Settlement with Rice Producers
ALGOMA STEEL: Decries Merit of Claims over Arsenic in Canadian Soil
FEN-PHEN: Former Class Action Opponent Advocates for AHP Settlement
FEN-PHEN: AHP Says 1% Opt out; Lawsuits Trickle in
FUNCO, INC: Receives Shareholder Lawsuit over EB Merger Agreement

LEHMAN BROTHERS: Named in Suit in CA over Mortgage Lender
LAIDLAW INC: Wolf Haldenstein Files Securities Lawsuit in SC
MTBE LITIGATION: NY Suit Asks Oil Companies to Pay for Water Analysis
NEOWARE SYSTEMS: Settlement Proposed for Securities Litigation in PA
PLYMOUTH COUNTY: Brockton Woman Files Federal Suit For Strip Search

POLICY MANAGEMENT: Intends to Defend Vigorously Investors' Complaint
POLICY MANAGEMENT: SC Complaints Seek Injunction on Politic Merger
PRINCIPAL MUTUAL: Policyholders Need Not Exhaust Admin. Remedies
STARWOOD ENTERPRISES: Shareholders Seek Action on Directors' Stock Buy
STATE DEPT: Wal-Mart Sues to Block Two-Tiered Medicaid Payment in AK

TOBACCO LITIGATION: "Insider" Urges Pataki to Sign Fire-Safe Bill
TOBACCO LITIGATION: Washington AG Has Begun Hiring Bankruptcy Attys.
UNOCAL CORP: Burmese Refugees Claim Cable Supports Charges Re Pipeline
WARREN CITY: Mantese Miller Files Complaint on Law for Tree Planting

* Employer Association Seeks Withdrawal of DOL Ruling on Stock Option


AMERICAN AGRISURANCE: AK Ct OKs Settlement with Rice Producers
-------------------------------------------------------------- Acceptance
Insurance Companies Inc. (NYSE:AIF) announced that the United States
District Court in Little Rock, Arkansas entered an Order on May 1 finding a
proposed settlement in Wallace, et al. vs. American Agrisurance, Inc., et
al. to be "within the range of possible final judicial approval." The Order
directs that a notice describing the proposed settlement be mailed to each
of the approximately 6,000 rice producers who applied last year for the
Company's supplemental crop insurance. The Court also set June 30, 2000 as
the date for a hearing to consider final approval of the settlement.

Under the proposed settlement, rice farmers who applied for and did not
receive supplemental crop insurance at 3(cent) per pound would share in a
settlement fund of $3.7 million. The Order appoints Lawrence Dawson, a
retired Arkansas Circuit Court judge, as a Settlement Master and directs
that, following final approval of the proposed settlement, Judge Dawson
allocate the settlement fund among members of the proposed settlement class
who submit claim forms. The Order was based on a Stipulation for Settlement
approved by all parties to the Wallace suit.

The Stipulation notes that the recent denial of class certification did not
preclude filing of additional class and individual actions against the
defendants. In the Stipulation Acceptance said it was settling the case
"solely to avoid further litigation expense and inconvenience, and to
remove the distraction of burdensome and protracted litigation."

ALGOMA STEEL: Decries Merit of Claims over Arsenic in Canadian Soil
In early April, Algoma was served with a Statement of Claim in a $55
million class action lawsuit initiated against the Corporation by the
Township of Michipicoten respecting arsenic in the soil in Wawa, Ontario.
The Corporation has no reason to believe that the arsenic concentrations at
Wawa pose a health risk and believes that the claim is without merit.
Algoma continues to work with various levels of government to address any
concerns of the local population.

FEN-PHEN: AHP Says 1% Opt out; Lawsuits Trickle in
The deadline for users of the notorious diet pill fen-phen to opt out of a
$ 3.75 billion national settlement has come and gone, and lawsuits filed at
U.S. District Court in Pittsburgh continue to trickle in.

Three plaintiffs June Thomas of Coraopolis, Olivia L. Staton of Pittsburgh
and John M. Garlow of Uniontown all filed lawsuits as part of a class
action against American Home Products Corp. of Madison, N.J.; its
subsidiary, A.H. Robbins Co.; and Interneuron Pharmaceuticals, Inc. All
three plaintiffs are represented by Paul M. Goltz of Pittsburgh and James
Capretz, Larry Sebastian and Makiko Meyers of Capretz & Associates in
Newport Beach, Calif. The plaintiffs claim personal injuries and damages
because they took a combination of the diet drugs fenfluramine, phentermine
and dexfenfluramine. In September 1997, the drugs were removed from the
market after a Mayo Clinic study linked fen-phen to potentially fatal heart
valve damage.

The settlement, which was reached in October, is open to anyone who used
fen-phen and Redux the commercial name for dexfenfluramine in the United
States, regardless of whether they filed suit. Users can get a maximum of $
1.5 million, though the actual amount depends on the level of injury.

Goltz said he represented about 240 different fen-phen cases at different
stages of the lawsuit. "We have several that we kept in the class," he
said. American Home announced earlier this month that just 1 percent of the
drugs' estimated 6 million users had dropped out of the deal a far cry from
the predictions of some attorneys who had estimated that half of the users
would opt out. The 1 percent figure represents an important milestone
because the company could have dropped the settlement if too many people
decided to retain their right to sue. The settlement still must be approved
by a judge.

The latest lawsuits do not specify injuries that any of the three
plaintiffs may have suffered, instead saying that each seeks damages and
relief to pay for the treatment and monitoring of "dangerous, severe and
life-threatening side effects caused by these drugs, either separately or
in combination, including but not limited to pulmonary hypertension,
cardiac valvular diseases and disorders, neurotoxicity, neurocognitive
dysfunction and developmental neurotoxicity." All of the lawsuits claim
that the defendants sold the drugs "to capitalize on the public's obsession
with being thin," and that their strategy "has been to aggressively market
and sell these products by falsely misleading potential users about the
products and by failing to protect users from serious dangers which
defendants knew or should have known to result from use of these products."
Staton, Garlow and Thomas all allege strict liability for failure to warn,
negligence, negligence per se, breach of implied warranty, breach of
express warranty, fraud and negligent misrepresentation.

American Home has said that most of those who opted out of the settlement
are not sick, and that the number of those who did decline the offer is
well within the range they expected. (Pennsylvania Law Weekly, May 1, 2000)

FEN-PHEN: Former Class Action Opponent Advocates for AHP Settlement
As fairness hearings begin this Tuesday in the massive fen-phen class
action diet drug settlement, the team of lawyers that put the deal together
will be calling a rather unlikely ally to the stand the country's leading
opponent of class actions.

Columbia Law Professor John C. Coffee has earned a reputation in recent
years for penning law review articles that sharply criticized the class
action vehicle, targeting both the conduct of lawyers and courts. Both the
U.S. Supreme Court and the 3rd U.S. Circuit Court of Appeals have cited his
work in the recent spate of opinions that vacated major class action
settlements, including the massive asbestos settlement rejected in Amchem
v. Windsor and the consumer settlement overturned in In Re: GM Trucks.

