/raid1/www/Hosts/bankrupt/CAR_Public/000623.MBX                  C L A S S   A C T I O N   R E P O R T E R

                  Friday, June 23, 2000, Vol. 2, No. 122


ANIKA THERAPEUTICS: Berman DeValerio Announces Securities Lawsuit
AUTO FINANCING: Co. Not Obligated to Pay Interest on Security Deposits
BRK BRANDS: Smoke Alarm Settlement Website Launched
BUCS: Fans in Lawsuit May Get Closer Seats and $5000 Credit
FLEXI-VAN: Announces Tentative Settlement of Lawsuit over Tender Offer

HMOs: NLJ Article Says Risk-Sharing Contracts Are Problematic
INTANGIBLES TAX: News from NC Says State Will Refund and Pay Interest
KNOLLS ATOMIC: Lawsuit Accuses of Employment Age Discrimination
LAFARGE CANADA: Will Appeal against $13M for Crumbling Concrete in Can.
MCKESSON HBOC: Firms Improperly Solicited Shareholders to Opt out

MEL FARR: Settles Lawsuit; Can Use On-Time Device; Customers Get Coupon
NORTHBRIDGE EARTHQUAKE: Judge Bars Spending By Quake Foundation
SAMSONITE CORP: Settles for CO Securities Suit; DE Case Dismissed
SOUTHWESTERN ENERGY: To Pay Royalty Owners of SEECO, AR Sp Ct Affirms
STEVEN MADDEN: Milberg Weiss Announces Securities Suit in New York

ST JOHN KINTS: Hearing Set for Final Approval of Settlement for Merger
ST JOHN KNITS: Settlement for '98 Securities Fraud Suit in CA Finalised
TOBACCO LITIGATION: 3 Smokers’ Lawsuits Can Proceed in Wisconsin
TOBACCO LITIGATION: Competitors Want to Keep Liggett CEO off Stand
TOBACCO LITIGATION: FL Judge Bars Maker Firm Scientist from Testimony

UNITED AIR: Ct Finds Bias in Different Weight Rules for Male and Female
USDA: Minority and Female Employees Seek Meeting With Clinton

* SEC Proposes Disclosure, Trading Rules


ANIKA THERAPEUTICS: Berman DeValerio Announces Securities Lawsuit
Investors have filed lawsuits against Anika Therapeutics, Inc. and certain
of its officers are charged with causing the company to issue materially
false and misleading financial statements. Anika has restated its financial
statements for its 1998 fiscal year and first three quarters of 1999. The
SEC is investigating the company's accounting practices. Investors who
purchased Anika stock between April 15, 1998 and May 30, 2000 may be
included in the class. The motion for lead plaintiff must be filed by
August 8, 2000.

Contact: Berman DeValerio & Pease, LLP Jeffrey C. Block, Esq. or Michael G.
Lange, Esq. (800) 516-9926 bdplaw@bermanesq.com

AUTO FINANCING: Co. Not Obligated to Pay Interest on Security Deposits
Because a security deposit paid in conjunction with an automobile lease
creates only a "debt" and does not constitute collateral, a leasing company
is not obligated to pay a lessee interest or profits earned on the deposit
during the term of the lease, according to the Ohio Court of Appeals.
(Dolan v. General Motors Acceptance Corp., No. 75315 (Ohio Ct. App.
5/11/00, unpublished).)

Sharon Dolan paid Fairchild Chevrolet a 250 security deposit for her leased
automobile. The lease provided that the refundable deposit constituted part
of the payment due upon signature of the agreement. After Fairchild
assigned the lease to General Motors Acceptance Corp., GMAC credited the
deposit as an amount payable to Dolan. When the lease ended four years
later, GMAC paid Dolan her 250 security deposit.

On behalf of herself and a purported class of other lessees, Dolan sued
GMAC seeking the "increase or profit" GMAC allegedly "gained or retained"
from its use of the deposit during the term of the lease. After the trial
court granted GMAC's motion for summary judgment, Dolan appealed.

                                 Debt vs. Collateral

Dolan argued that her security deposit constituted collateral and that GMAC
had a perfected, possessory security interest in the deposit. She contended
that, as a result of holding her collateral over the four-year life of the
lease, GMAC derived profits from its free use of the funds. Dolan relied
upon Ohio Rev. Code Ann. 1309.18(B)(3), which obligates a secured party to
use any increase or profit from collateral to reduce the debtor's
obligation or, alternatively, to return such increase of profit.

The court disagreed with Dolan's characterization of the deposit as
collateral. It stated that "a security deposit does not create a security
interest, i.e., a 'pledge,' because a conclusion to the contrary derogates
from the common law principle that a security deposit creates only a debt."
The court cited the trial court's observation that most jurisdictions treat
automobile lease security deposits as debts that do not require the
repayment of interest.

Finding Dolan's statutory reference inapplicable to automobile lease
security deposits, the Court of Appeals said that when the Ohio legislature
has intended to impose an obligation to pay interest on security deposits,
"it has done so explicitly and not in an oblique manner as [Dolan] contends
was done in [section] 1309.18." The court concluded that the legislature
did not intend to obligate lessors of automobile leases to pay lessees
interest or profits earned on security deposits.

Judge Kilbane affirmed the trial court's summary judgment award to GMAC.

Anthony J. Hartman, Romney B. Cullers and Jay H. Salamon of Hermann Cahn &
Schneider in Cleveland and James Deroche in Solon, Ohio, represented Dolan.
Michael Carpenter and Michael Beekhuizen of Zeiger & Carpenter of Columbus,
Ohio, represented GMAC. (Consumer Financial Services Law Report, June 12,

BRK BRANDS: Smoke Alarm Settlement Website Launched
First Alert announced on June 22 that a website has been established to
inform consumers of important information regarding the nationwide
settlement of class action litigation involving certain of its smoke alarm

The website is part of a public information campaign stemming from a class
action lawsuit filed against BRK Brands, the makers of First Alert. The
lawsuit alleges that the company failed to adequately inform the public of
the varying performance characteristics of its ionization and photoelectric
smoke alarms. BRK denies these allegations.

Owners of any of the BRK Brand smoke alarms manufactured and marketed under
the names First Alert, Family Gard, Wake'n Warn, BRK Electronics or BRK
Brands and under various private label brands can access the website at
www.brksmokealarmsettlement.com for information on the settlement. As part
of the settlement, BRK Brands will commence a nationwide print and
broadcast Public Information Campaign to further educate consumers, fire
safety officials and retailers regarding the varying characteristics of
ionization and photoelectric smoke alarm technology and other information
concerning fire safety, including instructions on the proper testing,
installation and maintenance of smoke alarms.

Preliminary approval of the settlement was granted on May 12, 2000, by the
Honorable U.W. Clemon, Chief Judge of the United States District Court for
the Northern District of Alabama. If the settlement receives final
approval, BRK Brands will also provide a $5 rebate certificate on the
purchase of a First Alert Double/Dual Sensor Smoke Alarm, which utilizes
both ionization and photoelectric technology. A long form notice, which
provides more information about the lawsuit and the terms of the
settlement, including class members' rights to opt out, comment on or
object to the settlement, and appear at the fairness hearing before Chief
Judge Clemon on September 19, 2000, can be downloaded from the website or
obtained by writing to the Notice and PIC Administrator, P.O. Box 3560,
Portland, Oregon 97208-3560.

BUCS: Fans in Lawsuit May Get Closer Seats and $5000 Credit
Season ticket holders unhappy with their seats will get to pick new ones
closer to the 50-yard line thanks to a plan to end a lawsuit. Four longtime
Bucs fans who sued the team over their seating assignments at Raymond James
Stadium may now get their pick of some of the best seats in the house.
Their attorney, Jonathan Alpert, announced in court Wednesday that both
sides had reached an amicable settlement after more than 13 hours of
court-ordered negotiation that ended around 3 a.m.

If approved, the settlement will end an extraordinary case involving a
sports team suing its fans, criminal battery and extortion complaints, and
one lawyer accusing another of tossing coffee in his face.

In a somewhat complex arrangement, the Bucs have agreed to make available
120 seats to season ticket holders unhappy with their seats. About
one-third of those seats will be in choice sections near the 50-yard line,
and the four fans named in the lawsuit will have first pick.

