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            Thursday, August 3, 2000, Vol. 2, No. 150


AMSOUTH BANK: Scores Fed Ct Victory in Check-Fee War
AUTO FINANCING: Grossinger's Holdback Charge Is Not a Finance Charge
AVISTA CORPORATION: Wolf Haldenstein Files Securities Lawsuit
COCA-COLA: What happens when a plaintiff eavesdrops on his lawyers?
COSTCO WHOLESALE: Three Firms Accuse Discount Chain of Deceptive Ad.

DELAINE EASTIN: Consent Decree Resolved Parents' Action over FAPE
EDUCATION DEPARTMENT: To Pay $4M for Black Employees Promotions Lawsuit
FOAMEX INTERNATIONAL: Reaches Agreement on Shareholder Suits in DE & NY
FRONTIER INSURANCE: Bernstein Liebhard Files Securities Suit in New York
K-TEL INTERNATIONAL: Announces Dismissal of Securities Lawsuit

MICROSOFT CORP: Price of Software Windows ME Slashed
MICROSTRATEGY INC: Replaces CFO; Retains Veteran Auditor As Consultant
MONSANTO COMPANY: Fd Ct Rejects Novel Legal Attack on Biotech Seeds
MP3 COM: Trial for Recording Companies' Suit Set for End of August
MTI TECHNOLOGY: Berman, DeValerio Charges with Securities Fraud in CA

NATURE'S BOUNTY: Paul C. Whalen Files Securities Lawsuit in New York
OIL COMPANIES: Ct of Appeals Affirms Dismissal of Price-Fixing
PHILIPPINE OFFICIALS: Negligence Alleged in Deaths at Garbage Dump
RELIANCE GROUP: Leucadia Pulls out; Lawsuits and Sell-off Continue
ST PAUL, MN: Search for Wrongly Flunked Kids in Math Test Begins

TOMS RIVER: Named in Lawsuit Alleging Ciba of Contaminating Dover Water
WATER CONTAMINATION: Victims of Parasite Seven Years Ago Get Checks


AMSOUTH BANK: Scores Fed Ct Victory in Check-Fee War
The banking industry has scored its first federal court victory in defense
of processing customers' largest checks first, extending its unbeaten
streak at the state level in a battle over processing fees.

A U.S. District Court judge in Alabama last week threw out a lawsuit by
three Amsouth Bank customers who had attacked the Birmingham-based
institution's check-paying policies, ruling that the practice violates no

Industry lawyers have successfully fended off a series of state court class
actions in the past five years that accused banks of trapping customers
into paying excessive overdraft fees by failing to notify them of a
"high-to-low" check processing policy.

Nearly a dozen suits were filed nationwide. Of four state cases that have
been concluded, two were dismissed, one settled, and one withdrawn. At
least six remain pending in state courts in Alabama, Illinois, and New

"The decisions are starting to roll in, and the banks are winning," said
Gregory B. Jordan, a partner in the Pittsburgh office of the Reed Smith
Shaw & McClay law firm who represented Amsouth.

Amsouth -- like many other banking companies, including Bank of America
Corp., Chase Manhattan Corp., and Wells Fargo & Co. -- pays checks
presented for payment on a single business day in order of descending
dollar value.

Consumers complain that such a policy is a moneymaking scheme that causes
excessive overdraft fees. If the check for the largest amount is processed
first and the customer has insufficient funds to cover it, all subsequent
checks processed that day will be bounced, triggering overdraft fees.
Consumer advocates argue that if banks processed the checks in reverse
order, from the lowest amount to the highest, some checks would clear and
the customer would incur fewer fees.

Bankers defend their practice, saying it is not only legal under state and
federal banking law but also beneficial to customers. "The reason the bank
does that is, they think it is in the customer's interest because they
think the largest check is most important to the customer," Mr. Jordan

Attorneys representing Amsouth customers hoped to bring a class action
alleging violations of the federal Truth-in-Savings Act, which requires
banks to notify customers of fees they could incur.

Siding with the bank, U.S. District Judge Richard W. Vollmer Jr. ruled in a
pretrial order that the case does not qualify as a class action and that
Amsouth had given customers fair notice of fees under Truth-in-Savings and
state common law covering fraud and breach of contract.

"The Truth-in-Savings Act and its implementing regulations do not impose on
the defendant a duty to disclose its posting order policy or its per check
policy," Judge Vollmer wrote on July 24. "Accordingly, the plaintiffs'
fraudulent suppression claim fails."

His decision is consistent with rulings by state judges in Kentucky and
Tennessee, who dismissed suits against PNC Bank of Kentucky in 1999 and
First Union Corp. in 1997.

The dismissals were all based on findings that high-low check processing is
legal. "The banks are complying with the law," said Michael F. Crotty,
deputy general counsel at the American Bankers Association. "It doesn't
matter what evidence the plaintiffs have. The law says (the high-low check
processing practice) is permissible. The plaintiffs had no case. These
folks want the law to go an extra step. The law just doesn't do that." He
said he hopes the federal court dismissal will send a message to "the
class-action bar that there's no case here."

Lawyers for the Amsouth customers said they are considering whether to

Though no bank has lost a lawsuit challenging its check processing
practices, the former NationsBank -- now part of Bank of America Corp. --
settled a class action for $9 million last November. It admitted no
wrongdoing but agreed to pay 1.4 million customers $50 each. (The American
Banker, August 2, 2000)

AUTO FINANCING: Grossinger's Holdback Charge Is Not a Finance Charge
Although a used car dealership charged subprime borrowers a higher price
than other customers, it was not required to disclose the financing
company's fee or "holdback" charge as a finance charge under the Truth in
Lending Act because it was not passed along to the purchaser. (Hoffman v.
Grossinger Motor Corp., No. 00-1024 (7th Cir. 6/20/00).

Mercedes Hoffman sued Grossinger Motor Corp. in the U.S. District Court for
the Northern District of Illinois alleging that the dealership violated the
TILA. Specifically, Hoffman contended Grossinger failed to disclose a
finance charge that it supposedly levies on high-risk borrowers. Hoffman
claimed the finance company routinely charges Grossinger a flat 400 per car
finance fee and that Grossinger, in turn, passes this "holdback" charge on
to its sub-prime purchasers. According to the class action complaint,
however, Grossinger does not treat this holdback charge as a finance charge
in computing the annual percentage rate of interest.

Grossinger moved for summary judgment and the District Court granted the
auto dealership's motion. Hoffman appealed to the 7th U.S. Circuit Court of

Writing for the 7th Circuit, Chief Judge Richard Posner explained that if
the dealer only charged subprime purchasers 400, the charge would be a
finance charge requiring the dealership to include it in the calculation of
the APR. He further explained that if the dealer tacked the 400 holdback
charge onto all purchases, both cash and credit, the 400 was not a finance
charge under the TILA. The court found, however, that Hoffman's case fell
between Judge Posner's "two hypothetical variants."

                            Pricing Practices

The court found that Grossinger did not add a 400 charge to the price of
cars sold to its subprime purchasers. Instead, the court discovered that
the dealership charges subprime customers a higher price on average than it
charges other customers. However, the court concluded that this difference
in price was not a hidden finance charge.

To support its finding that it is unlikely that Grossinger passes the
holdback charge onto its subprime customers, the court looked to the
dealership's pricing and commission practices. The 7th Circuit said that a
salesman's commission is based on the percentage of the dealership's net
profit on a sale. The net profit is the actual sales price of the car minus
the cash value of the car, the cost of any repairs, and an amount
representing the dealership's overhead. In the case of subprime sales, said
the court, the overhead figure includes the 400 holdback.

Next, the 7th Circuit explained that the commission method "implies that
for [the salesman] to get the identical commission on two otherwise
identical cars, one sold to a subprime purchaser and the other to a prime
or cash purchasers, the price to the subprime purchaser would have to be
400 higher ... . Otherwise the dealer's net profit would be less on the car
sold to the subprime purchaser and so the salesman's commission would also
be less." Because the pricing and commission method motivates the salesman
to get a deal as close to the list price as possible, the 7th Circuit held
the holdback was not passed on to high-risks borrowers and was not a secret
finance charge.

The court stated that the only situation in which a holdback would
constitute a hidden finance charge under the TILA is one in which "the
defendant would have sold the car to a cash purchaser for less than 400
over the defendant's cost of car."