But Coffee is now urging Senior U.S. District Judge Louis C. Bechtle to
approve the $ 5 billion settlement with American Home Products in the diet
drug litigation, saying in a declaration filed in court that "although I
have often opposed class action certification, this is a case where my
usual criticisms do not apply." The fen-phen plaintiffs' lawyers, Coffee
said, learned from the mistakes cited by the courts in Amchem and GM Trucks
and "have reached an innovative settlement that, in my judgment, is
extremely favorable to the class. "If the settlement In Re: Diet Drugs wins
court approval, injured class members will receive payments ranging from $
36,944 to $ 1.485 million depending on their age and the severity of their
injuries. Those who accept less than the maximum payment will also have the
right to come forward later and ask for more money if their medical
condition worsens. But the most unique factor of the settlement is the
provision that claimants can "opt out" at three distinct stages without
losing any rights.

Coffee will be a star witness in a two-week hearing that begins Tuesday
before Bechtle in which a team of plaintiffs lawyers led by Arnold Levin of
Levin Fishbein Sedran & Berman will be tangling with a handful of objectors
who insist the settlement is either unfair, illegal or violates court
rules. Joining Levin at plaintiffs' counsel table will be his partner,
Michael D. Fishbein; two more Philadelphia lawyers Gene Locks of Greitzer &
Locks and Sol H. Weiss of Anapol Schwartz Weiss Cohan Feldman & Smalley
Stanley Chesley of Waite Schneider Bayless & Chesley in Cincinnati; and
Charles R. Parker of Hill & Parker in Houston. The team filed a 166-page
brief urging Bechtle to grant final approval of the settlement.
Significantly, they note that only 36 objections have been filed out of an
estimated class of up to 6 million plaintiffs. "Close scrutiny reveals all
of the objections to be meritless," they argue. The "common flaw" in most
of the objections, they say, is that the lawyers ignore that the settlement
ensures "the fundamental right of all class members to exercise multiple
opt-out opportunities, including the initial opt-out which fully preserves
all litigation claims and potential remedies, including punitive damage

So far, 45,000 plaintiffs have exercised the opt-out right, they noted, a
fact that attests to the provision's potency. The brief included some harsh
criticisms of some of the lawyers who have filed objections. "In essence,
rather than opting out and trying their own cases (the old-fashioned way),
counsel attempt to hold this class of six million hostage," they wrote. For
many of the objectors, they say, it seem that the lawyer's interest comes
first. "Counsel retained their clients at the eleventh hour simply to
create standing to object," the settlement team says of one group, while
other objecting lawyers "have retained clients that are completely under
their authority and control, to the extent that they do not exercise their
own choice. "Before tackling each of the objections, the settlement team
noted that the small size of the group should be enough to convince Bechtle
that the deal is a good one especially when considered in context with
statistics that show how well it has been received by the rest of the
class." The existence of only a small number of objectors weighs in favor
of final approval of a settlement," they wrote. "Here, the vast majority of
class members have voted to support the settlement by choosing to remain in
the class, by accepting the settlement terms on the accelerated
implementation basis which over 100,000 class members have done; by
registering for the settlement as over 88,000 class member have done; and
by refraining from submitting objections." The brief goes on to argue that
the fen-phen settlement not only satisfies the requirements of Federal Rule
of Civil Procedure 23, but can also withstand scrutiny under Amchem and is
"fair and reasonable" as that term was defined by the 3rd Circuit in Girsh
v. Jepson.

Turning to the specific arguments made by the objectors, the team says many
complain that the settlement runs afoul of Amchem because it suffers from
the same "futures" problems that proved fatal in that case. "Objectors are
mistaken since this is not an 'unselfconscious' or 'amorphous' class," they
wrote. "Instead, the class here is a fully conscious one. All class members
know whether they used the drugs. Readily administrable testing reveals the
existence of cardiac/pulmonary injury. Inadvertent exposure is impossible."
Unlike asbestos exposure cases, they argue, the fen-phen settlement has no
injury latency issues "because the drugs were withdrawn from the market
over two and a half years ago, and there is no evidence of latency."

Some objectors oppose the settlement on the grounds that the payments are
insufficient and/or that the aggregate and individual compensatory "matrix"
settlement amounts for those with serious injuries are insufficient,
undeterminable, unfair and/or unfairly allocated.

But the settlement team argues that such objections "reflect a myopic
position, available in any settlement and belied by the actual facts of
this case, where the agreed settlement provides extraordinarily valuable
relief." The settlement protects the right of a class member to pursue an
individual lawsuit against AHP if a class member develops a diet drug
related injury even though the individual did not exercise the initial
opt-out, they note. "Unlike many other class settlements, here a class
member has the right to re-evaluate his or her initial decision to accept
the settlement and can later decide to reject the settlement after the
initial opt-out period if his or her injury becomes more serious or if he
or she contracts a second disease," they wrote." Indeed, the fairness of
the settlement is underscored by these opt-out options. No class members
will be compelled to participate in the comprehensive settlement against
his or her best interests. Class members who do not opt-out during the
initial opt-out period will not be forever bound to the settlement terms
and conditions. "Instead, class members are given multiple opportunities to
withdraw from the settlement and initiate individual lawsuits." The series
of opt-outs, they argue, ensures that by not electing an initial opt-out,
the class member is not precluded from a subsequent opportunity, thus
allowing an intermediate or back-end opt-out. "For those class members who
exercise the initial or financial insecurity opt-outs, the right to seek
punitive damages is preserved; for others, the trade-off of punitive
damages in return for the tolling of statutes of limitation and
preservation or revival of their compensatory damage claims, is a fair and
reasonable exchange." (The Legal Intelligencer, May 1, 2000)

MOBIL OIL: Up to 300 Planes Remain Grounded In Australia by Fuel Crisis
Up to 300 planes remain grounded by the aviation fuel contamination crisis,
a Senate estimates committee was told on May 2.

On January 10, the Civil Aviation Safety Authority (CASA) grounded all
planes fuelled with avgas from Mobil's Altona refinery in Victoria between
November 21 and December 23. Piston-engined aircraft in eastern states were
stopped from flying for weeks until the contaminant was identified, testing
kits developed and distributed, and cleaning carried out. Transport
Department aviation division first assistant secretary Bruce Gemmell said
up to 2,800 aircraft were affected, estimated on responses to a CASA survey
and claims for Mobil compensation. "The best estimate of the number of
aircraft that were grounded because of the contaminated avgas is somewhere
between 1,500 and 2,000 aircraft," Mr Gemmell told the estimates hearing.

"Mobil's attempted to contact what they've identified as a pool of aircraft
operators who may well have been affected. That pool's about 2,800 strong.
"They've contacted almost 2,000 of those." He said about 80 per cent of
grounded planes were found to be actually contaminated - and of those 88
per cent were now back in the air. "It's around 300, we think, that's still
down," Mr Gemmell said. "Mobil have confirmed 220 are still grounded for a
variety of reasons. "About half of them are waiting for labor and the other
half are waiting for parts." Mr Gemmell said Mobil had not encountered any
plane which would never fly again. Liberal senator Winston Crane said the
committee had previously heard 200 to 300 planes may never have flown again
because it would be cheaper for Mobil to pay out to owners rather than pay
for expensive parts.