Also, each of the fans named in the class-action suit will be given a $
5,000 credit that can be used to pay off tickets or parking in the years to
come. The Bucs also agreed to drop the $ 1-million defamation suits they
filed against three of the fans who complained publicly about the Bucs and
their seats after the team moved from Houlihan's Stadium to the newer,
smaller stadium in 1998. The Bucs also agreed to pay $ 180,000 in attorneys
fees and $ 30,000 in costs.

Both sides agreed to drop pending criminal battery and extortion complaints
alleging that one lawyer threw coffee in another lawyer's face, and that
the Bucs threatened to revoke the four fans' season tickets.

Wednesday's agreement forbade the usually gregarious Alpert from commenting
further on the settlement, which must be approved by Circuit Judge Sam
Pendino. "Instead of a lengthy dispute, we were able to amicably resolve
our differences," Alpert said in a joint statement issued by the Bucs on
Wednesday. "Both sides are satisfied with the results. My clients and I
look forward to cheering the Buccaneers for many years."

Patsy Falcone, a fan for 15 years who found himself moved from the 50-yard
line in the old stadium to the 10-yard line in Raymond James, said he too
could not discuss the case. "I'm not going to elaborate on anything," he

Bucs lawyer Arnold Levine said, "everybody gave. Everybody made certain
adjustments they felt were appropriate to put the matter behind them."

Even though the stadium is "essentially sold out," no ticket holder will be
involuntarily moved from a seat, Alpert said in court. According to
documents filed Wednesday, the process is expected to work like this:

The Bucs will make available 120 seats, most in upper sections of the
stadium. The four fans who sued, who hold 11 tickets among them, will have
first choice. They presumably will pick from 32 seats in two sections on
the 50-yard line on either side of the stadium.

The remainder of the 120 seats will be available to interested season
ticket holders through a random selection process supervised by a
court-appointed hearing master. Those fans must be willing to give up their
current seats and are only eligible for available seats in the same price
category. Season ticket holders are expected to be mailed a letter from the
Bucs detailing the arrangement.

The lawsuit, filed one year ago, alleged that instead of using the stated
criteria for seat assignments - such as how long someone was a ticket
holder and where he sat at the old stadium - the Bucs used "other and
secret" factors that may have benefited VIPs and elected officials.

At a previous court-ordered settlement hearing, Levine said Alpert flung a
cup of lukewarm coffee in his face and stormed out. Alpert later countered
that Levine had threatened that the fans could count on watching the games
from their living rooms if they didn't agree to settle that day. At a
recent court hearing, Judge Pendino ordered the lawyers to "cut it out."

Settlement talks began at 1 p.m. Tuesday and stretched past midnight. Those
attending nibbled on cookies and kept working even when the air conditioner
cut out. Two sons of team owner Malcolm Glazer attended, one in person and
one by telephone from California. The four fans were there, too, though one
of them eventually had to leave to get ready for work Wednesday morning.
(St. Petersburg Times, June 22, 2000)

FLEXI-VAN: Announces Tentative Settlement of Lawsuit over Tender Offer
David H. Murdock, Chairman of Flexi-Van Leasing, Inc., announced on June 21
a tentative settlement with the plaintiffs in the purported class action
litigation stemming from Flexi-Van's tender offer for shares of Castle &
Cooke, Inc. The settlement, which remains subject to court approval and
execution of a binding settlement agreement, provides for a $0.75 increase
in the offer price from $18.50 to $19.25 per share. The new price of $19.25
represents a premium of approximately 60% and generates an additional $123
million in enterprise value over the pre-offer market price of $12.06 on
March 29, 2000. This higher per share consideration offered places the
total enterprise value, which includes the assumption of debt, of Castle &
Cooke, Inc. at approximately $615 million.

HMOs: NLJ Article Says Risk-Sharing Contracts Are Problematic
Health care providers, unlike insurance underwriters, often do not conduct
enough research before entering into agreements.

Throughout much of the 1990s, risk-sharing contracts were a popular method
of forming partnerships between payers and providers in the health care
industry. The supporters of risk-sharing methodology proposed that if
providers were willing to take on some of the risk, they would have the
potential of obtaining large financial rewards. A decade later, the results
of these risk-sharing arrangements indicate that providers fared poorly
under these contracts. Many providers experienced financial hardship, while
others are no longer in business.

When the Clinton administration embraced the managed care system in the
early 1990s as part of its health care initiative, many providers believed
that HMOs would become the exclusive mechanism of payment for patient care.
Many providers rushed to join managed care networks, fearing that if they
did not do so immediately, they would be locked out of the system.

But providers were not risk managers. Unlike insurance underwriters, who
would research a market and its players, conduct a risk assessment and then
write a contract minimizing their level of risk, providers entered into
agreements in which they bore financial risk without taking these steps.

Providers did not have the highly sophisticated information systems needed
to set realistic benchmarks and administer the agreed-on contract terms.
They were not able to judge accurately what their average cost per patient
was in a calendar year, and they could not predict or control the health of
the patient populations of the HMOs with which they partnered. Further,
they did not have the financial assets or reserves to weather periods when
medical cost exceeded underwriting projections.

There are a number of provisions in risk-sharing contracts that providers
found particularly difficult to manage. They include caps on prescription
drug charges for individual patients. Many physicians agreed to set limits
on the annual prescription expenditures of their patient populations. But
few provider groups knew what individual patients spent on prescription
drugs. This situation was further exacerbated by pharmaceutical inflation,
so providers often agreed to fee structures that were well below the annual
average. In a worst-case scenario, one California medical practice owed an
HMO more than $ 1.5 million in prescription overcharges and ended up
declaring bankruptcy as a result.

Another provision of the agreements was the requirement that 100% of
patients be steered to a single hospital. Some doctors entered into
agreements with HMOs that had negotiated special rates with a single local
hospital. The contracts were often worded to require doctors to "make their
best effort" to steer patients to a single hospital, and doctors were at
financial risk to accomplish this goal.

But the contracts did not protect against leakage. Many patients insisted
on going to a different hospital, perhaps because a family member had a
good experience there or the alternative hospital had a reputation for
high-quality treatment of a specific illness. When it came time to settle
with the plan, the doctors insisted that they had made their best effort
but were unable to prove it.

Targeted utilization levels for assigned patient populations were also
included in the agreements. Alternatively, hospitals with the plan entered
into risk-sharing contracts with HMOs and agreed-on targeted utilization
levels for their assigned patient populations. Hospitals had no control
over patient admissions or discharges, however, as physicians have control
over where a patient is admitted and when a patient is discharged. When it
was time to settle up with the health plans, hospitals often found
themselves hurt by the financial settlements imposed by the contracts.

Finally, the agreements also required providers to take a percentage of
premium dollars instead of a per-patient, per-month fee. Many doctors, in
their haste to become participating providers for HMOs, agreed to accept a
percentage of premium dollars paid by an employer to the HMO as their
monthly capitation amount instead of the traditional per-member, per-month
capitation payment system. Their expectation entering into these business
relationships was that health plans could sign up large numbers of patients
during the life of the contract, which would translate into incremental
business volume and revenue. Unfortunately, without the establishment of
minimum monthly capitation amounts in the HMO contract, physicians suffered
financial setbacks when the HMOs discounted their premium levels during
bidding wars to gain patient market share.

                           One Cautionary Tale

Two of the basic tenets of risk management are: One should never enter into
a business agreement in which one cannot adequately control the risk, and
one should not sign a contract if one cannot determine the risk factors
ahead of time. Those tenets were broken repeatedly by providers when they
entered into risk-sharing contracts with HMOs.

MedPartners Provider Network Inc. (MPN), a billion-dollar limited-license
HMO based in Long Beach, Calif., is a classic example. In the late 1980s,
MPN received a limited Knox Keene -- a California HMO act -- license, which
allowed it to accept global risk from fully licensed HMOs. MPN contracted
with approximately 20 fully licensed HMOs to provide services to more than
a million enrollees. MPN generally retained the institutional risk,
contracting directly with hospitals and ancillary providers. The
professional risk was subcontracted to MedPartners Inc., which managed
physician group practices, then subcontracted with specialty physicians and
other ancillary providers.

MPN broke both tenets when it took on the majority of risk in HMO
contracts. As a result, MPN got locked into a situation in which it did not
properly evaluate its risk up front and did not have the ability to control
the risk underwritten by the HMOs.

When MPN was contracting with HMOs during the 1990s, the California managed
care market was fiercely competitive, and many HMOs were involved in price
wars. The HMOs took advantage of MPN's eagerness to grow its block of
business. They created capitated risk-sharing contracts with MPN in which
the physician practice group assumed the professional risk. MPN agreed to
accept a percentage of premium dollars that employers paid for each
individual enrolled in the plan and to take on the responsibility for
claims administration and utilization management.