In conclusion, the 7th Circuit ruled that there was no evidence Hoffman
paid a penny more than she would have if she had not been a subprime
purchaser. The court affirmed the District Court's judgment. (Consumer
Financial Services Law Report, July 24, 2000)

AVISTA CORPORATION: Wolf Haldenstein Files Securities Lawsuit
Wolf Haldenstein is commencing a class action on behalf of purchasers of
Avista Corporation (NYSE:AVA - News) securities during period between April
7, 2000 and June 21, 2000 (the "Class Period"). A copy of the Complaint can
be obtained from the Wolf Haldenstein firm web site at www.whafh.com.

The complaint charges Avista and certain of its officers and directors with
violations of the Securities Exchange Act of 1934 and alleges that during
the Class Period, despite assurances from Avista that it would only enter
into derivative contracts as a means to "limit the exposure to market
risk," the Company secretly entered into massive amounts of forward
contracts in an undisclosed gamble that electricity prices would decrease
in the future. The price of electricity, however, skyrocketed, causing
these derivative forward contracts to suffer massive losses. Premised on
theses revelations, Avista's share price declined dramatically on June 21,

Contact: Wolf Haldenstein Greg Nespole, 212/545-4657

COCA-COLA: What happens when a plaintiff eavesdrops on his lawyers?
The National Law Journal says in the case of the race discrimination suit
against Coca-Cola, you end up with name plaintiffs being jettisoned from
the case by their attorneys, famous plaintiffs' lawyers then being brought
in and a freshly minted $ 1.5 billion suit being filed against Coke. You
also end up with a lot of allegations being flung back and forth.

The bizarre turn of events began on March 29 with a conference call between
the Rev. Jesse Jackson and the eight original plaintiffs and their lawyers
in the Coke case. The call was arranged for the Rev. Jackson so he could
speak with the plaintiffs and their attorneys about the case with mediation
only two weeks away.

It was the Rev. Jackson who first raised the question of what the
attorneys' cut would be if Coke agreed to settle the case as a class
action, name plaintiff and Coke security guard Gregory A. Clark recalled in
an interview. He said that he was then surprised to hear Cyrus Mehri, of
Washington, D.C.'s Mehri, Malkin & Ross -- one of at least five lawyers on
the line -- tell the civil rights leader he anticipated a 25% contingency
fee. Mr. Clark had signed a contract in which the lawyers retained a third
of any settlement. In an affidavit filed with the suit, Mr. Clark would
later ask why Mr. Mehri "lied about the legal fees specified in the
contract when asked by" Mr. Jackson.

Because of what Mr. Mehri said, Mr. Clark explained, he decided to stay on
the line surreptitiously after Mr. Jackson and the other plaintiffs hung

Besides Mr. Mehri, other lawyers on the call included Jeffrey O. Bramlett,
Joshua F. Thorpe and Steven J. Rosenwasser, all of Atlanta's Bondurant,
Mixson & Elmore; and James E. Voyles, of Marietta, Ga.'s DeVille, Milhollin
& Voyles, Mr. Clark said. He explained that after the Rev. Jackson and the
other plaintiffs hung up, his attorneys discussed $ 250 million as an
acceptable class action settlement. No one connected with the suit has ever
publicly mentioned a settlement amount. Of that $ 250 million, the eight
named plaintiffs were expected to split 1% -- an estimated $ 2.5 million,
Mr. Clark recalled the lawyers saying. The lawyers, on the other hand,
would take one-third of the settlement, or an estimated $ 87 million.

The remaining $ 160 million would be divided among some 2,000 current and
former black employees attached to Coke's U.S. offices -- an estimated $
80,000 each.

"Hey, I've got it all worked out," Mr. Clark recalled Mr. Mehri as saying.
He would first tell the lead plaintiffs that their individual claims were
worth no more than $ 20,000 each. Later, he would ask the presiding judge
to set aside $ 2.5 million for them as class representatives, Mr. Clark
said. Although that might be less than they expected, the revised amount
would look much better to the plaintiffs, Mr. Clark recalled Mr. Mehri
saying. An affidavit Mr. Clark filed in the case also claims that the
attorneys made "various derogatory comments" about their clients.

"It was not just what they said," Mr. Clark explained. "It was almost as if
they had taken us for granted. . . . It was the arrogance with which they
laughed and chuckled about the seriousness of our lives. . . . They were
not concerned about the people in the company left to deal with its
policies, left to deal with whites angry about the lawsuit who had the
ability to retaliate. All they were concerned about was the money they were

Asked about Mr. Clark's recollection of the conference call, Mr. Mehri
would only say, "Either he misunderstood or has chosen to misrepresent what
was said on the call." Any discussion of a 33% fee was "flat-out not true,"
Mr. Mehri said. "It was never discussed." None of the other lawyers
involved in the phone call would comment.

Enraged by what he says he overheard, Mr. Clark promptly called the other
plaintiffs that night to warn them that their lawyers could no longer be
trusted. Eventually, Mr. Clark informed Mr. Mehri that he wanted Florida
plaintiffs' lawyer Willie E. Gary to join the case Mr. Mehri and his
co-counsel objected. Mr. Mehri ended up removing Mr. Clark and two other
plaintiffs from the suit. They then hired Mr. Gary.

On June 14, Coke announced that it had reached a previously secret
settlement in principle with the four remaining plaintiffs in which the
company's American black employees would share if the case is certified as
a class action. That same day, Mr. Gary and Los Angeles lawyer Johnnie E.
Cochran Jr. filed a $ 1.5 billion damage suit against Coke in Fulton
County, Ga., state court on behalf of four black women.

Meanwhile, Mr. Clark and the other plaintiffs removed by Mr. Mehri remain
members of a prospective class in the original Coke suit. Said Mr. Gary,
"The road to final resolution is going to have to come through Willie Gary
and Johnnie Cochran." (The National Law Journal, July 31, 2000)

COSTCO WHOLESALE: Three Firms Accuse Discount Chain of Deceptive Ad.
Three firms have come together in a suit against Costco Wholesale Corp.,
accusing the discount chain of consumer fraud and deceptive advertising.
The complaint, filed in Superior Court in Seattle, accuses Costco of
knowingly advertising expired product rebates, both in its stores and on
its Web site.

The plaintiffs' lawyers are Kim D. Stephens and Beth E. Terrell, of
Seattle's Tousley Brian P.L.L.C.; Robert G. Eisler, of New York's Lieff,
Cabraser, Heimann & Bernstein L.L.P.; and David Landry, of Nemier, Toiari,
Landry, Mazzeo & Johnson, in Farmington Hills, Mich. Issaquah, Wash.-based
Costco did not return calls seeking comment.

Mr. Eisler said that it was premature to estimate damages but added that
the class action, Yellen v. Costco, No. 00-2-19433-1SEA, involves millions
of transactions that ranged from $ 1 to $ 15 per item. "There wasn't a
store we looked in that wasn't selling expired rebates," he said. (The
National Law Journal, July 31, 2000)

DELAINE EASTIN: Consent Decree Resolved Parents' Action over FAPE
A school district and a group of parents entered into a consent decree in
settlement of a class action brought by the parents, who claimed that the
district did not provide FAPE to students with disabilities. Emma C. v.
Delaine Eastin, 31 IDELR 206 (N.D. Cal. 09/12/99).

Under the consent decree, the district promised to implement a
comprehensive corrective action plan. In return, the parents promised not
to pursue any further action against the district.

The CAP required the district to pay for a court-appointed neutral monitor,
who would direct the implementation of the CAP and ensure that the district
provided FAPE and compensatory education to the students. Some of the
monitor's duties included the creation of a time-task calendar and budget,
selection of consultants, preparation of monthly reports to the parents and
the court, the development of CAP supplements and modifications, the hiring
of parent advocates and recommendations to the district regarding hiring

The district's other duties included paying for compensatory education and
compensatory claims where compensatory education was not appropriate,
paying the expenses of parent participation in CAP committees, providing
notice to class members regarding the remedies available to them under the
CAP and paying the parents' attorney's fees. The CAP also provided that
after May 2001 the parties could request the monitor to issue a
determination that the district has or has not implemented a system that
provided FAPE. After consideration of any comments from the parties
concerning the monitor's determination, the court could also issue an order
modifying the CAP or dismissing the action, as it deemed appropriate.
(California Special Education Alert, July 25, 2000)

EDUCATION DEPARTMENT: To Pay $4M for Black Employees Promotions Lawsuit
The Education Department will pay 4 million to settle a class action suit
by some 1,100 current and former black employees who charged they were
denied promotions.

The 1991 lawsuit claimed the agency's employment practices led to promotion
denial for blacks in competitive service in grades 11 through 15.