Mr Gemmell said that as of Monday Mobil had made 345 hardship payments to
aircraft operators, totalling $2,157,047. Reimbursement of costs of meeting
CASA airworthiness directives were made to 1,722 people, totalling
$3,725,581. Fifty-nine business compensation payments totalled $1,716,556.
These three categories totalled $7.6 million out of Mobil's $15 million
compensation package. Mr Gemmell said the hardship and reimbursement
categories would fall away, while business compensation claims would
increase. "There is of course a separate (class action) court case being
run so there may be some people who won't claim through that program but
will take their recompense through the courts," he said. (AAP Newsfeed, May
2, 2000)

FUNCO, INC: Receives Shareholder Lawsuit over EB Merger Agreement
Funco, Inc. (Nasdaq: FNCO) announced on May 2 that David Van Essen, a
shareholder of Funco, has commenced a purported shareholder class action
lawsuit against Funco and the members of the Board of Directors of Funco.
The lawsuit alleges that the defendants have breached their fiduciary
duties by taking actions in connection with Funco's merger agreement with
Electronics Boutique (the "EB Merger Agreement") that are designed to halt
any other offers and to deter higher offers from other potential acquirers.
The plaintiff seeks, among other things, to enjoin Funco from honoring the
termination fee provisions of the EB Merger Agreement, to enjoin a merger
with Electronics Boutique, to require the directors to negotiate in good
faith with Babbage's, a unit of Barnes & Noble, and payment of costs and
attorneys' fees incurred in the lawsuit.

The purported Van Essen shareholder class action lawsuit was filed by the
same attorneys who had previously filed a purported shareholder class
action lawsuit announced on April 13, 2000, on behalf of another plaintiff.
On April 25, 2000, plaintiff's attorneys filed a notice of voluntary
dismissal of that lawsuit. Prior to that notice, Funco and Electronics
Boutique had amended the EB Merger Agreement to increase the acquisition
price to $21 per share. The notice of dismissal stated that the relief
sought in that lawsuit had become moot because of Funco's unwillingness to
pursue a $17.50 transaction with Electronics Boutique.

On April 26, Funco announced that it had received a revised proposal for $
24.75 per share from Barnes & Noble and on April 27, Funco announced that
it had given Electronics Boutique the five business day notice required by
the EB Merger Agreement and that Funco intended to enter into a merger
agreement with Barnes & Noble at the increased acquisition price at the
expiration of that period. During the five business day period, which
expires on May 3, 2000, Electronics Boutique has the right to propose
adjustments to the terms of the EB Merger Agreement. Despite the $24.75 per
share proposal and the April 27 announcement, the Van Essen lawsuit was

Stan Bodine, President of Funco, stated: "Given the notice of voluntary
dismissal of the first lawsuit and Funco's overall sale process, we do not
understand the basis for the Van Essen lawsuit." Funco's Board of Directors
denies the plaintiff's allegations and intends to defend the action

Funco currently owns and operates 404 video game retail stores, that are
predominantly located in strip malls throughout the United States, and also
operates an e-commerce division, located at http://www.funcoland.com.

LEHMAN BROTHERS: Named in Suit in CA over Mortgage Lender
Lehman Brothers, a major source of financing for lenders catering to
customers with less than perfect credit, was sued on May 1 as part of a
class-action suit filed against the First Alliance Corporation, a national
mortgage lender in Irvine, Calif.

The lawsuit was filed in Federal Bankruptcy Court in Santa Ana, Calif., by
the San Francisco law firm of Jenkins & Mulligan, one of several firms
representing homeowners who had received home-equity loans from the First
Alliance Mortgage Company, the corporation's flagship unit.

William J. Ahearn, a spokesman for Lehman Brothers, said last night that
the company had not seen the new lawsuit and that he could not comment on
it. But in the past, Lehman Brothers staunchly denied any wrongdoing in
connection with its financing of First Alliance.

First Alliance filed for Chapter 11 bankruptcy protection in March while
facing a long roster of civil and regulatory lawsuits that accused it of
using deceptive sales practices to draw homeowners into high-cost loans
that drained away the wealth they had tied up in their homes.

First Alliance had denied the accusations, insisting that homeowners were
fully informed about the terms of their loans. Under federal court rules,
those consumer lawsuits have been frozen by the company's bankruptcy
filing, although some state regulatory actions are proceeding in Illinois
and Massachusetts.

The mortgage company, which once had offices in more than a dozen states
was one of many so-called subprime mortgage lenders who relied on Lehman
both for lines of credit and for capital.

As recently as last fall, Lehman had raised more than $100 million for
First Alliance despite the accusations of predatory lending that had been
made against the mortgage company in dozens of lawsuits filed by AARP,
homeowners and state regulators. Those lawsuits were fully disclosed to
investors in the securities that Lehman sold.

The complaint filed May 1 repeats many of the consumer fraud allegations
already made against First Alliance. But it additionally argues that Lehman
Brothers provided the funds that allowed First Alliance and its
subsidiaries "to continue their fraudulent lending practices."

The investment bank, the complaint argues, "had knowledge of the fraudulent
practices described above and tacitly or expressly approved those practices
in its financing of the lending operations." The complaint added, "absent
this approval, First Alliance's fraudulent loans team would not have been

LAIDLAW INC: Wolf Haldenstein Files Securities Lawsuit in SC
The law firm of Wolf Haldenstein Adler Freeman & Herz LLP filed a class
action in the United States District Court for the District of South
Carolina, Columbia Division, on behalf of purchasers of Laidlaw Inc.
("Laidlaw") (NYSE:LDW; TSE:LDM) common stock during the period October 15,
1997 through and including March 13, 2000 (the "Class Period").

The complaint alleges that Laidlaw and certain of its directors and
executive officers violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint
alleges that the defendants issued materially false and misleading
financial statements contained in filings with the Securities and Exchange
Commission (the "SEC") and press releases, that overstated the Company's
assets, income and earnings per share during the Class Period.

In a series of announcements beginning on March 6, 2000 and ending on March
13, 2000, it was announced that the Company's affiliate, Safety-Kleen Corp.
("Safety-Kleen"), had placed on "administrative leave" its top three
executive officers, because of discovered "accounting irregularities."
These events prompted the Company's auditors to withdraw their audit
opinion on Safety-Kleen (formerly Laidlaw Environmental Services, Inc.) for
the past three fiscal years ending August 31, 1997, 1998 and 1999. During
the Class Period, Safety-Kleen accounted for a significant portion of
Laidlaw's assets, revenues and operating income and there were interlocking
directors and officers. Finally, it was announced that the SEC had
commenced an investigation of Safety-Kleen. Following this news, between
March 6, 2000 and March 14, 2000, the Company's stock fell almost $3.00 per
share or 75% on extremely heavy trading volume to close at $ 1.0625 per
share on March 14, 2000. During the Class Period, the Company's common
stock had traded as high as $16.625 per share on the NYSE.

Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York Michael Miske,
George Peters, Fred Taylor Isquith, Esq., Shane T. Rowley, Esq. or Gregory
M. Nespole, Esq., 800/575-0735 classmember@whafh.com

MTBE LITIGATION: NY Suit Asks Oil Companies to Pay for Water Analysis

A class action suit filed in a New York state court requests an order
directing oil companies that sold gasoline containing methyl tertiary butyl
ether to conduct and pay for the sampling and analysis of each complaining
property owner's well water to determine levels of MTBE. MTBE is a known
carcinogen in animals and is a suspected carcinogen in humans. The suit
alleges that the oil companies knew that it posed a health threat because
of its solubility in water but that they nonetheless increased its
concentration in their gasoline.