As the price wars escalated, HMOs reduced the premium amounts charged to
employers to attract competitors' market share. MPN suffered losses on its
block of business tied to percent of premium reimbursement. The negative
impact of this reduction in capitation revenue to MPN trickled down to both
MedPartners' primary care medical groups and subcontracted specialty
providers. Similar to most providers who have entered into risk-sharing
agreements, MPN and its contracting physicians were forced to absorb these

                          What System Comes Next?

Observes are beginning to see the managed care industry move away from
risk-sharing contracts. Doctors do not want to sign them because they have
seen some of the resulting damage. Health plans are starting to be named in
class actions on the theory that risk-sharing contracts could be cited as a
reason patients could not get the care necessary to treat their conditions.
New forms of risk-sharing are based on delivering a higher quality of care
in return for financial incentives. For instance, doctors might agree to
try to reduce the number of emergency room visits in a chronically ill
population, such as asthmatics, by treating them more aggressively and
monitoring them more closely. They would receive a bonus for meeting the
terms described in the contract.

Although rewarding doctors for delivering improved care is certainly a move
in the right direction, risk sharing may not be a viable option at this
time for providers. Doctors have no control over the health of the patient
population that selects them through the HMO enrollment process. Some could
have large numbers of chronically ill patients who require a higher level
of care than other groups. Without this information up front, it is
impossible for providers to estimate their level of risk accurately and
structure a contract accordingly.

As an alternative, providers can use a number of time-tested methods to
partner with health plans that may prove more effective. Many of these
methods were used for more than two decades by insurance companies, HMOs
and self-funded employers to reimburse providers for the services rendered
to patients. They are based on the concept of volume discounts -- that is,
the more patients directed to a specific provider, the higher the discount
achieved by the payer. It must be noted that before providers enter into
any contractual relationship, they must evaluate their own cost structure,
including both the fixed costs and variable costs associated with the
delivery of their services to patients. There are a number of methods
available for specific types of providers.

                             Other Paths to Follow

Physicians may want to move back to a methodology of fixed-fee schedule
reimbursement. The sophistication of fixed-fee schedules, which link
Current Procedural Terminology (CPT) codes to reimbursement fees, has
evolved over time. The most widely accepted fixed-fee schedule methodology
is Medicare's Resource Based Relative Values (RBRVs). This methodology sets
reimbursement amounts on a per-CPT code basis. Some physicians have been
critical of reimbursement levels for specialty procedures, such as
cardiology and obstetrics, but many physicians consider using RBRVs a fair

Alternatively, physicians could accept a per-member, per-month capitation
as a percentage of their revenue. This option is viable only if doctors
enter into these contracts with the understanding that capitation is not a
risk-sharing mechanism. They should also minimize the total percentage of
their practice revenues from capitation contracts. Under a partial
capitation system, providers will be assured of a steady revenue stream but
will not get into trouble if one large payer cancels its contract or ceases

Hospitals may want to reconsider the per-diem approach to payment. Per
diems are a fixed amount paid to hospitals for each day of a patient's
stay. The per diems may be service-level specific (depending on the type of
bed or ward used) or composite (calculated to take into consideration the
case mix of service used by the hospital). A composite per diem pays a
single amount regardless of the level of service the patient receives. Per
diems were the standard reimbursement mechanism for commercial payers for
more than 20 years. Now a number of hospitals are beginning to enter into
risk pools and risk-sharing agreements. One major factor in a per-diem
system is that the hospital is paid for the time that a patient is

Both payers and providers are critical components in the delivery of health
care to the American public. Both groups could benefit from re-examining
the numerous payment system options available. Many traditional methods are
effective and easily understood by both parties. These mechanisms do not
control the cost of health care, prevent fraud, reduce litigation or
resolve technology issues. They are, however, simpler to administer and
fairer to both the payer and provider communities, while risk-sharing
methods only substitute the entity responsible for assuming the financial
risk of services received. (The National Law Journal, June 19, 2000)

INTANGIBLES TAX: News from NC Says State Will Refund and Pay Interest
According to a report in The News and Observer (Raleigh, NC), people who
are already in line for full refunds from the settlement in the
intangibles-tax case will also receive interest on the taxes they paid, a
judge ruled Wednesday.

Judge Howard Manning Jr. of Wake Superior Court said that the taxpayers
will receive 6 percent interest for the tax years 1990 through 1994, and
that it will accrue through the end of July.

Eugene Boyce, one of the attorneys for the taxpayers, said it's unusual in
a class-action case to win interest on top of full refunds and not have
attorney fees and court costs deducted from the amount.

The refunds will go to people who paid a tax on stocks that was later ruled
illegal. The state agreed to pay $ 440 million to settle the lawsuit.

Checks will be mailed in September to about 276,000 taxpayers, who will
receive an average refund of $ 979. About 15 percent of the settlement will
cover attorney fees and the costs of finding the taxpayers and paying the
refunds; it will be paid with money from unclaimed or disallowed refunds.
(The News and Observer (Raleigh, NC), June 22, 2000)

KNOLLS ATOMIC: Lawsuit Accuses of Employment Age Discrimination
Trial has begun in a $6 million class action lawsuit on behalf of 28
workers contending a federally funded Naval research laboratory laid them
off because of their age.

Attorneys for the former employees of Knolls Atomic Power Laboratory have
so far emphasized that of the 36 workers who lost their jobs in a 1996
layoff, 33 were older than 40. Attorney Joseph Berger pointed that in
fiscal year 1996, after 36 were laid off, KAPL hired 35 new workers.

Knolls General Manager John J. Freeh, named as a defendant along with the
Niskayuna-based lab and Lockheed Martin Inc. of Maryland, which operates
it, testified Wednesday that a point-based system was used to determine who
would be laid off and that the facility was aware older people were a
protected class. The lists were compiled based on performance, flexibility,
critical skills and years of service. Points were awarded. Those with the
lowest number risked layoff.

He said that the laboratory's high tech, classified work on nuclear
propulsion systems for Navy submarines meant there was a constant need for
new people with advanced skills. He said that despite an incentive-based
buyout accepted by 107 workers, the lab was still forced to layoff workers.
Those workers "had to come from just exactly the right areas ... in those
places where we had excess skills," Freeh said. "It was not just numbers."

There was a concern, Freeh conceded, that if the buyouts were opened to
those with less than 20 years' service, younger employees might leave. (The
Associated Press State & Local Wire, June 22, 2000)

LAFARGE CANADA: Will Appeal against $13M for Crumbling Concrete in Can.
One of the longest-running civil cases in the history of Eastern Ontario
courts has culminated in a massive judgment ordering Lafarge Canada Ltd.
and Bertrand & Frere Construction Co. Ltd. to pay 137 homeowners in Eastern
Ontario a total of close to $13 million.

The money will pay for replacement of crumbling concrete foundations of 137
structures, mostly residences, in the Rockland-Hawkesbury area of Ontario
and the Montebello area in Quebec. The award will also pay each homeowner
$7,000 for hardship and inconvenience in the period 1986-93, and $1,000 a
year for every year thereafter until the deteriorating concrete in their
basements is replaced.

Lafarge has already filed a notice of appeal against the ruling by Superior
Court Justice Albert Roy which, when interest and costs are added, is worth
an estimated $20 million to the plaintiffs.

In an overview to the 414-page bilingual judgment, Justice Roy described
the enormity of the trial he had presided over:

* 110 witnesses heard during 100 days of trial over a 16 month period; .
   44 lawyers accredited to the case, with between 15 and 40 present on
   most days;

* "Massive amounts"of expert evidence;

*  Nearly 600 exhibits and thousands of photographs of concrete in decay;

*  A special courtroom to accommodate the number of parties;

*  Interpreters and special equipment to accommodate the bilingual

The judge, a former Liberal MPP, said he was "very fortunate and grateful"
to receive the co-operation of most counsel, although the conduct of a few
had made life difficult for everyone involved. Without naming her, he
singled out one who he said was "beyond her experience and competence," and
had "rendered a great disservice to her clients. A few counsel seemed to
think that the strength of their case depended on the quantity rather than
the quality of the evidence,"while a few, "perhaps with their eye on
another forum, were continually raising needless objections or refusing to
make admissions, thereby requiring the calling of unnecessary witnesses."