In settling the case, the ED promised a "systemic reform" of promotion
practices to "increase opportunities for advancement" and to improve
communications so black employees would better understand what promotions
were available. Education Secretary Richard Riley said the settlement
provides both relief to the aggrieved employees and "puts in place a strong
and constructive means for making available new job opportunities" for all
ED staffers. (Federal Human Resources Week, July 24, 2000)

FOAMEX INTERNATIONAL: Reaches Agreement on Shareholder Suits in DE & NY
Foamex International Inc. (Nasdaq: FMXI), the leading manufacturer of
flexible polyurethane and advanced polymer foam products, announced that it
had reached agreements in principle to settle all lawsuits brought by
stockholders of the company during the past two years in Delaware state
court and federal court in New York City.

The Delaware litigation relates to the unsuccessful attempts by Trace
International Holdings, Inc. to acquire Foamex in 1998 and 1999, as well as
to certain transactions entered into between Trace or Trace's affiliates
and the company. The federal lawsuit alleges that Foamex and certain of its
directors and officers misrepresented and/or omitted material information
about the company's financial condition between May 1998 and April 1999.

Under the terms of the settlement of the federal court litigation, members
of the class of shareholders who purchased Foamex shares between May 7,
1998 and April 16, 1999 will receive payments as defined in the agreement.
Payment to class members in the federal action, along with plaintiffs'
lawyers' fees in the federal and Delaware actions, will be paid by Foamex's
insurance carrier on behalf of the company.

Under the terms of the settlement of the Delaware litigation, Foamex agreed
that a special nominating committee of the Foamex Board of Directors,
consisting of Robert J. Hay as chairman, Stuart J. Hershon, John G.
Johnson, Jr., and John V. Tunney, will nominate two independent directors
to serve on the Foamex Board. The terms of the settlement also establish
the criteria for the independence of the new directors and require that
certain transactions with affiliates be approved by a majority of the
disinterested members of the Foamex Board.

Both settlements are subject to final documentation and court approvals,
which, if obtained, will resolve all outstanding shareholder litigation
against Foamex and its directors and officers. The settlements involve no
admissions or findings of liability or wrongdoing by Foamex or any
individual. Details about the terms of the settlements, including estimates
of the amounts payable to members of the class in the federal action, will
be mailed to affected stockholders by this Fall.

Foamex, headquartered in Linwood, Pennsylvania, manufactures comfort
cushioning for bedding, furniture, carpet cushion and automotive markets
and also manufactures high-performance polymers for diverse applications in
the industrial, aerospace, electronics and computer industries as well as
filtration and acoustical applications for the home.

FRONTIER INSURANCE: Bernstein Liebhard Files Securities Suit in New York
A securities class action lawsuit was commenced on behalf of purchasers of
the publicly-traded securities of Frontier Insurance Group, Inc. (NYSE:
FTR), between August 5, 1997 and April 14, 2000, inclusive (the "Class
Period"). A copy of the complaint is available from the Court.

The case is pending in the United States District Court for the Southern
District of New York, located at 300 Quarropas Street, White Plains, New

Named as defendants in the complaint are Frontier, Harry W. Rhulen
(President and Chief Executive Officer), Mark H. Mishler (Chief Financial
Officer), Patrick W. Kennedy (Executive Vice President)and Peter L. Rhulen
(Director). The case has been assigned to the Honorable Barrington D.

The complaint charges defendants with violations of 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 information concerning, among other things, the
Company's financial and operating condition and the Company's prospects.
For example, as alleged in the complaint, on December 4, 1997, Frontier
announced that it expected to boost the scope of its medical malpractice
business through the acquisition of Western Indemnity Insurance Company
("Western"). In fact, as revealed on April 14, 2000, the increase in the
Company's medical malpractice business resulted from the relaxation of
underwriting standards, loosening of policy terms and predatory pricing --
not simply the acquisition of Western's medical malpractice business.
Furthermore, on April 14, 2000, Frontier announced a revision to its
previously reported financial results for 1999, causing its stock price to
close at $1 per share, dramatically below its Class Period high of $38.6875
per share.

Contact: Mark Punzalan, Director of Shareholder Relations at Bernstein
Liebhard & Lifshitz, LLP, 800-217-1522, or 212-779-1414, FTR@bernlieb.com

K-TEL INTERNATIONAL: Announces Dismissal of Securities Lawsuit
K-tel International, Inc. (Nasdaq:KTEL) announced that on July 31, 2000 the
U.S. District Court granted a motion dismissing a class action lawsuit
brought against K-tel International, Inc. and certain of its executives on
behalf of shareholders of the Company. The granting of the motion to
dismiss bars further actions by the Plaintiffs. Plaintiffs' request to
amend the most recent complaint in order to refile the complaint in the
future was also denied.

K-tel International is a vertically integrated developer, marketer, and
distributor of entertainment and consumer products worldwide.

MICROSOFT CORP: Price of Software Windows ME Slashed
Facing accusations that he overcharges for software, Bill Gates is slashing
the price of Microsoft's latest version of Windows - even before it hits
the stores.

Windows Millennium Edition, also known as Windows ME, is an upgrade to
Windows 98 due in the stores on Sept. 14. The software will be
promotionally priced at $59.95 instead of $109 through Jan. 15, 2001.

Microsoft was due to file a motion on August 1 in a Baltimore court asking
a panel of federal judges to dismiss more than 60 class-action suits
alleging that Microsoft overcharged for previous versions of Windows, often
by as much as $40.

In its antitrust case against the software giant, the government has
already documented how Microsoft used its operating system monopoly power
to twist the arms of OEMs and computer manufacturers and make them pay
higher prices for Windows - depending on how cooperative they were.

The near half-price discount is designed to ensure Windows ME hits the
ground running with consumers. Although Win 98 and Win 98 Second Edition
upgrades are consistently high-selling products, having moved 4 million
units and generating $350 million in the process, off the shelf sales of
Win 98 started slowly compared to the blockbuster treatment the public
reserved for Windows 95.

"Microsoft has the marketing cash to promote this," said Steve Baker,
analyst at PC Data. "And the retailers benefit because it draws people into
the stores." Baker added that Microsoft is hanging back. "The major upgrade
will be when they come out with a consumer version of Windows 2000, which
is just for businesses at the moment."

Microsoft is keen that the suite of improved multimedia features in Windows
ME get on to the machines of customers as soon as possible.

These include Windows Media Player 7, which favors Microsoft's own
rights-managed audio and video files with which they are trying to
challenge the dominance of MP3, Real Networks and QuickTime.

The system is designed to boot up in less than 30 seconds. (The New York
Post, August 2, 2000)

MICROSOFT CORP: Price of Software Windows ME Slashed
Facing accusations that he overcharges for software, Bill Gates is slashing
the price of Microsoft's latest version of Windows - even before it hits
the stores.

Windows Millennium Edition, also known as Windows ME, is an upgrade to
Windows 98 due in the stores on Sept. 14. The software will be
promotionally priced at $59.95 instead of $109 through Jan. 15, 2001.

Microsoft was due to file a motion on August 1 in a Baltimore court asking
a panel of federal judges to dismiss more than 60 class-action suits
alleging that Microsoft overcharged for previous versions of Windows, often
by as much as $40.

In its antitrust case against the software giant, the government has
already documented how Microsoft used its operating system monopoly power
to twist the arms of OEMs and computer manufacturers and make them pay
higher prices for Windows - depending on how cooperative they were.

The near half-price discount is designed to ensure Windows ME hits the
ground running with consumers. Although Win 98 and Win 98 Second Edition
upgrades are consistently high-selling products, having moved 4 million
units and generating $350 million in the process, off the shelf sales of
Win 98 started slowly compared to the blockbuster treatment the public
reserved for Windows 95.

"Microsoft has the marketing cash to promote this," said Steve Baker,
analyst at PC Data. "And the retailers benefit because it draws people into
the stores." Baker added that Microsoft is hanging back. "The major upgrade
will be when they come out with a consumer version of Windows 2000, which
is just for businesses at the moment."

Microsoft is keen that the suite of improved multimedia features in Windows
ME get on to the machines of customers as soon as possible.

These include Windows Media Player 7, which favors Microsoft's own
rights-managed audio and video files with which they are trying to
challenge the dominance of MP3, Real Networks and QuickTime.

The system is designed to boot up in less than 30 seconds. (The New York
Post, August 2, 2000)

MICROSTRATEGY INC: Replaces CFO; Retains Veteran Auditor As Consultant
MicroStrategy Inc., the Vienna software maker whose stock has lost 91
percent of its value since it announced in March that it overstated years
of revenue and earnings, replaced its chief financial officer on August 1.