Class Action Against Union Carbide. In a suit filed in the U.S. District
Court for the Southern District of New York, survivors and victims' next of
kin filed a class action suit against Union Carbide and its ex-president in
connection with the "Bhopal Disaster" in which thousands died when methyl
isocyanate (MIC) was released from a Union Carbide chemical plant in
Bhopal, India. The suit asserts violations of the Alien Tort Claims Act and
claims that even though the company knew that MIC was "an extremely
volatile and highly dangerous chemical substance," it failed to operate a
safe plant, thus exposing the people of Bhopal to the deadly chemical.

Environmental Groups Challenge EPA to Reduce New York's Air Pollution. Ina
suit filed in December 1999, the Environmental Defense and the Natural
Resources Defense Council charged that EPA is not doing enough to reduce
air pollution in the metropolitan areas of New York, Houston, Atlanta,
Chicago, Boston, Philadelphia, Baltimore, and the District of Columbia. The
charges stem from the agency's proposal to conditionally approve state
implementation plans outlining pollution reduction programs for the
metropolitan areas that, the groups allege, would not reduce pollution to
the extent required by the Clean Air Act. The groups recommend that the
agency disapprove all of the metropolitan-area SIPs until the plans are
improved. (New York/New Jersey Environmental Compliance Update, April,

NEOWARE SYSTEMS: Settlement Proposed for Securities Litigation in PA
The following was released May 2 by Abbey, Gardy & Squitieri, LLP and
Savett Frutkin Podell & Ryan P.C.:







30, 1998, INCLUSIVE.

PLEASE TAKE NOTICE that, pursuant to Federal Rule of Civil Procedure 23 and
an order of the Court, a hearing will be held on July 14, 2000 at 3:00 p.m.
in Courtroom 3B, United States Courthouse, 601 Market Street, Philadelphia,
PA 19106 to determine whether a proposed settlement of the above class
action is fair, reasonable and adequate and to determine Plaintiffs'
counsels' application for an award of attorneys' fees, costs and
reimbursement of expenses.

TAKE ACTION BEFORE MAY 31, If the Settlement is approved at the hearing,
the Court will enter an order dismissing all claims that were or could have
been asserted in this lawsuit against defendants Neoware Systems, Inc.,
Arthur B. Spector, Michael G. Kantrowitz, Edward C. Callahan, Jr., Edward
T. Lack, Jr., and Scott Holland (the "Defendants") with prejudice, on the
merits and without costs.

If you believe you are a member of the Restatement Class or if you are a
broker or otherwise acting as a nominee for a beneficial owner of Neoware
common stock and/or Neoware warrants who you believe may be a Restatement
Class Member, you should read the full Notice. If you have not received a
copy of the full Notice and Proof of Claim and Release, you may obtain
those materials by writing to the Class Action Claims Administrator:
Neoware Systems, Inc. Securities Litigation, Restatement Class, P.O. Box
3028, Blue Bell, PA 19422, 800-222-2760.

Order of the United States District Court for the Eastern District of

Contact: Mark C. Gardy or Nancy Kaboolian of Abbey, Gardy & Squitieri, LLP,
212-889-3700, or Stuart H. Savett or Barbara A. Podell of Savett Frutkin
Podell & Ryan, P.C., 215-923-5400

PLYMOUTH COUNTY: Brockton Woman Files Federal Suit For Strip Search
A Brockton woman who says she was illegally strip-searched at a Plymouth
County lockup has filed a class-action lawsuit seeking thousands of dollars
in damages. Kimberly Connor, a 34-year-old single mother, said she was
ordered to strip naked twice when she was arrested by Rockland police last
year for alleged cocaine possession, and once in 1998 when she was arrested
by Hanover police for armed robbery. The robbery charges were later
dropped, and the drug charges continued without a finding. Since neither
Hanover nor Rockland has cells to keep women being held after-hours until
they post bail or appear in court, Connor was sent to a Plymouth County
lockup in Marshfield.

The suit, filed in U.S. District Court in Boston, says: "Ms. Connor was too
scared to protest. Ms. Connor complied with the order and took off all her
clothing. Then defendant Doe search plaintiff's clothing. Defendant Doe
ordered plaintiff to squat and cough."

Named in the suit were Plymouth County; its former sheriff, Peter Forman,
and the towns of Hanover and Rockland. Plymouth county officials say they
had a blanket policy of strip-searching all women - who are held separately
at the lockup in the Marshfield police station - until this year. Under
federal law, authorities must have "reasonable suspicion" that a prisoner
is carrying weapons or drugs."

Some 75 to 100 women may have been strip-searched at the Marshfield lockup,
according to Plymouth County Sheriff spokesman Roy Lyons. In February, a
federal judge ruled that several thousand women who were strip-searched at
the Suffolk County Jail in Boston over the past four years may join in a
federal class-action suit. (The Associated Press State & Local Wire, May 2,

POLICY MANAGEMENT: Intends to Defend Vigorously Investors' Complaint
On January 7, 2000, following a morning news release by the Company that
Policy Management Systems Corp=92s fourth quarter earnings would be below
analyst estimates, the Company and three of its officers were named as
defendants in an purported class action complaint filed on behalf of
purchasers of the Company's stock during the period between October 22,
1998 and January 6, 2000. Since this initial filing, additional purported
class actions have been filed, three in the United States District Court
for the District of South Carolina and two in the United States District
Court for the Southern District of New York (which are in the process of
being transferred to South Carolina), purportedly on behalf of purchasers
of the Company's stock during the period between October 22, 1998 and
February 9 or 10, 2000.

These class action lawsuits allege violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 based on, among other things,
alleged misleading statements, alleged failure to disclose material adver=
se information, alleged false financial reporting, alleged failure to
report trends, demands or uncertainties, and alleged failure to implement
and maintain adequate internal controls. Each of the complaints seeks
unspecified compensatory damages, including interest, costs and attorney

At a hearing held on March 20, 2000, the court granted plaintiffs' motion
to consolidate all six cases, appointed four members of the class as lead
plaintiffs and approved their selection of lead counsel, directed that th=
e complaints in all but the first-filed case be dismissed without
prejudice= , and directed plaintiffs to file an amended consolidated
complaint within = 45 days.

The Company says the lawsuits are without merit and is vigorously pursuing
a full defense of these actions and allegations but has not yet filed
formal responses.

POLICY MANAGEMENT: SC Complaints Seek Injunction on Politic Merger
On March 31, 2000, three purported class action lawsuits were filed against
the Company and its directors in the Court of Common Pleas in Richland
County, South Carolina on behalf of all stockholders. The complaints allege
that the consideration to be paid in the Politic merger is unfair and
grossly inadequate because defendants failed to conduct a "market check"
and because the Company stock has consistently traded above $14 per share
and its market price is only temporarily depressed due to recent
disappointing financial results. The complaints also allege that defendan=
ts have a substantial conflict of interest, to the extent they will
continue their employment with the Company after the merger.

The complaints seek an injunction directing that defendants ensure that no
conflicts exist that would prevent defendants from exercising their
fiduciary obligation to maximize stockholder value, and an injunction
preventing consummation of the merger unless the Company implements a
process, such as an auction, to obtain the highest price for the Company,
together with an award of costs and attorneys' fees. The Company believes
the claims are without merit and will vigorously defend the action.