Almost all of the 137 homes affected were built in 1986 and 1987. Some of
the owners saw the deterioration start within the first year, although a
total of only 29 registered their complaints with the Ontario Home Warranty
Program within its five-year limitation period.

In fact, it wasn't until 1992 that it dawned on program officials that they
were facing a problem of epic proportions, and thus Justice Roy found the
limitation period a "serious flaw"in the Ontario New Homes Warranties Act,
because "as this case illustrates, the owner may not appreciate that there
is a serious problem within five years of completion."

The main factual issue was whether deterioration was due to the effect of
cyclic freezing and thawing on concrete that had become critically
saturated; or whether the chemical composition of the new type of flyash
Lafarge had mixed with its Portland cement left the resulting concrete
product vulnerable to internal sulfate attack.

Justice Roy concluded that the primary mechanism was sulfate attack, but
that there were places where the damage resulted from both sulfate attack
and freeze-thaw. Lafarge had supplied the cement powder and flyash,
Bertrand had batched the concrete. Justice Roy had to decide how to
apportion blame and damages.

Of Lafarge, he wrote that although the company had steadfastly maintained
that its new Type C flyash had been adequately tested, "the court is left
somewhat perplexed as to why a large multi-national corporation like
Lafarge would market a new product without having taken all reasonable
steps to assure its performance."

He then answered his own question. The flyash, which the company obtained
from the Detroit Edison electrical utility at $2 a ton, "would have been
the ideal product for Lafarge in the years 1985-87. It would have a greater
profit margin than cement powder and, at the same time, help alleviate a
demand for the cementitious material which Lafarge could not meet with only
Portland cement."

As for Bertrand, which operates out of L'Orignal, Ont., the company was "a
relatively unsophisticated ready-mix producer"that had been in business
since 1960 without experiencing problems with its concrete. Bertrand
witnesses testified that the company relied exclusively on the advice and
expertise of the much bigger Lafarge, a fact the trial judge found "not
altogether surprising."

However, it was of "great concern" to him that Bertrand, "having been
provided so little information by Lafarge, was prepared to rely on it
exclusively," against the advice of its own plant manager and without first
seeking other expert opinion. "Basically," Justice Roy wrote, "it engaged
in a policy of willful blindness."

In the end, Justice Roy held Lafarge 80 per cent responsible and Bertrand
20 per cent.

Both companies carried insurance against such financial disasters, and
deciding how much (if anything) each should pay, was as much a part of the
court's burden as determining how and why the concrete itself deteriorated.
The court found Bertrand to be fully covered. As for Lafarge, Alain
Fredette, its director of legal services, told The Lawyers Weekly that
insurance would cover most of its damages, if that becomes necessary.
However, in its notice of appeal, Lafarge is maintaining, as it did
throughout the trial, that the problem lay not in the materials Lafarge
supplied, but in the way they were batched.

At one point in the judgment, Justice Roy complained of "an overload of
evidence too many witnesses, too many experts, too many exhibits, too many
questions and answers." Unfortunately, he wrote, class action proceedings
were not available when the action began. "Nevertheless, the issues and
facts did not warrant such a lengthy trial."

As he prepared to wade through the insurance issues in the case, he quoted
from a decision in which another judge had likened defendants'"formidable
series of obstacles in attempting to fix liability on the insurer" to the
voyage of Odysseus, "the great navigator of antiquity, who had to overcome
all sorts of terrible hazards to make it back home to Ithaca." "I feel like
Odysseus," he wrote at another point near the end of the judgment. (The
Lawyers Weekly, June 23, 2000)

MCKESSON HBOC: Firms Improperly Solicited Shareholders to Opt out
A federal court in San Francisco has ruled that the solicitations sent by
Much Shelist Freed Denenberg Ament & Rubenstein to shareholders of McKesson
HBOC Inc. were misleading and unnecessarily disruptive to the class action
process. The court has ordered that a curative notice be sent to the
investors at the firm's expense. In re McKesson HBOC Inc. Securities
Litigation, No. 99-20743 (N.D. Ill., May 1, 2000).

In this securities fraud suit, one of McKesson's predecessor corporations,
HBOC, is accused of improperly recognizing about $40 million in revenue,
thereby, artificially inflating the value of the stock.

In 1999, the court consolidated 53 complaints and appointed the New York
State Common Retirement Fund as lead plaintiff based on its alleged damages
of over $50 million. The court also approved Bernstein Litowitz Berger &
Grossmann and Barrack Rodos and Bacine as lead counsel.

Two firms that had lost the bid for lead counsel then began a campaign to
recruit individual shareholders for non-class claims based on Section 14(a)
of the Securities Act, which covers the alleged false proxy statement that
endorsed the merger of McKesson and HBOC.

The two firms involved were Much Shelist and Milberg Weiss Bershad Hynes &
Lerach, although the latter subsequently agreed to stop its solicitations
leaving Much Shelist to defend this action.

The solicitations consisted of a mass mailing and posting on the firms'
Internet sites. According to the opinion, the "Notice of Opportunity to
Join McKesson HBOC/Proxy/Breach of Fiduciary Duty Litigations" said that
the court's consolidation had "diluted" the interests of shareholders
without mentioning the 500,000 proxy shares held by lead plaintiff.

By agreeing to the terms of the solicitation, an investor:

-- agreed to abide by the decisions of a steering committee which would be
    appointed by the attorneys;

-- authorized the attorneys to opt the client out of any class action
    proceedings; and

-- agreed to pay attorney costs out of any recovery even if the firm was

The retirement fund argued that the mailings were misleading and unethical,
as well as counter to the purposes of the Private Securities Litigation
Reform Act. The lead plaintiff also said that the contact violated the
attorney/client relationship, because the investors were already

The court agreed that one of the principal goals of the PSLRA is to prevent
lawyers from controlling a large group of clients who are only minimally
able to supervise the attorneys. "Unfortunately, the solicitation documents
in this record appear to contemplate precisely such a scheme," said Judge
Ronald M. Whyte.

The shareholder letters were misleading in their use of the term "notice,"
continued the court, as the format led one to believe it was an official
document rather than attorney advertising. In addition, the court said the
notice induced shareholders to opt out of a class (that is not even
certified) without providing them with information on the costs and
benefits of class membership.

The court concluded that a new notice should be sent to shareholders
informing them that they could rescind any agreement to have Much Shelist
represent them or to opt out of the proposed class. It also enjoined the
firm from any further solicitation unless it complied with a list of
conditions that would give the investors sufficient information to make an
informed decision.

However, the court said the solicitation was not an ethical violation of
the prohibition against contact with a represented party because the
attorney-client relationship does not extend to unnamed class members.

The lead plaintiffs were represented by James E. Lyons of Skadden, Arps,
Slate, Meagher & Flom in San Francisco and Michael J. Shepard of Heller
Ehrman White & McAuliffe in San Francisco.

Much Shelist was represented by Michael J. Freed and Carol V. Gilden of its
Chicago office. (Pension Fund Litigation Reporter, June 12, 2000)

MEL FARR: Settles Lawsuit; Can Use On-Time Device; Customers Get Coupon
Auto dealer Mel Farr will continue to use the controversial On-Time Device
in his leased vehicles despite the settlement of a class-action lawsuit.

The high-tech dashboard devices, which automatically prevent vehicles from
starting if the lessee is behind on payments, have been upgraded by
California-based manufacturer Payment Protection Systems. About 1,500
vehicles Farr has leased through Triple M Financing Co. to high-risk
borrowers have the device installed.

Under the settlement announced Wednesday, the court will monitor Farr's use
of the devices through the end of the year. Customers who leased vehicles
from June 1999 through May 2000 are entitled to $200 in coupons to cover
vehicle repair costs, free inspections and an upgraded On-Time Device.
"This is a consumer protection case," said attorney Lawrence Charfoos, who
represented the two women who filed the original lawsuit. "The main reason
for the case was to make sure it (On-Time Device) was safe and to disclose
their rights as consumers."

Mandi Bergeron of Wixom and Chavela Jones of Detroit filed the suit in
August against Mel Farr Automotive Group and Farr's Triple M Financing. The
women claimed the On-Time Device shut down their vehicles while they were

In December, Wayne County Circuit Judge Kaye Tertzag denied the pair's
request for $25,000 in damages and a void of their leases because he ruled
they didn't prove the device caused the vehicles to shut down. "It was a
computer glitch initially in which the programing set the dates in a
fashion that permitted early shutoff," said Ken Lewis, an attorney for Mel
Farr. "That was corrected early on in the process. "When we went through
the schematic drawings and talked to the engineers and talked to the
manufacturers ... you could not have a situation where the car would just
cut off while the car was going," he said. "The wiring was set up in such a
way as to avoid that problem."