In the first high-level management change since disclosing its accounting
problems, the company said Mark S. Lynch had moved from the CFO's job to
the new position of vice president and chief administrative officer.

The new chief financial officer is Eric Brown, who joined the company in
February and has been serving as chief financial and administrative officer
of its Strategy.com subsidiary.

In a statement issued after the markets closed, MicroStrategy also said it
is retaining as a consultant Timothy C. Clayton, a veteran auditor who is
also an associate of board member Jonathan Ledecky. Clayton will serve as
acting director of internal audit and financial controls. He will "lead the
company's development of an internal audit function," the statement said.

MicroStrategy said in a news release that it "has strengthened its
management team."

A source close to MicroStrategy, who asked not to be identified, said of
Clayton's hiring: "The company's board of directors felt there should be
more adult supervision at the company."

A MicroStrategy spokesman said Clayton would serve the purpose that chief
executive Michael J. Saylor had in mind in April when he announced the
company was searching for "a noted expert on contracts accounting and
revenue recognition issues to join the company."

Clayton has served as chief financial officer of Building One Services, a
business founded by Ledecky to provide janitorial, electrical and other
services for office buildings. Ledecky recruited Clayton in 1997 from the
accounting firm Price Waterhouse, now PricewaterhouseCoopers, where Clayton
had worked for 21 years. Clayton spent nine of those years as an audit
partner at the accounting firm, and his clients "included a number of
software industry companies," MicroStrategy said.

PricewaterhouseCoopers, MicroStrategy's longtime outside auditor, pushed
the company to restate past financial results in March. When the results
were restated, what was originally reported as a $ 12.6 million profit for
1999 became a $ 33.7 million loss. Until March, PricewaterhouseCoopers had
attested that the original financial statements conformed to generally
accepted accounting principles.

Clayton's appointment is part of MicroStrategy's effort to "reestablish
confidence with the financial community," the source close to the company
said. "If you're trying to reestablish confidence with your auditors, you
reach into their world."

In his new role, Lynch "will be focused upon improving the overall
performance of the company's various global business units," MicroStrategy
said. His responsibilities will include information systems and real estate
functions, the company said.

New CFO Brown was previously chief operating officer of a division at
Electronic Arts, an entertainment software company. Before that, he worked
at DataSage Inc., an Internet firm that he co-founded, and for Pillsbury's
Haagen-Dazs ice cream operation.

Saylor and Lynch were not available for comment, MicroStrategy spokesman
Michael Quint said. Quint praised Lynch, saying of the former chief
financial officer: "Mark's contribution to MicroStrategy has been
incredibly valuable."

Lynch's pay has not changed.

The spokesman would not say who was responsible for the accounting errors,
citing "pending litigation." MicroStrategy faces a class-action suit by
shareholders alleging it "perpetrated a massive fraud on the investing
public." The Securities and Exchange Commission is also investigating the
circumstances that led to the restatement.

No one at MicroStrategy has been fired over the accounting matters, Quint
said. (The Washington Post, August 2, 2000)

MONSANTO COMPANY: Fd Ct Rejects Novel Legal Attack on Biotech Seeds
Byline: The managing partner of the New Orleans-based law firm Frilot,
Partridge, Kohnke & Clements, L.C. He heads the firm's Products Liability
and Complex Litigation practice areas, and represents international and
national companies in complex products liability and consumer class
actions. Kerry J. Miller is a member of Frilot, Partridge, Kohnke &
Clements, L.C., where his practice is focused on complex and class action

In what appears to be the first class certification decision involving
genetically modified organisms, Chief Judge F. A. Little, Jr. of the United
States District Court for the Western District of Louisiana recently denied
certification of a purported nationwide class of soybean growers. Johnny
Byone, et al. v. Monsanto Company, et al., United States District Court,
Western District of Louisiana, Alexandria Division, No. 99-1277A. The Byone
case involved claims against the provider of the transgenic trait and
various soybean seed company defendants alleging that herbicide tolerant
soybean seeds caused yield loss. The court rejected the attempt to certify
a nationwide class and held that because the production of a soybean crop
is so individualized in nature, plaintiffs could not meet their burden of
showing that the transgenic technology at issue caused yield loss on a
class-wide basis.

The Byone ruling is important not only for other class actions against
genetically modified agricultural products that have yet to reach the
certification stage, but also adds to a significant trend of decisions in
the federal court system denying class certification when the product at
issue is "user-specific." "User- specific" products liability cases are
distinct in that the use or success of the product is heavily dependent on
external or environmental factors. The Byone decision leaves little doubt
that genetically modified agricultural products cases are the ultimate
"user-specific" cases and should rarely, if ever, receive class treatment.
The Byone ruling also is instructive for future user- specific products
liability cases because of its proper focus on the difficulty of proving
causation, liability, and damages on a class- wide basis.

                        The Product at Issue

The soybean seeds at issue contained a patented gene technology known as
"Roundup Ready." Monsanto Company developed the Roundup Ready gene for
certain agricultural products including soybean seed. Roundup Ready is a
transgenic trait that has been bred into hundreds of different varieties of
soybean seed. The gene technology causes soybean plants to be tolerant of
the effects of Roundup herbicide when applied in conformance with label
instructions, allowing growers to apply Roundup herbicide on or around
soybean plants without damaging them. Roundup Ready technology is intended
to provide safe and cost-effective weed control to growers. The technology
saves money, time, and labor, and increases safety because its broad-
spectrum weed control system requires only one herbicide for weed control,
thereby eliminating the use of residual herbicides and tank mixes of
herbicides. Sales of Monsanto transgenic technology for the year 2000 is
estimated at $330 million. Rocky Ground for Monsanto? The New Spin-off Must
Sell Investors on Ag Biotech, Bus. Wk., June 12, 2000 at 72.

Monsanto licenses its gene technology to many different seed companies,
which in turn incorporate it into hundreds of soybean varieties. After
inserting the gene technology into different varieties of seed, the seed
companies then package and sell the resulting Roundup Ready soybean seed.
In order to properly use Monsanto's patented technology in soybean seeds,
each grower purchasing Roundup Ready soybean seeds must enter into a
licensing agreement with Monsanto. Thousands of farmers have done so.

                          The Byone Decision

The named plaintiffs brought the class action on behalf of all soybean seed
growers in the country who purchased soybean seeds in 1997 or 1998 that
contained the Roundup Ready gene technology. The plaintiffs alleged that
Monsanto and the other seed company defendants falsely advertised the yield
performance of Roundup Ready soybean seed for the 1997 and 1998 crop
seasons. Plaintiffs claimed that the Roundup Ready technology in the seed
reduced their crop yields.

Plaintiffs sought certification under Rule 23(b)(3) of the Federal Rules of
Civil Procedure. To certify a class under Federal Rule of Civil Procedure
Rule 23(b)(3), the case must meet the following prerequisites: (1) joinder
of claims is impracticable due to size; (2) common questions of law or
fact; (3) similarity in claims and defenses; (4) representatives and
counsel to class will protect all members' interests; (5) common questions
of law and fact predominate; and (6) the class action is superior to other
available methods for the fair and efficient adjudication of a controversy.

In their filings seeking class certification, the plaintiffs asserted that
a common nucleus of operative fact existed. This was demonstrated by: the
use of the same gene in all soybean seeds; the use of the same licensing
agreement among all soybean growers; the use of the same advertising
materials; the alleged failure of the Roundup Ready seed to perform as
advertised; and Monsanto's alleged failure to disclose the risks associated
with using the seeds.

The court focused its analysis on the "predominance" requirement of Rule
23(b)(3). At the outset of its predominance analysis, the court recognized
that the "critical inquiry" in the case was whether the Roundup Ready
genetic traits actually caused plaintiffs' alleged yield loss. According to
Judge Little, to find the defendants liable under this inquiry, plaintiffs
would have to prove that the Roundup Ready trait, not environmental or any
other factors, caused the alleged reduction in their yields.

The court held that common issues of fact did not predominate, stating that
a multitude of possible factors could contribute to yield reduction, such
as planting conditions, soil conditions, weather conditions, drainage
problems, plant diseases, and weed and insect management. The court
concluded that these factors "individualized" each potential class member's
claim. The multitude of individual factors also made it "extremely
difficult" to ascertain the precise cause of the plaintiffs' alleged yield
loss. Consequently, the plaintiffs failed the "critical inquiry" because
they could not prove that Roundup Ready technology caused the alleged crop

Byone also recognized that the defendants were entitled to challenge
plaintiffs' claims individually. Indeed, defendants' rights to assert
affirmative defenses on each claim would make class action treatment
"extremely burdensome" because those defenses depended on facts peculiar to
each class member's case. For example, each claimant would have faced
evidence at trial of environmental factors and a myriad of other discrete
cultivation practices employed by each grower that could have adversely
affected yields. Because the number and significance of individual defenses
would have overwhelmed any common issues, predominance was defeated on this
basis as well.