PRINCIPAL MUTUAL: Policyholders Need Not Exhaust Admin. Remedies
---------------------------------------------------------------- Although
insurance policyholders complained to the state insurance commissioner
about increasing premiums, the commissioner never issued any formal
opinion. Thus, the policyholders could not claim injury by any
administrative decision and did not need to exhaust administrative remedies
before filing a state RICO Act lawsuit. (Griffeth, et al. v. Principal
Mutual Ins. Co., et al., No. A99A1835 (Ga. Ct. App. 3/29/00).)

After an agent told Charles and Linda Griffeth that Principal Mutual
Insurance Co. offered a group health policy to individuals who were
self-employed, the Griffeths bought a policy from Principal. After several
years of substantial increases in their monthly premiums, the Griffeths
canceled their Principal policy. They also complained to Georgia's
insurance commissioner about the increasing premiums.

After the commissioner's office notified Principal to express concern that
Principal was not complying with Georgia's small group pooling laws and
would refer the matter to its enforcement division, Principal terminated
its coverage for all Georgia policyholders under the plan.

The Griffeths then filed a class action against Principal in state court
under theories of fraud, violations of Georgia's RICO Act, breach of
contract, unjust enrichment and conspiracy to aid and abet the breach of
fiduciary duty. The complaint alleged that Principal misrepresented the
nature of its policy and committed various illegal and tortious acts,
including violations of Georgia's insurance code.

The trial court dismissed the complaint for lack of subject matter
jurisdiction declaring that the insurance commissioner had exclusive
jurisdiction. The trial court also stated that the Griffeths failed to
exhaust their administrative remedies before the insurance commissioner.
The Georgia Court of Appeals reversed.

The Court of Appeals held that the Griffeths need not pursue an
administrative remedy. Quoting from one of its prior opinions, the court
said that "[s]imply alleging Insurance Code violations does not transform a
civil RICO complaint into a cause of action which must be pursued
exclusively through administrative channels, particularly when numerous
other predicate acts are alleged in the complaint, including fraud." (Civil
RICO Report, April 26, 2000)

STARWOOD ENTERPRISES: Shareholders Seek Action on Directors' Stock Buy
The following release was issued by Abbey, Gardy & Squitieri, LLP:

Plaintiffs in a pending shareholder action have sent a "demand letter" to
the Board of Directors of Starwood Hotels & Resorts Worldwide, Inc. (NYSE:
HOT) regarding the allegedly improper acquisition of Priceline.com stock by
Starwood Chairman Barry Sternlicht and director Jonathan Eilian.

The shareholder letter demands that the Starwood Board take appropriate
legal action against Sternlicht, Eilian and any Starwood director or
officer involved in the Priceline.com stock purchase. The purchase was made
shortly after Starwood Hotels entered into a deal with Priceline.com for
hotel rooms to be offered by Priceline.com. Plaintiffs contend that the
shares purchased by Sternlicht and Eilian, through Starwood Capital
(Sternlicht's private investment vehicle), represented a corporate
opportunity that belonged to Starwood Hotels. The pre-IPO purchase of
Priceline.com stock by Sternlicht and Eilian was not presented to the
Starwood Hotels Board of Directors for a vote.

"We have issued the letter to demand that the Starwood Hotels Board take
action in response to Sternlicht and Eilian's allegedly improper actions.
The Board should file suit on behalf of the Company to redress this wrong
and recoup the damages to Starwood Hotels," said Arthur Abbey, senior
partner at Abbey, Gardy & Squitieri, LLP, one of counsel to the Starwood

The Priceline.com purchase stands in contrast to Starwood Hotels' recently
announced agreement with BigVine.com, an online barter exchange. Starwood
Hotels announced that in conjunction with that agreement, it (not Starwood
Capital) would make an equity investment in BigVine.com. According to
plaintiffs, this shows that Starwood is capable of putting its interests
and those of its shareholders first when investment opportunities present

Contact: Arthur Abbey of Abbey, Gardy & Squitieri, 212-889-3700

STATE DEPT: Wal-Mart Sues to Block Two-Tiered Medicaid Payment in AK
The state says it has the law on its side in a legal battle with Wal-Mart
over Arkansas' new policy to pay big chains less for filling Medicaid

Bentonville-based Wal-Mart Stores Inc., the nation's largest retailer, says
it filed a federal lawsuit Monday seeking to block the state Department of
Human Services from implementing a two-tiered reimbursement policy that
reduces Medicaid payments to pharmacy chains that operate 11 or more stores
in the state. The policy is discriminatory and violates the equal
protection clause of the 14th Amendment, the company said.

DHS, which oversees the Medicaid program providing health services for the
poor, elderly and disabled, implemented the new policy last Friday April 28
after several delays. Ray Hanley, the DHS medical services director, said
the agency had authority from the federal Health Care Financing
Administration to start the plan March 1. The agency went ahead with the
policy last Friday April 28 after the pharmacy industry failed to offer
long-promised, cost-saving alternatives, he said. (The Associated Press
State & Local Wire, May 2, 2000)

TOBACCO LITIGATION: "Insider" Urges Pataki to Sign Fire-Safe Bill
----------------------------------------------------------------- Jeffrey
Wigand, perhaps Big Tobacco's biggest whistleblower, joined a coalition of
anti-smoking groups and firefighters in pressuring Gov. George Pataki to
sign a bill mandating so-called fire-safe cigarettes. "There is an
opportunity for New York to take a leadership role to really establish the
mechanism by which children can be protected," said Wigand,a former Brown &
Williamson executive who was the subject of the 1999 film, "The Insider."

Both houses of the state Legislature have approved the bill requiring that
only fire-safe cigarettes be sold in the state starting in April 2002.
Pataki has not said what he will do with the bill.

Of the approximately 1,000 people who die in cigarette-related fires each
year, 150 to 200 are children, said Wigand, a former New York resident.

Wigand helped push the industry to a settlement of a class-action lawsuit
brought by the 50 states when he went to the CBS television show "60
Minutes" in 1995 with claims of perjury and other wrongdoing by the
industry. Tobacco companies, Wigand said, have for years known how to
create cigarettes that self-extinguish when the smoker stops puffing, but
have been resistant to change because no legislation has pushed them.

Russell Sciandra, of the Center For a Tobacco Free New York, said he and
others would meet with a Pataki counsel to discuss the legislation. In
addition, Sciandra said his group's Web site allows people to send Pataki
electronic postcards endorsing the legislation. The groups focused
especially on cigarette-maker Philip Morris because it has not been as
active in opposing the fire-safe legislation as other manufacturers. The
company is test-marketing fire-safe cigarettes.

Asked whether the issue would be more appropriately handled by federal
authorities, Andrew McGuire, executive director of the Trauma Foundation,
said that was true. However, he added, "There's no way in Washington to get
it through. By having leadership in this state push it ... we will get a
federal solution."