Jim Potter, who leased a 1993 Dodge Daytona from Farr, said the device
prevented him from starting his vehicle, although he said he had made his
payment in time. Potter, a "high-risk" customer, pays about 23 percent
interest on the lease. "It's important, whether you have tremendous credit
or no credit, that you're treated fairly," said Potter, 37, of Clinton
Township. "This has given me a new perspective on going to dealerships."
(The Detroit News, June 22, 2000)

NORTHBRIDGE EARTHQUAKE: Judge Bars Spending By Quake Foundation
A Sacramento judge has tentatively agreed to prevent a nonprofit foundation
created by Insurance Commissioner Chuck Quackenbush from spending any more
money, including $6 million initially intended for victims of the 1994
Northridge earthquake. Sacramento Superior Court Judge John R. Lewis
temporarily froze the assets of the foundation in May. On Tuesday, he
rejected arguments by foundation lawyers, issuing a tentative ruling that
would prevent future spending.

Attorney General Bill Lockyer has sought to shut down the California
Research and Assistance Foundation, which he alleges illegally spent
millions of dollars and became a sham corporation.

Lewis' ruling, which is subject to change pending oral arguments scheduled
today in the case, said Lockyer likely will prevail on allegations that the
foundation board improperly ceded spending decisions to George Grays, a
former deputy commissioner under Quackenbush. Moreover, the judge's ruling
said the attorney general's office likely will prove that one board member,
Ron Weekley, participated in improper self-dealing.

But Lewis' ruling stops short of dissolving the foundation entirely or
determining whether the nearly $7 million it spent should be repaid. Those
issues, he said, are interrelated with another lawsuit filed in Sacramento
last week by two Los Angeles residents.

That lawsuit asks that Quackenbush and others personally repay nearly $13
million the plaintiffs claim was misappropriated in settlements with
insurance companies accused of mishandling claims and spent by nonprofit

Quackenbush's decision to waive potentially huge fines against insurance
companies in favor of much smaller contributions to foundations he created
has ignited a firestorm of controversy, with critics alleging the
nonprofits spent the money to benefit Quackenbush politically. (Sacramento
Bee, June 21, 2000)

SAMSONITE CORP: Settles for CO Securities Suit; DE Case Dismissed
The Company and some of its officers, directors and shareholders have been
named in shareholder class action lawsuits and a derivative action lawsuit
filed between March 13, 1998 and March 9, 1999 in various courts, including
Colorado State District Court and the United States District Court for the
District of Colorado (collectively, the Colorado Litigations); and the
Delaware Court of Chancery (the Delaware Litigation).

On April 9, 1999, the Company signed an agreement with a major insurance
company that provides comprehensive insurance coverage for the defense and
resolution of all of these litigations. As part of the insurance agreement,
the Company agreed to pay premiums ranging from an estimated minimum of
$7.0 million to an estimated maximum of $17.5 million, net of potential
reimbursements, depending on the ultimate cost of these litigations. The
Company was responsible for paying all legal defense costs prior to April
9, 1999, and the insurance company is responsible for such costs after that

The Delaware Litigation was dismissed and the dismissal was affirmed on

On December 17, 1999, the Company and the other defendants in the Colorado
Litigations signed a memorandum of understanding with the plaintiffs that
contains a settlement in principle of the Colorado Litigations.

On April 27, 2000, a definitive settlement agreement was entered into by
the same parties. The settlement provides that all defendants and related
parties, including Samsonite and its officers, directors and shareholders,
will be fully released from all claims that were asserted or could have
been asserted in the Colorado Litigations (in which the federal securities
complaint has been amended to include the claims asserted in the Delaware
Litigation). All amounts to be paid pursuant to the settlement will be paid
entirely by Samsonite's insurance carrier. The Colorado federal court has
ordered that the best notice practicable of the proposed settlement be
given to members of the putative class and shareholders of the Company, and
has scheduled a hearing on the fairness of the settlement for July 25,
2000. If this court approves the settlement, it then will be submitted for
approval to the Colorado state court. There can be no assurance that the
settlement will be approved and completed.

SOUTHWESTERN ENERGY: To Pay Royalty Owners of SEECO, AR Sp Ct Affirms
Energy Company (NYSE: SWN) announced on June 22 the Arkansas Supreme Court
today has ruled to affirm the 1998 decision of a Sebastian County Circuit
Court awarding more than $109 million in a class action to royalty owners
of SEECO, Inc., a wholly-owned Southwestern Energy subsidiary.

While this decision was not expected by Southwestern, the Company had
prepared for the outcome including posting a $109 million bond supported by
letters of credit from the Company's lead lending institutions.

"Southwestern is disappointed at the Supreme Court Decision. It is not the
outcome we had anticipated. It will take some time to recoup the cost of
this judgment and will involve the disposition of some Company assets,"
said Harold Korell, Southwestern President and Chief Executive Officer.
"Fortunately, Southwestern has the financial flexibility to allow it the
time to recoup settlement costs and to continue development of its quality
exploration and production projects."

In late 1999 and early this year, Southwestern successfully drilled
exploratory wells in south Louisiana at Gloria and North Grosbec and has
had continued success in its Arkoma Basin and Permian Basin investments.
The exploration successes in south Louisiana are of particular note as they
were the first prospects in this area developed in-house by our new
exploration team. Southwestern's full-year 1999 and first quarter 2000
earnings were consistent with previous years' levels despite the warmest
winter in the Company's history.

The Company said that within the next few days it will disclose specific
action it will take to fund the judgment and the near term effects of the
judgment on the financial condition of the Company. "Following the Court's
decision today, let us be clear, our position is unchanged. We believe that
from the beginning in this matter Southwestern Energy has acted honestly
and responsibly and has served the best interests of its royalty owners and
utility customers, and we will continue to do so in the future," said Mr.
Korell. "Despite the disappointment of the ruling, we remain optimistic
about the Company's future because the outlook for our exploration and
production operations has never been brighter."

Southwestern Energy will broadcast a conference call in conjunction with
this press release over the Internet at 12:00 p.m. EST (11:00 a.m. CST)
today at the Company's website: http://www.swn.com.RealPlayer 8 Basic is
required to listen to the teleconference and can be downloaded from the

Southwestern Energy is an integrated natural gas company whose wholly-
owned subsidiaries are engaged in gas and oil exploration and production,
natural gas gathering, transmission and marketing and natural gas
distribution. Additional Company information can be accessed at

ST JOHN KINTS: Hearing Set for Final Approval of Settlement for Merger
The Company announced on June 9, 2000 that it reached an agreement to
settle the class action shareholders' lawsuit arising from the mergers. The
case has previously been reported in the CAR. The terms of the settlement
agreement, which remains subject to final court approval, calls for payment
of $13.75 million to the Company's former public shareholders and their
attorneys. Nearly all of this payment will be funded by the Company's
insurance carriers. Additionally, in the event of a future sale, merger or
public offering of the Company, the Company has agreed to provide these
former shareholders with an opportunity to receive a specified percentage
of proceeds from such an event under certain limited circumstances. The
court preliminarily approved the settlement on June 12, 2000 and set a
hearing to consider final approval on August 1, 2000.

ST JOHN KNITS: Settlement for '98 Securities Fraud Suit in CA Finalised
As previously reported, on January 23, 2000 the Company reached an
agreement in principle to settle a case filed in 1998 by Binary Traders,
Inc. for $5 million, an amount the company's insurance carrier has agreed
to pay. On October 13, 1998, Binary Traders, Inc. had filed a complaint on
behalf of purchasers of publicly traded securities of St. John during the
period of February 25, 1998 to August 20, 1998 against St. John, Bob Gray,
and Kelly Gray in the United States District Court, Central District of
California, Southern Division (Binary Traders, Inc. v. St. John Knits, Inc.
et al.). The complaint, which sought class action certification, alleged
that the defendants violated federal securities laws by allegedly making
fraudulent statements during the Class Period and sought an unspecified
amount of compensatory damages. The settlement is subject to court
approval, which is expected to occur in the spring.

Update on the case: The settlement which was reached on January 23, 2000,
between the Company and Binary Traders, Inc. received final approval from
the court on April 24, 2000.