                       Other User-Specific Cases

The Byone decision breaks new ground and establishes sound precedent in
class actions involving genetically modified agricultural products. The
rationale behind the Byone decision, however, is not confined to
genetically modified agricultural products cases. On a more general level,
Byone demonstrates the tension between the requisite cohesion among claims
in a class action and the fact that some products cases are simply too
individualized to be adjudicated on a class-wide basis.

Products liability class actions often hinge on the commonality,
typicality, and predominance class action requirements. The United States
Supreme Court has observed that commonality and typicality "tend to merge"
and test whether the named plaintiffs' claims and the claims of the class
are sufficiently "interrelated" to protect the rights of the absent class
members (members of the class not named in the lawsuit). Amchem Products,
Inc. v. Windsor, 521 U.S. 591 (1997). Predominance focuses on the number
and significance of common claims and defenses, in contrast to individual
claims and defenses. A series of recent federal court class action
decisions have explicitly or implicitly recognized that the individual
nature of some products make class action treatment very difficult.

Not surprisingly, medical products are often subject to distinct
environmental factors (often the medical conditions and nuances of the
recipients of the devices), and consequently, courts have denied class
certification. The most significant medical products class action is the
decision of the U.S. Court of Appeals for the Sixth Circuit in In re
American Medical Systems, Inc., 75 F.3d 1069 (6th Cir. 1996). In re
American Medical Systems involved a proposed Rule 23(b)(3) class of penile
prosthesis recipients asserting products liability claims. The use and
success of the prosthetic devices was subject to a "variety of factors"
including surgical error, improper use of the device, anatomical
incompatibility, infection, and discrete psychological problems. The court
denied certification, finding too great a range of user sensitivity to the
injury-causing agent (the prosthetic devices). In a ruling ahead of its
time, the Ninth Circuit reached essentially the same conclusion in In re
Northern District of California, Dalkon Shield IUD Products Liability
Litigation, 693 F.2d 847, 854 (9th Cir. 1982). Dalkon Shield involved the
use of intra-uterine devices in women. The court held that the individual
case histories of the women involved different negligence, strict products
liability, breach of warranty, fraud, and adequacy of warning issues. On
the typicality requirement, the court opined that:

    [i]n proving liability under a negligence theory, ... the plaintiffs
have to prove not only their injuries, but that ... defendant owed them a
duty of care and also what [the standard of care was], if [it was]
breached, and most important if the breaches proximately caused the
plaintiffs' varying injuries.... To prove liability under a breach of
warranty theory, representative plaintiffs must exist for each type of
warranty, assurance, or medical advice each plaintiff received. The
difficulty of meeting the typicality requirement seems obvious.

Certification has also been rejected in constructed structures and building
products cases. In Jeannides v. U.S. Home, 114 F.R.D. 29, 30 (N.D. Ill.
1987), plaintiffs brought an action against a contractor based on the
contractor's poor workmanship in constructing various residences. The court
held that typicality was lacking because of the diverse location, design,
and construction of each house. The court also noted that the proof the
class representatives would need to present to win their case would not
provide the same proof prospective class members would need to present.
Further, class representatives and other class members would not rely on
the same construction documents, and the contractor's defenses would differ
and would be unique to each homeowner.

In In re Masonite Corp., 170 F.R.D. 417 (E.D. La. 1997), the court denied
class certification because of variations in the product itself (wood
siding) and because the "siding user's conduct individualize[d] each case."
These significant variations in the use and success of the product made a
class action "patently inappropriate." Significantly, in the production of
the wood siding, Masonite used different wood, different chemical
additives, and different manufacturing processes producing products of
different thickness, width, texture, color, and finish. Also, the location
and climate surrounding each claimant's home varied, producing different
moisture absorption rates. These individualized facts successfully
countered the named plaintiff's generalized claim of generic product
defect. The court in Ilhardt v. A.O. Smith Corp., 168 F.R.D. 613, 619 (S.D.
Ohio 1996), reached a similar decision finding that common issues did not
predominate where multiple factual variations existed regarding models,
installation procedures, product use, and environmental factors surrounded
the silos at issue.

Like Byone, the individual nature of the products in the cases cited above
was instrumental in court determinations denying class certification. These
rulings make sense. Certainly, the federal and state rules permitting class
actions are not intended to be all-inclusive. User-specific products cases
simply do not fit within the class action parameters. Forcing these types
of cases into a class action format flouts the fundamental notions of proof
of causation, liability, and damages, which cannot be adjudicated on a
class-wide basis in user-specific cases.

       Why the Recent Trend and What Does the Future Hold?

The catalysts for the recent trend of certification denials in
user-specific products cases are two landmark 1996 decisions: Castano v.
American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) and In re American
Medical Systems, Inc., 75 F.3d 1069 (6th Cir. 1996). The Castano and
American Medical Systems decisions require federal district courts faced
with class certification decisions to look past the plaintiffs' allegations
in support of class certification and undertake a detailed evaluation of
the case with the objective of understanding the claims, defenses, relevant
facts, and applicable law before granting certification. This evaluation
involves a detailed and rigorous analysis into whether the facts, claims,
and defenses of a particular case satisfy the class action prerequisites.
In simplest terms, Castano and American Medical Systems compels federal
district courts to focus on whether the case can be tried as a class
action. If it cannot, class certification is not in order.

Before the Castano and American Medical Systems' decisions, many courts
accepted the plaintiffs' allegations in support of certification, no matter
how superficial, as true in making class certification determinations. See,
e.g., Blackie v. Barrick, 524 F.2d 891 (9th Cir. 1975); Olenhouse v.
Commodity Credit Corp., 136 F.R.D. 672, 679 (D. Kan. 1991). The analytical
change called for in Castano and American Medical Systems is critical in
user-specific products cases because of the severe chasm between the often
superficial and conclusory allegations made in support of class
certification and the realities of the case. In Byone, the plaintiffs
contended in a generic and oversimplified manner that the requisite
commonality was met for several reasons discussed supra, page After
conducting a rigorous analysis into the claims, defenses, and facts of the
case set out in the affidavits and other materials accompanying Monsanto's
brief opposing class certification, Judge Little rejected these
contentions, properly recognizing that the case was too individualized to
handle as a class action. In Byone, Judge Little went beyond the
plaintiffs' allegations and confronted the real issues presented by the
case, under the aegis of the class action requirements.

As long as courts conduct a rigorous analysis into the real facts, claims,
and defenses, user-specific cases, such as those involving genetically
modified organisms, should not be certified as class actions. The issues
presented in user-specific cases are not conducive to the requisite
commonality required in class actions. Despite the recent trend of class
certification denials in user- specific cases, the plaintiffs' class action
bar appears to show no reluctance in bringing these types of cases as class
actions. More decisions like Byone are therefore needed to quell the
unwarranted use of the class action device in user-specific products
liability. (Legal Backgrounder, July 28, 2000)

MP3 COM: Trial for Recording Companies' Suit Set for End of August
On January 21, 2000, ten major recording companies filed a copyright
infringement lawsuit against MP3.com in the United States District Court
for the Southern District of New York.

The complaint alleged that MP3.com, in connection with certain content
available in its My.MP3.com service, made unauthorized copies of
approximately 45,000 audio CDs in violation of the Copyright Act. The
complaint further alleged that offering the new My.MP3.com service, which
allowed a user to listen, via the Internet, to the tracks of certain
commercial audio CDs of his or her choosing, constituted unauthorized
copying and willful infringement of plaintiffs' copyrighted sound
recordings. Plaintiffs seek damages (including statutory damages of up to
$150,000 per violation) and injunctive relief prohibiting MP3.com from
operating its My.MP3.com service or any other service that uses
reproductions of plaintiffs' copyrighted sound recordings.

In February 2000, MP3.com filed an answer to the complaint denying each of
the substantive allegations therein, and the plaintiffs moved for summary
judgement on the issue of liability.

On April 28, 2000 the court granted plaintiffs'; motion for summary
judgement and held that MP3.com was liable for infringing plaintiffs'
copyrights, and the litigation proceeded with discovery on the issues of
willfulness and damages. On May 10, 2000, MP3.com voluntarily disabled the
plaintiffs' content within the My.MP3.com service.