State Democratic Assemblyman Alexander Grannis, D-Manhattan, said the bill
he was a main sponsor of would probably be delivered to Pataki Wednesday.
Pataki's office said the governor would review the bill when he receives

Groups pushing for the legislation included the American College of
Obstetrics and Gynecology, the League of Women Voters and the Islamic
Society of Fire Department Personnel, Inc. (The Associated Press, May 1,

TOBACCO LITIGATION: Washington AG Has Begun Hiring Bankruptcy Attys.
The national media has talked about the possibility of tobacco companies
filing for bankruptcy because of a potentially disastrous punitive damages
award in a Florida class action.

The BCD News and Comment, April 26, 2000 says Washington Attorney General
Christine Gregoire has already begun to hire bankruptcy attorneys to
protect industry payments to the 46 states that settled their tobacco
lawsuits for 246 billion in 1998 and the National Association of Attorneys
General itself has hired the bankruptcy boutique of Pachulski, Stang,
Ziehl, Young & Jones to represent them. Sources tell us the NAAG is working
furiously on this, but neither the organization nor its attorneys are
talking to the press at the moment.

The BCD reports that at least one legal expert believes bankruptcy
filing(s) would constitute a "surrealistic event" that would involve, among
other things, "a gigantic Seminole [Tribe v. Florida] problem." The money
being spent by the states is coming out of profits that have yet to be
created. In fact, the higher the profits, the more money the states get.
This creates an interesting dynamic, says UCLA Law School Professor Lynn
LoPucki. "[In a bankruptcy case], the government will be on the side of the
tobacco companies," LoPucki said. "That was the whole point of the
settlement - to take government in as a partner in the tobacco business.
It's the same way the Mafia does it."

However, Northeastern University Law Professor Richard Daynard, chair of
the Tobacco Products Liability Project, said some states have found a way
around this problem. "They securitized the debt - so the state ceases to be
bound together with the industry, at least financially - and sold it to the
markets," the report goes on.

The report cites the question by one legal scholar, "If tobacco companies
want new funding, to what extent can that come ahead of the states?"

To what extent have tobacco companies made themselves judgment-proof?
LoPucki has been saying for years that the tobacco companies have been
engaged in a process of judgement-proofing. Daynard agreed. It began in the
'80s. Tobacco companies acquired a variety of non-smoking-oriented
companies and then reorganized so that the tobacco companies themselves
became subsidiaries of a parent. "They say the parent company is insulated
because it doesn't make tobacco products, but, meanwhile, the parent has
been the creature of tobacco profits over many, many years," Daynard said.

The BCD article goes on with a series of questions and answers. Will this
strategy hold up in court? How likely is a filing? Legislators are
reportedly looking for a way to prevent this potential filing. The Florida
Senate may pass a bill that would allow tobacco companies to pay punitive
damages according to a payment schedule while North Carolina's legislators
are talking about passing a law that would cap the amount of bond money a
tobacco company must pay to appeal such an award. These efforts may

However, as it currently stands, if the tobacco companies lose the Florida
case, they will have to post a bond equal to 120 percent of the damages in
order to appeal - and some believe that bond amount could be as high as 100
billion. (In fact, one April 10th news article put the amount at 300
billion.) "It's hard to find someone willing to write a 100 billion bond
for anybody, much less a tobacco company that may not be around to pay the
bond," said Daynard, whose annual Tobacco Liability Products conference
will be held this year on June 3 (see sidebar, p. A10 for details).

Unlike some Wall Street analysts, Daynard doesn't believe that tobacco
companies will prevail on appeal. "The Florida Supreme Court has refrained
from knocking this case out twice," he said. "I think it's unlikely the
U.S. Supreme Court will look at it. It meets the criteria for when it's
appropriate to hit somebody with big damages. So the notion that the U.S.
Supreme Court is going to save them is, I think, fatuous.

"Even if the industry ducks a bullet here, there are lots of other
potential bullets. There's a limit to how many 20 million damage awards
they can take. If one is happening in every state every month, which is
certainly possible, they are going to have a very hard time covering these
awards, even in individual [rather than class action] cases."

What sort of legal questions might arise in a tobacco bankruptcy?

Can you reorganize a company that sells an "unreasonably dangerous"
product? LoPucki believes the bankruptcy courts will be willing to confirm
a plan that allows the tobacco companies to continue to operate. But
Harvard Law School Professor Elizabeth Warren disagrees. "Every mass tort
bankruptcy case has involved a debtor who quit manufacturing or
distributing the dangerous product that brought them to ruin. The idea that
a debtor could go into bankruptcy to deal with past tort creditors while it
continues to create new tort creditors is shocking. "It's true that lying
[about the dangers of cigarettes] is part of [the reason tobacco companies
are being sued] but the fact that they manufacture a dangerous product that
injures people is the far more significant part. If there were no physical
injury, but only the insult of the lie, there would be no multibillion
dollar judgements."

Can you confirm a plan that allows you to do overseas what you can't do
domestically? UCLA Law School Professor Ken Klee of Klee, Tuchin, Bogdanoff
& Stern in Los Angeles takes Warren's logic one step further. If the courts
find that "domestically, it is not proper to permit tobacco companies to
continue to poison American citizens, to what extent can states be party to
a plan that sharply curtails domestic product and distribution, but is
predicated on production and distribution of tobacco products overseas? "I
think that, based on the potential to sell product to the third world and
developing counties and the EU, there's a tremendous profit potential to
fund a plan. But to what extent can states be party to a program that says
you can't sell it here, but you can sell it overseas?"

Klee outlined four Seminole-type questions that will almost assuredly arise
in a tobacco bankruptcy. He gives a short answer to each and then expounds
on the legal authority that supports his answers.

Are the tobacco settlements executory contracts and can the debtor reject
them? "I think the bankruptcy court has the power to consider that because
rejection is tantamount to abandoning property from the estate."

Are amounts paid to the state under the settlement agreement avoidable as a
preference? "Unless the State has consented to jurisdiction by filing a
proof of claim or expressly waiving sovereign immunity, I don't think the
bankruptcy court can enforce a preference avoidance order against the
State, except under 502(d) defensively."

Can the states file a proof of claim and participate in the bankruptcy case
on account of the settlement? "I think they can, but if they do, they
probably waive their Eleventh Amendment and constitutional sovereign
immunity with respect to those claims as well as any right to a jury trial
which right I'm not sure states have to begin with."

Can a state's claim under the settlement agreement be discharged under a
plan of reorganization? "I think that the plan can discharge the state's
claim without their consent, but that probably the bankruptcy court does
not have jurisdiction to enforce any judgment with respect to
dischargeability. It probably has to be raised as an affirmative defense in
any lawsuit against the tobacco company or surviving entity if the state
goes to sue to try to enforce the settlement."

What is the legal theory here? Klee bases his opinions on Seminole Tribe
and three cases that the U.S. Supreme Court handed down last summer: Alden
v. Maine, 119 S. Ct. 2240 (1999), Florida Prepaid Postsecondary Education
Expense Board v. College Savings Bank, 119 S. Ct. 2199 (1999), and College
Savings Bank v. Florida Prepaid Postsecondary Education Expense Board, 119
S. Ct. 2219 (1999).

Based on the above, Klee said: "The Supreme Court has set us back over 200
years to almost completely insulate a state from the power of the
bankruptcy court. The question around the edges is: 'What can be done to a
state and what can't?' Some things are basically pretty clear. Unless the
state has an express waiver of sovereign immunity, it's not going to be
held to have waived it. Congress has no power to abrogate it, and,
therefore, it exists."