STEVEN MADDEN: Milberg Weiss Announces Securities Suit in New York
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on June 21 on behalf of purchasers of the
securities of Steven Madden Ltd. (NASDAQ: SHOO), between November 3, 1999
and June 20, 2000, inclusive.

A copy of the complaint filed in this action is available from the Court,
or can be viewed on Milberg Weiss' website at:

The action, numbered CV 00 3676, is pending in the United States District
Court for the Eastern District of New York, located at 225 Cadman Plaza
East, Brooklyn, New York 11201, against defendants Steven Madden, Steven
Madden ("Madden") (Chairman and Chief Executive Officer), Rhonda J. Brown
(President, as of February 29, 2000, and Chief Operating Officer) and
Arvind Dharia (Chief Financial Officer and Secretary). The Honorable
Raymond J. Dearie is the Judge presiding over the case.

The complaint charges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by failing to disclose material adverse facts about the Company and
defendant Madden. Specifically, defendants failed to disclose, among other
things, that defendant Madden had participated in a scheme to manipulate
the market for various initial public offerings of common stock of certain
companies and that he had done so in conjunction with Stratton Oakmont - a
securities brokerage that was censured and fined by the NASD and SEC for
securities fraud and is now defunct; (b) that the Company's projections of
future success were lacking in a reasonable basis at all times because
defendant Madden's ability to continue in his roles at the Company were
subject to increased risk and uncertainty given his involvement in the
aforementioned scheme; and (c) that, given defendant Madden's involvement
in the aforementioned scheme, his ability to continue to operate and direct
the operations of the Company were subject to increased and heightened risk
in that he would be unable to continue in his roles at the Company and,
accordingly, the Company's operations would be adversely affected. On June
20, 2000, when news of defendant Madden's arrest for his alleged
involvement with a massive securities fraud was communicated to the
securities markets, the price of Steven Madden common stock fell from 13
1/8 to 11 3/16 before trading was halted on the NASDAQ.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or
Samuel H. Rudman, 800/320-5081 Website: http://www.milberg.comEmail:

TOBACCO LITIGATION: 3 Smokers’ Lawsuits Can Proceed in Wisconsin
State smokers with lung cancer can sue tobacco companies for negligence, a
federal appeals court based in Chicago says. The 7th U.S. Circuit Court of
Appeals reinstated three lawsuits that accuse five tobacco companies and
two industry trade groups of negligently producing a product that's
addictive and causes cancer.

U.S. District Judge Barbara Crabb decided the lawsuits, filed on behalf of
state residents with lung cancer who started smoking before the release of
a 1984 surgeon general's report that said smoking causes lung cancer,
couldn't proceed as a class action and dismissed them last year.

Madison Attorney Jim Olson said Wednesday the appeals court decision was a
victory for his clients, who started smoking from 1935 to 1953. "Crabb's
decision had foreclosed any cases from being brought in the state of
Wisconsin," Olson said. "We can now attempt to prove the tobacco companies
were negligent, and I think we have some pretty strong proof in that

The appeals court said it will be up for a jury to decide what the smokers
understood about the health risks of cigarettes. But the panel said Crabb
correctly ruled the tobacco companies couldn't be held strictly liable for
producing an unreasonably dangerous product. (The Associated Press State &
Local Wire, June 22, 2000)

TOBACCO LITIGATION: Competitors Want to Keep Liggett CEO off Stand
Bennett LeBow, the chief executive of Liggett Group Inc., broke ranks with
the rest of the tobacco industry three years ago to say smoking is deadly
and addictive. Now his competitors want to keep him off the stand or
severely limit what he can tell jurors in a landmark class-action case
covering 300,000 to 700,000 sick Florida smokers.

The smokers are seeking a potential multibillion-dollar punitive damages
verdict to punish Liggett and four other tobacco companies for decades of
misconduct. The industry has argued no money should be awarded based on
changes adopted by cigarette makers under a $254 billion commitment to
settle state lawsuits.

Philip Morris attorney Dan Webb warned Wednesday of ''an end-of-the-world
scenario'' if LeBow were allowed to testify broadly about his change of
attitude. ''There is no question the contrast to the other tobacco
companies is extraordinary,'' Webb told Circuit Judge Robert Kaye. Webb
suggested keeping Liggett witnesses off the stand for now, having the jury
reach a verdict on the other four cigarette makers and bringing the jury
back to hear from people like LeBow.

Smokers' attorney Stanley Rosenblatt called it ''one of the worst
suggestions I've heard in a long time.''

Kaye promised to consider both issues Thursday.

The other defendants previously lost an attempt to go on trial without
Liggett, claiming an almost adversarial relationship on the same side.

Liggett in 1997 settled lawsuits with what then were just 22 states suing
the industry, turning over thousands of secret documents concerning
smoking's health risks to use as evidence against its competitors. (AP
Online, June 22, 2000)

TOBACCO LITIGATION: FL Judge Bars Maker Firm Scientist from Testimony
Tobacco firm scientist can't testify The judge in the Florida smokers
lawsuit barred testimony from a tobacco company scientist Wednesday about
industry research into the treatment of Alzheimer's and Parkinson's
disease. R.J. Reynolds Tobacco Corp. put the expert on the stand as part of
an effort to fend off a potential multibillion-dollar punitive-damages
verdict against the industry on behalf of up to 700,000 Florida smokers.

''It has nothing to do with cigarettes and smoking,'' Circuit Judge Robert
Kaye ruled.

This case is the first class-action lawsuit by smokers to go to trial. The
jury in Miami earlier determined that the nation's five largest cigarette
makers conspired to produce a deadly product. It awarded $ 12.7 million in
compensatory damages to three people representing the class.

Now the jury will decide how much the industry should have to pay as
punishment. The industry has argued that it has changed the way it does
business as a result of the $ 254 billion settlement with the states and
should not be forced to pay punitive damages. (The Atlanta Journal and
Constitution, June 22, 2000)

USDA: Minority and Female Employees Seek Meeting With Clinton
A group of minority and female workers at the Department of Agriculture
yesterday called on President Clinton to resolve long-standing complaints
of discrimination at the agency, saying that bias continues to fester there
despite repeated pledges by Secretary Dan Glickman to stamp it out.

About 30 members of the Coalition of Minority Employees aired their
concerns at a Capitol Hill news conference before meeting with senior USDA
officials yesterday. Citing their own experiences as well as an upsurge in
the number of discrimination complaints brought by USDA employees,
coalition members said the agency is making little progress in its
much-touted civil rights fight. "Nothing has changed," said John Sedillo, a
Forest Service employee from New Mexico. "If anything, things have gotten

Members of the coalition said that minority and female employees frequently
receive disparate treatment from USDA supervisors, are often steered away
from assignments that will enhance their careers, are denied promotions and
are targets of blatantly racist jokes or sexual harassment, particularly in
the agency's rural outposts. "There is continued widespread discrimination
at USDA," said Lawrence Lucas, president of the coalition. "We demand that
President Clinton meet with the coalition to resolve this."

Since being named agriculture secretary in 1995, Glickman has said that his
highest priority is to make USDA into a "civil rights leader in the federal
government." In May, the agency released a report that officials trumpeted
as evidence of the civil rights progress that had taken place. A USDA
spokesman referred to the report when asked for comment about the
coalition's charges yesterday.

The report said that the agency had increased its farm lending to
minorities and women, increased minority and female representation on the
local committees that make loan decisions for farmers and increased the
percentage of agency employees who are minorities from 17 percent to 20
percent. "Our efforts are having a real impact on USDA's programs and
people," Glickman said then.

But minority employees said that has not been enough. Despite Glickman's
efforts, they said, the number of employment discrimination complaints
increased by nearly 50 percent between 1996 and 1999. At the end of last
year, more than 1,700 were on file. "There are so many cases that they are
largely put aside," said Rep. Patsy T. Mink (D-Hawaii), who attended the
news conference.

Also, the coalition said, the agency is the target of 20 class action
complaints, either in the courts or before the Equal Employment Opportunity
Commission. The coalition said several of the complaints have been filed in
the past year. "The Department of Agriculture is an overflowing cesspool of
filth that needs cleaning," said John Boyd, president of the National Black
Farmers Association, who is running for Congress from Virginia's 5th
District. "Nothing will change unless people are held accountable for their

In his May report, Glickman said that 13 employees were fired and another
81 were at least reprimanded as a result of the agency's civil rights
initiative--numbers that coalition members say are inadequate.