In June 2000, MP3.com entered into settlement and licensing agreements with
BMG Entertainment and Warner Music Group (see discussion below), and the
six (6) plaintiffs related to such parties agreed to dismiss with prejudice
their portion of the lawsuit.

In July 2000, the remaining four (4) plaintiffs moved for summary judgement
on two issues: (i) that the unit of measurement for statutory damages
should be an individual recording, or song (as opposed to a CD, regardless
of the number of individual recordings or songs embodied on that CD) and
(ii) that MP3.com willfully infringed plaintiffs' copyrights. MP3.com
simultaneously moved for summary judgement on two issues: (A) that MP3.com
did not willfully infringe plaintiffs' copyrights and (B) that plaintiffs
are entitled to recover statutory damages only for the infringement of
those copyrights evidenced by the twelve (12) copyright registrations
actually produced by such plaintiffs during the discovery phase of the
litigation. A hearing on each of the foregoing motions is scheduled to be
heard on July 28, 2000, and a trial on the issues of willfulness and
damages is currently scheduled to commence on August 28, 2000.

In June 2000, MP3.com entered into settlement and license agreements with
Warner Music Group and BMG Entertainment, which together represented six of
the ten major recording companies that filed the copyright infringement
lawsuit on January 21, 2000. The settlement agreements provide for a
settlement amount to be paid in cash by MP3.com in exchange for a release
from Warner Music Group, BMG Entertainment and their affiliated entities
(as defined in the settlement agreements) of all claims related to the
January 21, 2000 lawsuit and the My.MP3.com service. MP3.com made no
admission of wrongdoing in connection with these settlements. Subject to
certain affirmative obligations of MP3.com and other terms and conditions
regarding the implementation of the My.MP3.com service, the license
agreements permit MP3.com to utilize recordings owned by Warner Music Group
and BMG Entertainment as part of the My.MP3.com service. The license
agreements have terms of approximately five to ten years, and provide for
on-going royalty payments based on the greater of (i) a specified
percentage of net revenues generated from the My.MP3.com service or (ii) a
specified amount accrued each time a licensor recording is streamed from
My.MP3.com. In addition, the licenses provide for on-going royalty payments
based on the number of times a licensor recording is added to My.MP3.com

MP3.com has pursued and continues to actively pursue settlement discussions
with the remaining major record company plaintiffs from the January 21,
2000 lawsuit, as well as other individuals and entities related to the
additional litigation matters mentioned herein. The decision whether to
enter into settlement and/or license agreements with each party will be
based upon a number of factors related to both the lawsuits and MP3.com's
business in general.

MP3.com says that on May 10, 2000, the Company voluntarily disabled the
major recording companies' content within the My.MP3.com service.

MP3.com claims that it has obtained license agreements permitting the use
of recordings from BMG Entertainment and Warner Music Group, but cannot
guarantee that MP3.com will be able to secure similar license agreements
from any other recording company. Similarly, MP3.com has not yet secured
any publishing license or other affirmative clearance (whether by
litigation or otherwise) to utilize within the My.MP3.com service the
compositions embodied in the recordings owned by any recording company
(including BMG Entertainment and Warner Music Group), nor can we guarantee
that any such license or clearance will ever be obtained.

MTI TECHNOLOGY: Berman, DeValerio Charges with Securities Fraud in CA
MTI Technology Corp. (Nasdaq: MTIC) was charged with misleading investors
in a securities class action with respect to the financial condition of the
Company. The case, filed by the San Francisco and Boston based Berman,
DeValerio & Pease LLP, www.bermanesq.com, is pending in the United States
District Court for the Central District of California on behalf of all
persons and entities who purchased or otherwise acquired the common stock
of MTI during the period January 26, 2000 through and including July 27,
2000 (the "Class Period").

The action charges that MTI and certain of its officers violated the
securities laws by issuing a series of false and misleading statements
concerning the Company's financial condition and business prospects during
the Class Period. In particular, the Complaint charges that MTI failed to
disclose the implementation of a revised compensation plan which required
the Company to pay out more than $3 million in commissions and bonuses
during the fourth quarter 2000 causing MTI to report a loss for that
quarter. Further, the Company failed to disclose that sales to dot-com
companies were waning and that it was unable to collect payments for
products sold to dot-com companies, resulting in a substantial earnings
shortfall for both the fourth quarter 2000 and the first quarter 2001. As a
result of these revelations, MTI's stock collapsed, falling from a Class
Period high of $54 3/8 to as low as $4 per share. Moreover, during the
Class Period, but prior to the disclosures, MTI executives sold their stock
for proceeds of over $12.3 million. Plaintiff seeks to recover damages on
behalf of all those who purchased or otherwise acquired MTI common stock
during the Class Period.

Contact: Jennifer L. Finger, Esq. of Berman, DeValerio & Pease LLP,
800-516-9926; or Jennifer Abrams, Esq. of Berman, DeValerio, Pease &
Tabacco, 415-433-3200

NATURE'S BOUNTY: Paul C. Whalen Files Securities Lawsuit in New York
The Law Office of Paul C. Whalen, P.C. announces that it has filed a class
action lawsuit on July 28, 2000, on behalf of purchasers of the securities
of Nature's Bounty, Inc. (Nasdaq: NBTY) between January 27, 2000, and June
15, 2000, inclusive. A copy of the complaint filed in this action is
available from the Court.

The action, numbered 00-CIV-4402, is pending in the United States District
Court for the Eastern District of New York, located at Two Uniondale
Avenue, Uniondale, NY 11553, against defendants NBTY and certain of its
officers and directors. 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 certain known adverse
factors to the market between January 27, 2000 and June 15, 2000. The
Company also noted that "the weakness in the pound sterling is currently
expected to have a negative impact upon (its) financial statement arising
out of the operation of its Holland & Barrett stores in the United
Kingdom." In response to these announcements, the price of NBTY common
stock fell dramatically by 36% from $11.06125 per share to $7.06125 per

Contact: The Law Office of Paul C. Whalen, P.C., webmaster@manhasset.net

OIL COMPANIES: Ct of Appeals Affirms Dismissal of Price-Fixing
Question presented: Was summary judgment for the defendants warranted in an
antitrust suit against companies engaged in refining oil and marketing
gasoline to California consumers where the defendants presented
declarations denying improper agreements or conspiracies and the plaintiffs
presented no direct evidence indicating the existence of such agreements or

Facts: Theresa Aguilar and others instituted a class action suit against a
number of companies engaged in refining oil and marketing gasoline to
California consumers. The plaintiffs alleged that the defendants illegally
agreed and conspired among themselves to restrict the capacity to refine
and produce cleaner-burning gasoline ("CARB gas") and to fix CARB gas

Following extensive discovery, the defendants moved for summary judgment.
The defendants relied on senior manager declarations from most of the
defendant companies. According to the declarations, CARB gas refining
capacity, production, and pricing were the result of independent decisions
by each company, acting in its own self-interest; they were not the result
of any agreements or conspiracies. They also asserted that a web of
two-party exchange agreements between various companies was established for
independent business reasons that did not include restricting availabity of
CARB gas. Finally, they denied that use of common consultants among the
defendant companies served as a conduit for exchanging confidential

In response, the plaintiffs asserted that improper agreements to restrict
production and supply and to fix prices could be inferred from planning
activities by the defendants that preceded the introduction of CARB gas.
They offered no direct evidence, but asserted that the agreement could be
inferred from several categories of circumstantial evidence, including
evidence of common motivation, the use of information exchange agreements
and practices, spot marketing, and common industry consultants.

The trial court granted summary judgment, after concluding that the
plaintiffs had presented no direct evidence to support a reasonable
inference that the defendants' CARB gas capacities, production, or pricing
resulted from an agreement or conspiracy.

The plaintiffs moved for a new trial. The trial court granted the motion,
after concluding that it erroneously shifted the burden to the plaintiffs
to raise a triable issue of material fact.

The defendants appealed from the new trial order. The plaintiffs
cross-appealed, contending that if new trial was not warranted, then the
order granting summary judgment was made in error.

The court of appeal reversed the new trial order and affirmed the summary
judgment. The court held that a new trial order following summary judgment
must be reversed if summary judgment was properly granted and that, in this
case, summary judgment was warranted because the plaintiffs offered no
evidence to refute the defendants' summary judgment declarations.