Why does Klee say this? In Seminole (federal court) and in Alden vs. Maine
(state court), the court held that "under the doctrine of sovereign
immunity, a debtor cannot sue a state in any court, unless the state
consents or the state has waived its sovereign immunity. Then in College
Savings Bank vs. Florida Prepaid Postsecondary Education Expense Board, the
Court found that the waiver has to be express, it can't be implied.
However, in an earlier case, Gardner v. New Jersey, 329 U.S. 565 (1947),
the Court found that filing a proof of claim does constitute a waiver - at
least with respect to that claim.

Klee said it's unclear whether the debtor can only seek to disallow the
claim or whether the court would permit recovery based on compulsory
counterclaims and the like. He said the state attorneys general would
undoubtedly try to limit Gardner. "That issue probably would be resolved in
a tobacco bankruptcy."

To what extent does a confirmed plan and discharge affect the state? "The
issue is going to be: 'Okay, you've got a confirmed plan. You've got a
discharge. Now, how do you protect yourself against the state?'" Klee said.
"There are court of appeals decisions that say a plan can go ahead and bind
the state because the Chapter 11 case is not a suit against the state. That
reasoning is based on Eleventh Amendment language; it might not overcome
sovereign immunity concerns.

"I don't think, unless there is a clear indication the state will violate
the plan, that injunctive relief will be available. It is available, under
Ex parte Young, to prevent a state from violating federal law on a
prospective basis. But it's far more likely that the state will take some
action to enforce the settlement, like seizing a bank account or filing a
suit in state court, and then the debtor will have to use the discharge as
a defense to that type of action.

"If the state seizes assets, there is very little that can be done unless
the U.S. sues on behalf of the debtor to enforce the debtor's rights.
That's very unlikely, unless the U.S. Trustee becomes involved." (BCD News
and Comment, April 26, 2000)

UNOCAL CORP: Burmese Refugees Claim Cable Supports Charges Re Pipeline
Attorneys for a group of Burmese refugees say they have discovered a
"smoking gun" document supporting their claims that a major U.S. oil
company should be held accountable for human rights violations related to
construction of a natural gas pipeline in Burma.

The 15 plaintiffs, representing thousands who fled to the Burma-Thailand
border in the early 1990s, charge that Unocal Corp. and the French oil firm
Total SA, partners in the project with the Burmese government, were
complicit in human rights abuses by Burmese forces. The abuses allegedly
included the forced relocation of entire villages, the use of slave labor,
and numerous deaths, beatings, rapes and property seizures. Unocal denies
the charges.

A federal judge in Los Angeles will hear arguments May 22 on whether the
suits, the first such effort to hold an American corporation liable for
human rights abuses abroad, can proceed to trial.

Attorneys for the refugees say State Department cables obtained under the
Freedom of Information Act contradict the company's denials. They cite a
1995 State Department cable of an interview with Unocal official Joel

"On the general issue of the close working relationship between
Total/Unocal and the Burmese military, Robinson had no apologies to make,"
the cable said. "He stated forthrightly that the companies have hired the
Burmese to provide security for the project and pay for this through the
Myanmar Oil and Gas Enterprise," the Burmese state oil company.

Robinson was quoted as saying that three truckloads of Burmese soldiers
typically accompanied project officials as they conducted survey work and
that Burmese military officers were informed of the next day's activities
so that soldiers could secure the area and guard the work perimeter.

"I would call this cable the smoking gun, because it refutes everything
they [the defendants] said about the relationship between Unocal/Total and
the military," asserted Terry Collingsworth, a lawyer representing one
group of plaintiffs. He said the existence of a "contractual relationship"
with the Burmese military is also supported by other documents that remain
sealed by the court.

A Unocal lawyer, Edwin V. Woodsome Jr., said the cables are "not factually
accurate." He insisted that "there is no evidence the military was hired by
Unocal or Total or anybody else."

The 416-mile, $ 1.2 billion pipeline starts at Burma's Yadana offshore gas
field in the Andaman Sea and crosses 39 miles of the Tenasserim region,
which traditionally has been inhabited by ethnic minorities including the
Karen, who have been fighting for self-rule for more than 50 years.

Construction began in 1992 and was completed in 1998. Limited amounts of
gas have flowed through the pipeline because facilities on the Thai side of
the border remain unfinished.

The class-action suits, filed against Unocal and its partners in 1996 by
the International Labor Rights Fund, the Center for Constitutional Rights
and other groups, seek more than $ 1 billion in damages from the giant
California-based oil company.

They are also aimed at setting a precedent that would deter U.S. firms from
doing business with despotic regimes.

In 1997, the Clinton administration prohibited new U.S. private investment
in Burma, prompting some companies to pull out. Among them were Levi
Strauss & Co., Eastman Kodak Co. and Hewlett-Packard Co. Levi Strauss
acknowledged that its investment had been supporting "one of the leading
violators of human rights in the world."

In addition, four states and about 30 municipalities, including Takoma
Park, have declared some form of boycott against Burma to punish the
military junta that seized power in 1988 and brutally suppressed a
democracy movement.

A foreign trade group representing 580 corporations, including Unocal, has
challenged a Massachusetts law that penalizes companies with Burmese
investments. That case is now before the Supreme Court. In defending itself
against the lawsuits, Unocal has consistently maintained it had nothing to
do with alleged human rights violations.

In a deposition last year, John F. Imle Jr., then president of Unocal, said
he knew of no "contractual obligation" for the Burmese armed forces to
protect the project. They did so, he said, "in the same way the Los Angeles
Sheriff's Department would provide security for activities of any kind . .
. in Los Angeles County."

Independent human rights groups say the Burmese army routinely rounds up
villagers and forces them to work on construction projects or serve as
porters--sometimes, in effect, as "human minesweepers"--for military
counterinsurgency operations.

"Robinson acknowledged that army units providing security for the pipeline
construction do use civilian porters" but said Unocal and its French
partner "cannot control their recruitment process," the May 1995 cable
said. It quoted the Unocal official as saying Total was responsible for
ensuring porters were paid. He "admitted that villagers were not paid" for
earlier work, including the arduous clearing of forest on both sides of an
access road along the pipeline route.

U.S. District Judge Richard Paez has dismissed Total and the Burmese
government as defendants in the case. Woodsome said Unocal is confident
that its summary judgment motion "will dispose of this case in its

According to excerpts from the company's motion, most of which remains
sealed, the company says U.S. courts have repeatedly ruled that the 13th
Amendment prohibition against slavery does not prevent state and federal
governments from compelling citizens to "perform certain civic duties" such
as road building. The Burmese villagers' alleged forced labor consisted of
"public works" activities that do not violate U.S. law and "simply do not
amount to 'slavery' under any meaningful sense of that term," the motion

Moreover, it says, Unocal cannot be held liable for the actions of
"indirect" subsidiaries. Among these is Unocal Myanmar Offshore Co., which
holds Unocal's interest in the Yadana gas field.

Besides, Unocal says in a report published on its Web site, Total was
responsible for "day-to-day operations" on the pipeline, "including hiring
all labor."

Robinson, who has since retired from Unocal, gave a sworn deposition last
year, before the State Department documents were released. Thus, he was
never asked about the meeting with embassy officials. He declined to talk
about the case.