For decades, minorities at USDA have complained about a hostile work
environment that fosters discrimination against employees as well as some
USDA clients. In 1999, USDA settled a class action lawsuit brought by black
farmers who charged that they were denied loans and other services because
of their race. Payouts in the suit are on track to top $ 1 billion.

The coalition's complaints come on the heels of a report by the agency's
inspector general, who in March criticized the agency's handling of civil
rights complaints. The report said USDA's civil rights division had lost
more than a dozen files and mishandled hundreds of others.

During the news conference, a spokesman for Sen. Charles S. Robb (D-Va.)
said that Robb plans to request a meeting between Clinton and the minority
employees. "The secretary has failed us," said Allen Spencer, an USDA
employee involved in a suit against the agency. "It seems that all of our
resources other than presidential action have been expended." (The
Washington Post, June 22, 2000)

UNITED AIR: Ct Finds Bias in Different Weight Rules for Male and Female
Male and female flight attendants had different standards in the '70s
In a victory for thousands of women, a federal appeals court ruled
yesterday that weight limits United Airlines imposed on its flight
attendants between 1980 and 1994 illegally discriminated against women.

In a 2-to-1 decision, the U.S. Court of Appeals in San Francisco said the
weight restrictions for women were "far more stringent" than those for men,
resulting in unfair treatment. Employees who could not meet the weight
requirement were suspended without pay or fired.

The ruling, which could cost United millions of dollars, is a long-awaited
victory for as many as 16,000 former and current female employees who were
part of a class action suit against United. The decision reverses a ruling
by U.S. District Judge Charles Legge, who dismissed the lawsuit in 1997.

In ruling in favor of the women, the appeals court said there is no
evidence that the weight requirements had any bearing on an attendant's
ability to do the job.

"United made no showing that having disproportionately thinner female than
male flight attendants bears a relation to flight attendants' ability to
greet passengers, push carts, move luggage and, perhaps most important,
provide physical assistance in emergencies," wrote Judge William Fletcher
in the court's decision.

If anything, he said, "United's discriminatory weight requirements may have
inhibited the job performance of female flight attendants."

The lawsuit was one of several filed in the 1980s and 1990s against the
major airlines over weight restrictions imposed on flight attendants. Some
were settled, while others prompted airlines to drop their policies. United
voluntarily ended the practice in 1994.

"It's a great victory for flight attendants and for women," said Ed
Gilmartin, associate general counsel for the Association of Flight
Attendants in Washington, D.C. "It will have a major impact not only on
airlines but other industries that try to use an unequal or gender-based
standard for occupational qualifications."

As part of its ruling, the court said the plaintiffs can pursue an age
discrimination claim if they can prove that the weight limit policy had a
disparate impact on older employees. If so, the decision could affect a
number of men as well as women. "It was the intent and effect to use these
weight requirements to eliminate older flight attendants," said San
Francisco attorney Edith Benay, who represented the women. Older flight
attendants, Benay said, are more expensive for the airlines because their
salaries have increased and they use more medical benefits for themselves
and their children.

Unless United appeals the decision, the case will go back to the trial
judge to determine damages, which could be in the millions of dollars.

Matthew Triaca, a spokesman for United, said officials at the Chicago-based
airline did not have any comment because they were still reviewing the

During the 1960s and 1970s, large commercial airlines hired only female
attendants and required that they be unmarried, refrain from having
children and meet weight and appearance criteria. They also had to retire
by the age of 32 or 35.

After airlines began hiring male attendants in 1971, they set separate
weight and height requirements.

In 1992, a group of women filed a class action suit, charging that United
discriminated against women and older flight attendants by adopting a
biased weight policy and enforcing it in a discriminatory manner.

United set its weight requirements by relying on a table of desirable
weights and heights published by Metropolitan Life Insurance Co. But the
court noted that United allowed men to have the top weight in the large
body frame category, while women were limited to the top weight in the
medium body frame category.

As a result, women were required to weigh between 14 and 25 pounds less
than their male colleagues of the same height and age. For example, a
30-year-old woman who was 5 feet 7 inches tall could not weigh more than
142 pounds, while a man of the same height and age could weigh as much as
161 pounds. A 50-year-old, 5-foot-11-inch woman faced a maximum weight of
162 pounds, while her male counterpart could tip the scales at 184.

Benay said women would starve themselves for days, give blood or use
diuretics to meet the weight requirements.

The appeals court rejected United's argument that its weight tables were
permissible as "grooming" or appearance standards.

The court concluded that United's policy of applying medium-frame weight
limits to women and large-frame maximums to men "is facially discriminatory
and not justified" as a requirement of the job. (The San Francisco
Chronicle, June 22, 2000)

* SEC Proposes Disclosure, Trading Rules
In today’s volatile stock market, extraordinary trading gains and losses
are often realized over a matter of hours or, occasionally, minutes. Those
who act quickly in response to important events often lock in gains, while
latecomers are sometimes saddled with mediocre returns or large losses.

The immediacy of information transmitted via the Internet and the increased
availability of sophisticated market analyses to individual investors has,
to a certain extent, created a new breed of investor. The need to speed the
flow of information, not just for the investment community but for
everyone, has spawned new industries and, some would argue, a new economy.
The challenge to public companies to manage the flow of information to the
public consistent with the requirements of law has never been greater.

In partial response to these changing dynamics, the Securities and Exchange
Commission (SEC) has proposed new rules and regulations with respect to
"selective disclosure" and insider trading in order to enhance the
efficiency and (perceived) fairness of the securities markets.

                           Selective Disclosure

In recent years, representatives of the SEC have been vocal in their
criticism of public companies that have provided more extensive or timely
information to research analysts and institutional investors than is made
available to the general public. Companies that have encountered at least
the perception of disclosure problems over the last year include
Abercrombie & Fitch (disclosure of same-store sales trends), Webvan
(pre-IPO disclosure of business results not included in prospectus) and
Compaq (disclosure of slowdown in PC demand).

In the SEC's continuing quest to "level the playing field" among analysts,
institutional investors and the public, the agency has proposed new rules
to govern the disclosure by public companies of material nonpublic
information. Proposed Regulation FD (for "fair disclosure"), if enacted as
proposed, would require (1) an issuer that intends to disclose material
information that is not yet public to do so through public disclosure, not
through selective disclosure to analysts, institutional investors or
others, and (2) an issuer that learns that it has made a non-intentional
material selective disclosure to make prompt public disclosure of that

In accordance with current law, Regulation FD does not require that issuers
publicly disclose all material developments when they occur. Rather, it
requires that "when an issuer chooses to disclose material non-public
information, it must do so broadly to the investing public, not selectively
to a favored few."

The proposed Regulation continues to define "material non-public
information" in accordance with existing precedent. Information is material
if "there is a substantial likelihood that a reasonable shareholder would
consider it important" in making an investment decision, or if it would
have "significantly altered the 'total mix' of information made available."

The proposed Regulation would apply to all reporting issuers (i.e., issuers
with securities registered under @@ 12 or 15(d) of the Securities Exchange
Act of 1934). Since Regulation FD would apply only to public companies, it
would not apply to the initial public offering "road shows" of nonpublic
companies "in registration." However, the proposed Regulation would apply
to reporting issuers with pending registration statements.

Regulation FD also regulates disclosures made by "an issuer or person
acting on its behalf." Therefore, as proposed, disclosures subject to
Regulation FD are disclosures made by any officer, director, employee or
agent of the issuer while acting in the scope of his or her authority, but
not disclosures otherwise made improperly by such a person, e.g., a "tip"
in violation of Rule 10b-5.

As to the policy behind proposed Regulation FD, the SEC promulgated it in
response to its concern that companies are making significant disclosures
to analysts and institutional investors before disclosure of the same
events or financial information to the public via press release or filing
with the SEC. The agency stated that it was troubled by recent reports of
this selective disclosure and its impact on the perception of market
integrity. While the Commission acknowledges that corporate communications
with securities analysts benefit the flow of information in the
marketplace, it believes that the early disclosure to analysts and other
private entities of material nonpublic information will erode public
confidence in the fairness of the markets.

                             Two-Pronged Approach

Regulation FD classifies disclosures as either "intentional" or
"non-intentional." Intentional disclosures are planned disclosures - e.g.,
agenda items to be covered in a meeting with analysts. Non-intentional
disclosures are unplanned disclosures - e.g., "off-the-cuff" remarks in
such a meeting or phone call, or comments that might be uttered in casual

                         Intentional Disclosures

For intentional disclosures to analysts, institutional investors or others,
Regulation FD would require companies to issue a press release or a
securities filing (on Form 8-K for domestic issuers or Form 6-K for foreign
issuers) simultaneously with the planned disclosure. Accordingly,
intentional selective disclosures would violate Regulation FD as proposed.
While the SEC considered other methods of non-selective disclosure,
including a requirement that investor conference calls be open to the
public, it concluded that simultaneous disclosure of the same information
through press release or securities filing would suffice.