With respect to the new trial order, the appellate court was not persuaded
that the plaintiffs were unaware of the burden-shifting, noting that the
trial court had alerted the parties, at oral argument, that it was focusing
on the plaintiffs' showing. More importantly, there was no authority for
the proposition that a trial court, in considering a summary judgment
motion, must rule on specific evidentiary objections or advise on

Moving to what it saw as the larger issue, the court concluded that a new
trial order following summary judgment must be reviewed in the same manner
as would be a denial of a summary judgment motion, unless the issue on
appeal of the new trial order is whether the summary judgment was properly
granted or denied. No such post summary judgment factual issues were
presented in this case.

Under federal law, it is well established that in the context of antitrust
litigation there are limits on the range of permissible inferences that may
be drawn from ambiguous circumstantial evidence; plaintiffs must present
evidence that excludes the possibility of independent action by alleged
conspirators. The court found those federal principles to be consonsant
with California law.

The court then addressed the trial court's summary judgment ruling. First,
the court found that the burden did shift to the plaintiffs. With respect
to the defendants' manager declarations, the court interpreted current
authority to require that declarants occupied positions in which they were
competent to deny the existence of agreements based on their personal
knowledge. That standard was met in this case, based on evidence that key
pricing, capacity, and productions decisions were made at less than the
highest corporate level. Thus, the burden to prove the agreements shifted
to the plaintiffs.

Finally, the court reviewed the plaintiffs' showing and found it lacking.
The court found no evidence of an agreement to limit capacity, finding
inadequate the plaintiffs' showing of circumstantial evidence as to shared
motive and opportunity. No evidence was offered directly relating to an
alleged agreement to coordinate production. There was no non-speculative
evidence that the two-party exchange agreements were illegal or that their
use was not consistent with the defendants' claim of legitimate business
purpose. The court rejected the plaintiffs' claim that their expert's view
of the exchange agreements sufficed to raise a triable issue of fact. Last,
the court rejected a variety of circumstantial evidence regarding the
alleged agreement to fix prices.

Counsel for petitioner Theresa Aguilar: Timothy Cohelan, Cohelan & Khoury,
701 C St., San Diego, CA 92101-5307, 619-595-3001

Counsel for respondent Atlantic Richfield Corporation: David Noonan, Post
Kirby Noonan & Sweat, 600 W. Broadway, Ste. 1100, San Diego, CA 92101-3302,

Supreme Court Case No. S086738

Case: D030628; Cal.Ct.App., 4th Dist., Div. 1; 78 Cal.App.4th 79, 92
Cal.Rptr.2d 351, 00 C.D.O.S. 827

Petition filed: March 10, 2000

Review granted: May 17, 2000

Justices voting for review: Brown, Kennard, Mosk, Werdegar

Procedure: Petition for review after reversal of judgment with directions.
(California Supreme Court Service, June 30, 2000)

PHILIPPINE OFFICIALS: Negligence Alleged in Deaths at Garbage Dump
Survivors of a mountain of garbage that collapsed on a squatter community,
killing at least 218 people, filed a $ 22 million class-action lawsuit
Tuesday accusing the local government and private waste contractors of

The Payatas dump in Quezon City outside Manila, and Smokey Mountain,
another dump, have long symbolized the Philippines' wrenching poverty.

In their complaint, the plaintiffs alleged negligence by the Quezon City
government, the Metropolitan Manila Development Authority, which supervises
garbage disposal, a garbage contractor and two real estate companies who
claim the property where the dump is located.

The complaint said the dump was established despite warnings by experts of
health and environmental problems it would cause. The dump also violated
environmental laws and zoning and health regulations, they said.

President Joseph Estrada ordered the dump closed after the tragedy July 10.
(The News and Observer (Raleigh, NC), August 2, 2000)

RELIANCE GROUP: Leucadia Pulls out; Lawsuits and Sell-off Continue
Now that Leucadia National Corp. (NYSE: LUK) pulled out of the deal to
purchase Reliance Group Holdings Inc. (NYSE: REL), the dismantling and
sell-off of Reliance continues.

Reliance, which wrote $170 million in workers' comp premium in California
last year, has already agreed to sell off its large and medium accounts
books of commercial property casualty business. With deteriorating results
and facing about $500 million in holding company debt this year, analysts
say, Reliance is spiraling hard and most market observers don't know how
much, if any, of the company will continue on.

Reliance two years ago saw its stock trading at a nice $20 a share, but
last week it closed at just above 18 cents per share.

Numerous class action suits against Reliance have also been filed alleging
that management made false and misleading statements regarding the
financial success and record growth, resulting in the stock price being
inflated. Such suits are expected in these circumstances.

Reliance is now seeking permission to allow the transfer of some funds from
its insurance entities to its parent holding company to facilitate the
payment of debt coming due next month. The question is if regulators will
allow funds that could be used for paying claims to be siphoned off from
the ailing companies.

Analysts are also surprised that regulators haven't moved in to take over
Reliance, considering its feeble state. There's much talk in the industry
that a conservation is likely by authorities in Pennsylvania, Reliance's
state of domicile. It would certainly stop funds from being removed from
the insurers.

A Pennsylvania Department of Insurance spokeswoman would neither comment
when asked about an impending takeover nor would she confirm that the
Pennsylvania DOI is in talks with the insurer. She says that's department

                             Leucadia Bails

The Leucadia deal fell through July 14, about a month after it had been
entered into. Leucadia wavered after Reliance's stock price fell down below
$1 a share. The company's original offer was $293 million - or about $2.55
a share.

As part of the deal Leucadia would have assumed Reliance's debt. Reliance
stated that it was unable to reach agreement with Leucadia on a transaction
that Reliance believed would be fair to its equity and debt holders and
recognize the intrinsic value of the Company. Leucadia would have paid off
more than $700 million of Reliance debt, including $237.5 million of bank
debt due in August. That payment was due in March, but Reliance

Reliance's other debts include $291.7 million of bond debt due in November,
and a $172 million bond debt due in 2003.

Last year Reliance ended up losing $310 million on $2.5 billion in premium.
The year prior Reliance earned $326 million on $2.3 billion premium.

The company's total combined ratio over 10 lines of business was 124
percent. Its workers' comp combined ratio was a respectable 103 percent.
Reinsurance combined ratio was 129 percent and commercial auto 140 percent.

Last year reinsurance accounted for 10 percent of its premium, or $247
million. Reliance was also the underwriter for buy-down reinsurance
policies sold through Unicover Managers Inc. After it became clear that
many primary workers' comp carriers were pricing their policies below cost,
Reliance at the beginning of the year severed those agreements, leading to
the loss taken last year.

Workers' comp last year was its largest line with $457 million written,
compared with $304 million in 1998. Reliance also increased reserves in
1999 by some $300 million.

Analysts aren't sanguine on Reliance and they've shown their displeasure in
recent ratings downgrades. A.M. Best Co., for example last month knocked
Reliance down to a B from a B++, knocking it out of the "secure" range.
"Our downgrade was largely based on the weak holding company and we don't
anticipate that they will make their upcoming payments on the debt," says
Brett Lawless, senior financial analyst with A.M. Best Co. "It's not our
policy to have a 'secure' rating on a company that is in default."

Some are almost nostalgic for the profitable years. "It all began in the
second quarter of last year when they took a reserve hit," says Matthew
Coyle, analyst with Standard & Poors. "They announced thereafter the
Unicover issue and add to that a lack of confidence out there. Time is the
enemy now."

                        In Class Action Traction

A number of class action lawsuits have been filed against the company and
management for violations of Securities and Exchange Act violations. The
suits generally accuse Reliance of issuing "materially false and misleading
information concerning, among other things, the company's expectations of
recovery on its reinsurance contracts."

One suit filed by Schiffrin & Barroway alleges that Reliance Group "filed a
financial statement with the SEC for the fiscal 1998 operations and stated
that the company's reinsurance contracts were valid and, that it expects to
recover the full amount of such coverage." It goes on: "This statement is
false and misleading. Reliance Group Holding Inc. knew because they were
notified, prior to making the statement, that several reinsurance companies
terminated their obligations to the Company."

Indeed Reliance may not have known what it was getting into when it allowed
Unicover Managers Inc. to sell buy-down workers' compensation reinsurance
coverage for Reliance. This coverage brought retention down to as low as
$10,000 per claim, meaning that the primary carrier pays for the first
$10,000 of every claim and the reinsurer - Reliance - covers the rest.

Unfortunately, primary carriers under-priced their policies and the buck
was going to be passed to reinsurers and their reinsurers. When Reliance
saw the writing on the wall late last year it went about the business of
severing all of the reinsurance contracts.