Unocal attorney Woodsome denied that any villagers were relocated or that
any forced labor was used in the pipeline construction.

Collingsworth said most of the "dirty work" of forced relocations and slave
labor was done before the pipe-laying phase. The oil companies' later
insistence on paying the workers was a charade because soldiers confiscated
the money, he added.

Even if some workers were paid, they were still forcibly recruited in the
first place, he argued. He pointed to another U.S. Embassy cable, dated
January 1996, that quoted Total briefing materials as saying local
villagers were "hired by the army" and incorporated in "battalions."

The cable said a Unocal consultant on the scene "claimed that the rate at
which these workers run away has decreased sharply since the start of the

Woodsome maintained that villagers in the area appreciated the employment
opportunities the oil companies provided. "People who live there are
delighted this pipeline project was done," he said. (The Washington Post,
May 2, 2000)

WARREN CITY: Mantese Miller Files Complaint on Law for Tree Planting
Robert and Shirley Hill, of Warren, Michigan, on May 2 filed a class action
complaint, on behalf of themselves and all others similarly situated,
against the City of Warren. The suit stems from Warren's longstanding law
requiring that a tree be planted in front of each home in the city. The
roots of the trees have destroyed thousands of homeowner's sewer lines,
front yards, sidewalks, and landscaping. The City of Warren is not only
responsible for the destructive trees and the initial damage, it is also
responsible for the aggravation of the damage because it refuses to allow
homeowners to cut the trees down, to alleviate the problem, the suit says.

The suit was filed by Gerard Mantese, of the Troy firm of Mantese Miller
and Mantese, P.L.L.C. Mr. Mantese emphasized: "The City of Warren has not
handled this problem responsibly. Many people are experiencing sewage
backups, unsanitary conditions, destroyed plumbing, and even dangerous,
uneven sidewalks because of the pressure of the tree roots. The City's
failure to take responsibility for its policies is indefensible."

The suit says that Robert and Shirley Hill have so far had to spend
thousands of dollars on plumbing problems caused by the tree roots, with
more expenses to come. Under Warren's ordinances, they are forbidden from
removing the tree that has caused so much damage to their plumbing system,
front yard, and sidewalk. The suit says that the Hills are afraid even to
allow their grandchildren to play on their lawn or on their sidewalks,
because of the unevenness created by the pressure of the tree roots on
their property.

Contact: Gerard Mantese of Mantese Miller and Mantese, P.L.L.C., office:
248-267-1200, cellular: 248-909-4813, facsimile: 248-267-9551, or home:

* Employer Association Seeks Withdrawal of DOL Ruling on Stock Option
The Labor Policy Association (LPA), an employer association whose members
are companies with business operations in the U.S. that have more than $
750 million in revenues and more than 2,500 employees, has recently asked
Secretary of Labor Alexis Herman to withdraw an opinion letter that
requires the inclusion of a stock option bonus in the "regular rate of pay"
for nonexempt employees and requires complex overtime calculations.

                        Opinion letter

On February 12, 1999, the Department of Labor's (DOL) Wage and Hour
Division issued an opinion letter expressing the opinion that a one-time
stock option bonus offered by an employer to its nonexempt employees was
required to be included in a nonexempt employee's regular rate of pay.

In reaching that conclusion, the DOL specifically stated that none of the
recognized exceptions from inclusion applied. For example, it expressly
ruled that the one-time stock option bonus is not a gift or a "special
occasion bonus" that can be excluded from a nonexempt employee's regular
rate of pay under a specific provision of the FLSA providing for the
exclusion of such items. The DOL also ruled that the program does not meet
the requirements for the exclusion that is available for discretionary
bonuses and profit-sharing plans, trusts, or bona fide thrift savings plans
or benefits.

In that February 1999 opinion, the DOL explained how the inclusion of the
stock option bonus in an employee's regular rate of pay would be
calculated. It stated that the employee's profit -- that is, the difference
between the grant price and the price of the stock when the options are
exercised -- must be allocated over the period of time in which it was
earned, ending with the workweek in which the option was exercised and
going back to the date of the employee's right to purchase the shares
(element 5 of the proposed stock option program). The profit, however, may
not be allocated over more than the previous two years. The opinion letter
offered the following example:

For example, employee A exercises her stock option 3 months (13 weeks) into
the program and earns a profit of $ 1,750. The $ 1,750 profit would be
attributed to the previous 13 workweeks, ending with the workweek in which
employee A exercised her option. See [Department of Labor Regulations at]
29 CFR sec. 778.2090b. Employee B exercises his stock option 3 years (156
weeks) into the program and earns a profit of $ 7,800. Due to the statute
of limitations (Section 6(a) of the Portal-to-Portal Act of 1947) [29
U.S.C. section 255 (a)(1)], employee B's profit would be attributed to the
previous 104 workweeks, ending with the workweek in which he exercised his

LPA President Jeffrey McGuiness has requested Herman to withdraw that
opinion letter because in the association's view, the opinion will make it
very difficult for companies to offer stock options to employees covered by
the Fair Labor Standards Act (FLSA) and would force employers to undergo an
"excessively complicated" series of calculations to pay overtime on the
profit earned by hourly employees. He further argued that DOL policy now
states that employers that provide stock options to their hourly employees
must pay overtime on the profit earned by the employees. For example, a
company that gave options to 10,000 hourly (nonexempt) employees must now :

* determine the exercise date for each share of stock exercised by each

* determine the profit each employee made on the stock as of the
  exercise date;

* determine the overtime hours worked by each employee during the weeks
  the employee held the options; and

* calculate and pay the additional overtime owed to each employee.

For each calendar year during which an option was held, the following
calculation applies: The profit allocated to the calendar year in question
is divided by the total hours worked during the weeks in the year in which
profit was earned and then divided by two. That result is multiplied by the
total overtime worked during the weeks in the year in which the profit was

He noted that failure to perform the calculation correctly would expose a
company to "liquidated," i.e., penalty-type, damages under the FLSA and a
class action for all employees receiving options.

T. Michael Kerr, the new administrator of DOL's Wage and Hour Division,
replied on January 11, 2000, stating that his agency is "specifically
charged by the law to ensure that workers receive the minimum wage and
overtime pay they are entitled to, regardless of the forms of compensation
they receive." Kerr said that the DOL does not want to discourage the use
of stock option plans and that, in fact, the plans, like profit-sharing
plans, discretionary bonuses, and gifts, would not need to be included when
calculating overtime in certain circumstances.

Kerr also pointed out that the advisory letter responds to a specific
request for assistance and is based exclusively on the facts and
circumstances set out in that request. The letter "does not state, nor was
it intended to suggest, that all stock option programs would be treated in
the same manner," he said.

                          Point to ponder

Many companies now are reviewing the merits of continuing stock option
programs for nonexempt employees because of the complexities of including
the benefit in the employee's regular rate and also the requirements of
complex overtime calculations. According to the National Center for
Employee Ownership, employees own, or have options to own, stock worth
almost $ 800 billion, or about nine percent of all stock in the U.S.
Employers that offer stock option programs to nonexempt employees are
advised to review payrolls in the context of the DOL opinion and to consult
legal counsel over any compliance questions or concerns. (Nevada Employment
Law Letter, April, 2000)


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

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

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

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