                        Non-Intentional Disclosures

The SEC has recognized that mistakes are sometimes made in the absence of
recklessness or intent. In such a situation, since a press release or
securities filing would not be prepared for public dissemination, the
company would be required to disclose promptly the same information to the
public once a "senior official" of the company knows (or would be reckless
in not knowing) of the non-intentional disclosure. "Promptly" is defined to
be "as soon as reasonably practicable (but no later than 24 hours)," and
"senior official" is defined as an executive officer, director, investor
relations officer, public relations officer, or any employee acting in an
equivalent function.

Since the term "senior official" is narrower than a person "acting on
behalf" of the issuer, the applicability of rules governing non-intentional
disclosures are somewhat limited. For example, if a vice president of a
company who is not a senior official makes a non-intentional selective
disclosure, there would be no requirement to remedy the situation until the
disclosure is brought to the attention of a senior official.

                Public Disclosure Satisfying Regulation FD

Under the proposed Regulation, the required disclosures must be made in a
way that can be reasonably relied upon to inform the general public.
Companies can comply with the public disclosure obligations by filing a
Form 8-K or Form 6-K with the SEC containing the information.

As an alternative, an issuer may either (1) issue a press release that is
distributed by a widely circulated news or wire service such as Dow Jones,
Bloomberg, Business Wire, PR Newsweek or Reuters, or (2) disseminate
information through any other method of disclosure that is reasonably
designed to provide broad public access and does not exclude access to
members of the public, such as an announcement at a press conference to
which the public is invited. The SEC has also encouraged the posting of the
information on the issuer's Web site - but the proposed Regulation would
not consider a Web site posting alone to be a sufficient means of public

             Penalties for Violations of the Regulation

As proposed, no private right of action will arise from an issuer's failure
to file or make public disclosures required by Regulation FD. Therefore,
absent any other circumstances that would give rise to a private right of
action (such as a Rule 10b-5 violation), the failure to make a required
disclosure could not be the basis of a private class action or derivative
suit. Instead, if a company fails to comply with Regulation FD, it could be
subject to an SEC enforcement action.

                 Comments on the Proposed Regulation

At the close of the comment period in April, the SEC had received over
3,000 comments on the proposed Regulation. Many individual investors who
commented were highly supportive of enacting it as proposed, and asserted a
claim to the same timely information that is given to their institutional

However, several organizations and their representatives argued that the
definitions and explanations included within Regulation FD were ambiguous,
and that such ambiguity would have a "chilling" effect on disclosure,
instead of improving the flow of information (by arguing, for example, that
words such as "agent" and phrases such as "acting within the scope of his
or her authority" were unwieldy). Other persons who commented, including a
nationally recognized statistical rating organization, stated that a
certain amount of selective disclosure benefits the public and the markets,
and argued for exemptions from the general prohibition on intentional
selective disclosures.


Regardless of the final outcome of the rule-making process, public
companies should review their policies concerning disclosure and discuss
these policies with persons authorized to speak on behalf of the company.
Most importantly, those companies that have had a great deal of comfort
talking to analysts and institutional investors yet are constantly looking
to cut back on written disclosures, as well as those that follow a
formulaic approach to written disclosure, may need to undergo a general
change of mind-set and attitude towards their disclosure obligations.

                          Insider Trading Proposals

In recent years, the SEC has employed a strategy of expanding the scope of
insider trading laws beyond the "classical" theories applicable primarily
to corporate executives and other "insiders" through broader theories of
liability, most particularly the "misappropriation" and the "fraud on the
market" theories.

As part of this strategy, and in conjunction with Regulation FD, the agency
has proposed new rules designed to clarify the insider trading laws
currently embodied in a loosely knit and sometimes conflicting set of
judicial rulings. Specifically, the SEC has proposed two new rules, (1)
Rule 10b5-1, which would prohibit a person from trading a security while
"aware" of material nonpublic information unless one of four safe harbors
were applicable, and (2) Rule 10b5-2, which would prohibit a person from
trading a security in breach of a "duty of trust or confidence," as defined
by the new rules, which would include confidential relationships created by
a familial relationship.

Rule 10b5-1. The SEC has historically argued that it is unlawful to trade a
security while in the "knowing possession" of material nonpublic
information. However, certain courts have held that mere knowledge of such
information is not enough to establish culpability and, instead, have held
that a person is culpable only if he or she "uses" such information. See,
e.g., SEC v. Adler, 137 F.3d 1325 (11th Cir. 1998). Thus, in some
jurisdictions, the agency has been required to show that a defendant not
only possessed the information, but used it to his or her unlawful benefit.

As a compromise position, proposed Rule 10b5-1 would generally prohibit a
person from trading a security while "aware" of material nonpublic
information with respect to such security unless one of four safe harbors
were applicable. These exclusive safe harbors apply where a person
demonstrates that, before becoming aware of the material nonpublic
information, he or she:

(1) entered into a binding contract to purchase or sell the security in the
amount, at the price and on the date when he or she purchased or sold the

(2) provided instructions to a third party to execute a trade of the
security for the person's account in the amount, at the price and on the
date when the trade was executed;

(3) adopted, and previously adhered to, a written plan specifying purchases
or sales of the security in the amount, at the price and on the date when
the purchase or sale was executed; or

(4) adopted, and previously adhered to, a written plan for trading
securities that is designed to track a market index or group of securities,
and the amounts, prices and timing of the trades were the result of
following the plan.

The proposed Rule also provides one additional requirement for the
availability of the foregoing safe harbors - good faith. In order to
qualify for the protections of the Rule, the binding contract, instructions
or written plan cannot be part of a plan or scheme to evade the Rule's
prohibition. In addition, the Rule also specifies that a person will lose a
defense for a trade if he or she enters into or alters a "corresponding or
hedging transaction or position" with respect to the planned securities

Rule 10b5-2. The SEC's "misappropriation" theory was validated by the
Supreme Court in the landmark case of United States v. O'Hagan, 521 U.S.
642 (1997), where the Court held that a person commits fraud when he or she
misappropriates material nonpublic information for securities trading
purposes in breach of a duty of loyalty and confidence, even when the
person (or company) to whom the duty is owed does not suffer from the
trading activity in question. However, lower courts have struggled to agree
on the types of non-business relationships that create a duty of trust or
confidence and have failed to agree if a familial relationship, in itself,
creates such a duty. See, e.g., United States v. Chestman, 947 F.2d 551 (2d
Cir. 1991), cert. denied, 503 U.S. 1004 (1992) (marriage alone does not
suffice to create a fiduciary relationship); United States v. Reed, 601 F.
Supp. 685 (S.D.N.Y.), rev'd on other grounds, 773 F.2d 447 (2d Cir. 1985)
(family member having reasonable expectation of confidence may be
sufficient to form fiduciary relationship).

Proposed Rule 10b5-2 sets forth a non-exclusive set of circumstances in
which a person will be deemed to have a duty of trust or confidence for
purposes of the misappropriation theory. Under proposed Rule 10b5-2, a
relationship that would include a duty of trust or confidence that would
serve as a basis for the misappropriation theory includes, but is not
limited to:

(1) a relationship based on an express agreement, such as a confidentiality
agreement, which, however, need not be in writing;

(2) a relationship based on a history, pattern or practice of sharing
confidences, such that the person communicating the material nonpublic
information has a reasonable expectation that the other person would
maintain confidentiality; or

(3) a spousal, parent, child or sibling relationship, unless the alleged
"misappropriating" person demonstrates affirmatively that no duty of trust
or confidence existed in light of the circumstances.


Officers and directors of public companies are often "aware" of material
nonpublic information regarding their respective companies and,
accordingly, should familiarize themselves with proposed Rules 10b5-1 and
10b5-2. These Rules would expand the potential liability that may emanate
from such awareness.

In addition, since the "awareness" of a director or officer may at times be
imputed to their respective companies, which may also trade in their own
securities (through, for example, a stock repurchase program), such
companies should review their securities trading policies to ensure
compliance with the proposed Rules if enacted. (New York Law Journal, June
12, 2000)


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