One suit alleges that Reliance failed to reflect expected reinsurance
business losses of $150 million as a charge to income under Generally
Accepted Accounting Principles.

During a class period between Feb. 8, 1999 and May 10, 2000 the suits
allege that Reliance's stock price was artificially inflated as a result
management's actions.

Other New York City class action law firms include, Rabin & Peckel LLP.;
Stull, Stull & Brody; Milberg Weiss Bershad Hynes & Lerach LLP; Weiss &
Yourman; Spector, Roseman & Kodroff; and Cauley & Geller LLP.

                              The Selloff

Reliance starting selling off assets as early as last year when it sold its
38 percent ownership in Zenith National Insurance Corp. (NYSE: ZNT) for
$184.1 million to Fairfax Financial Holdings Ltd. Zenith had been one of
the crown jewels.

But starting in Spring the company started peddling books of its own
business and the Leucadia deal was just one of many. "The company has gone
into a mode of either we sell this business or we just lose it," Coyle

Earlier this year Reliance sold its surety operations to Travelers Property
Casualty, a division of Citigroup (NYSE: C), that transaction grossed
Reliance $ 580 million in cash, $300 after taxes on a statutory basis.

The Hartford Financial Services Group, Inc. (NYSE: HIG) in June agreed to
acquire the in-force, new and renewal business of Reliance Group's
financial products business, as well as the majority of its excess and
surplus (E&S) lines. The business also includes directors and officers
liability and professional liability policies. Hartford estimates the
business to be worth $250 million. A price has not been named.

Reliance has also agreed to sell the renewal rights to its risk management
business, which also includes Reliance's large account workers' comp
business. It also includes deductible programs and self-insured retention

Some of what remains includes its middle market business and its small
market workers' comp business which is mainly in Reliance's Cybercomp
division, which leans heavily towards Internet transactions. "It's safe to
say that we are seeking buyers for our other business," says one Reliance
insider who asked not to be identified. (Workers' Comp Executive, August 2,

ST PAUL, MN: Search for Wrongly Flunked Kids in Math Test Begins
Attorneys interested in filing a class action on behalf of students who
were wrongly flunked in the state's basic-skills math test have contacted
some of their parents.

Meanwhile, lawmakers are considering the costly step of allowing parents
and students easier access to their graded tests.

Nearly 8,000 students were told they failed the math part of the state's
basic skills test when they actually passed.

In all, about 47,000 students who took the test in February and April this
year received the wrong scores because of errors made by the Assessments
and Testing Division of National Computer Systems, a private Eden
Prairie-based company hired by the state.

As many as 336 seniors may have been kept from graduating because of the
error and thousands of others may have been required to take summer

Marty Swaden, the Mendota Heights father whose persistence uncovered the
mix-up in the results, said that he has been contacted by several

But Swaden, an attorney who specializes in divorce and family law, said he
isn't interested in dragging his 15-year-old daughter through such a case
because she's a sophomore and wasn't as affected. He did say he thinks
seniors denied diplomas because of scoring mistakes by National Computer
Systems Inc. have a case.

"I don't think compensation is inappropriate," Swaden said. "If money can
improve these children's lives, it might help in the future."

NCS has admitted its mistake and offered $1,000 in tuition reimbursement to
each senior wrongly told that he or she had failed the test.

While he's still making up his mind about what the Legislature's response
should be to the testing fiasco, Sen. Chuck Wiger, DFL-North St. Paul, said
that he sees potential for a class-action suit. Wiger, an attorney and a
member of the K-12 Education Budget Division, participated in a Senate
committee hearing Monday on the testing blunder and came away believing NCS
was negligent because it did not follow safeguards called for in its

Parents may also gain more access to their children's state tests as a
result of the botched scores.

Some states, such as New York, allow parents and students to see the tests
as soon as they are graded by teachers. But most states, including
Minnesota, have strict security rules for the tests so questions can be
recycled in subsequent years.

With better access, parents would get more information about where their
kids messed up on the tests, and potential test errors could be discovered
more quickly. But such a change would cost taxpayers more because the state
would have to develop new tests each year.

"I remember when I got tests back - it was quite a learning experience,"
said state Sen. Larry Pogemiller, the chairman of the Senate education
committee. "If the test is important enough for every kid to take, it may
be worth that extra expense."

Pogemiller, DFL-Minneapolis, called Monday's hearing on the scoring gaffe.
The issue of opening access to the tests is expected to be revisited by
lawmakers later this month when Pogemiller calls a second hearing on the
scoring errors.

Christine Jax, state education commissioner, told lawmakers that allowing
open access to the tests would cost $250,000 to $300,000 per test each

"We could do that, but it would be time-consuming and costly," Jax said.

Currently, parents can get access to the tests, but must go to the state
Department of Children, Families and Learning headquarters in Roseville and
agree not to disclose the contents. In the past two years, four parents
have made such a request, Jax said.

Meanwhile, school districts began in earnest Tuesday to try to track down
those thousands of students affected by the fiasco, some pulling in
guidance counselors from summer break as they pored over lists provided by
the state.

"Our number one priority is making sure we're accurate," said Melissa
Winter, a spokeswoman for the Minneapolis district, with 5,151 eighth-
through 12th-graders affected by the error - including 594 "new passes."
(The Associated Press State & Local Wire, August 2, 2000)

TOMS RIVER: Named in Lawsuit Alleging Ciba of Contaminating Dover Water
A second class-action lawsuit filed against a chemical company many
residents say exposed them to polluted water and contaminated air also
blames a local water company for failing to protect the public water

Four attorneys who filed a class-action lawsuit earlier this year claiming
the former Ciba-Geigy Corp. contaminated Dover Township's water filed the
second lawsuit on behalf of more than 200 people.

The latest lawsuit claims 201 people lost loved ones, suffered emotional
distress, or live in fear of contracting cancer because Ciba was negligent
in disposing of hazardous wastes from its dye manufacturing operations.

It also claims United Water Toms River, formerly known as Toms River Water
Co., failed to protect the purity of the public water supply. The earlier
class-action lawsuit, filed in May, did not name the water company.

Both lawsuits cite a Feb. 29 public health report that concluded that
residents may have been exposed to traces of dye and nitrobenzene from
Ciba-Geigy that seeped into three wells used by the Toms River Water Co.

Organic dyes, epoxy resins and specialty chemicals were manufactured for
nearly 40 years on the site, which was formerly known as Toms River
Chemical Co. Solid and liquid waste from the manufacturing was dumped in 20
different places at the site, contaminating soil and ground water.

Declared a federal Superfund site in 1982, the land has come under
increased scrutiny since 1996, when the state revealed an unusually high
rate of some childhood cancers in the town.

Between 1979 and 1995, 90 Dover Township children were diagnosed with
cancer, or about 23 more than researchers would have expected.

The May lawsuit seeks payment from the company for medical monitoring to
detect potential health problems in people exposed to polluted water.

The second lawsuit also seeks the monitoring fund, adds the water utility
as a defendant, and seeks compensatory and punitive damages for the 201
people, who include those who have lost family members to cancer and other

Spokespeople for both companies said officials there had not yet seen the
newest lawsuit.

United Water spokesman Richard Henning told the Asbury Park Press of
Neptune for Wednesday's editions that the company's water "has met and
continues to meet all the standards for safe drinking water set by the
state and federal governments."

Donna M. Jakubowski, a spokeswoman for Ciba Specialty Chemical Corp., the
successor to Ciba-Geigy, said the company intends to defend its position
that the company is not responsible for people's illnesses. (The Associated
Press State & Local Wire, August 2, 2000)

WATER CONTAMINATION: Victims of Parasite Seven Years Ago Get Checks
Checks are in the mail to hundreds of victims who consumed city water
contaminated by the cryptosporidiosis parasite seven years ago. More than
540 people will receive payments ranging from about $240 to more than
$18,000 for those who lost a relative to illness caused by the parasite,
said Michael Pollack, an attorney for the plaintiffs.

The settlements include 51 death claims and the total disbursement is
nearly $1.4 million, he said. Each of the victims consumed Milwaukee's
drinking water and became ill between March 24 and April 10, 1993, he said.
Under the terms of the settlements approved in March, the General Chemical
Corporation will pay $1.5 million and the City of Milwaukee will pay up to
$100,000 to cover the costs of the settlement.

Water from one of the city's two treatment plants was contaminated with
cryptosporidiosis, a parasite that attacks the intestines. The case was
certified as a class action for settlement purposes. (Chicago Tribune,
August 1, 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
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