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             C L A S S   A C T I O N   R E P O R T E R

             Friday, August 11, 2000, Vol. 2, No. 156

                              Headlines

AUTOHAUS ON EDEN: Red Light for Lawsuit over $299 Car Deal Hidden Fee
BEHR PROCESS: Consumer of Wood Coating Seeks Nationwide Action in CA
BEHR PROCESS: WA Consumers of Wood Coating Products Seek More Damages
BRIDGESTONE/FIRESTONE: Moves to Settle Suits; More Claims Seen
BRIDGESTONE: Says 50 Individual US Suits Filed But No Class Action Yet

BROKER-DEALERS: 2d Cir Defers to SEC; Dismisses Suit Re Fee Disclosure
CHRISTIE'S: Former Chairman Alleged of Ignoring Price-Fixing Suit
CITIES: Susman & Watkins Files MN Suit over Housing Gross Revenue Bonds
FIRESTONE: A Takeover With Problems for Bridgestone, the NY Times Says
FIRESTONE: Florida Attorney Files Class-Action Suit for Tire Owners

FIRESTONE: News and Observer Says NC May Have to Wait a Yr for Exchange
HOLOCAUST VICTIMS: Polish Government Wants No Tax on Compensation
INMATES LITIGATION: Court-Ordered Secrecy Clouds Plight of Mentally Ill
KNOLL PHARMACEUTICAL: Announces Settlement for Synthroid Marketing Suit
LA DEQ: Suit Challenges Permit for Power Plant

MICROSOFT CORP: "They Were Getting Something for Nothing?" Pollak Asked
NETSCAPE: Changes Its Download Software After Privacy Suit
NOS COMMUNICATIONS: Complex calculations on TCUs Lead to High Prices
OMNIBANK: Sp Ct May Soon Decide on Force-Placed Protection Liability
QUALITY SYSTEMS: Counsel Disqualified in CA; Investor Will Seek New One

QUALITY SYSTEMS: Reaches Agreement to Settle Derivative Complaint in CA
QUALITY SYSTEMS: Securities Claim in CA Stayed Pending Other Claims
TOSHIBA CORP.: Citibank Says Logistical Problems Slowed Claims Proces
UNIVERSALSCIENCE.COM: SEC Cracks Down on So-Called Free Stock Offering
WWII LITIGATION: Slave Labor Suit Filed in CA against Japanese Firms

                               *********

AUTOHAUS ON EDEN: Red Light for Lawsuit over $299 Car Deal Hidden Fee
---------------------------------------------------------------------
A state appeals court panel criticized a Chicago lawyer for rushing to
court in a dispute over an allegedly fraudulent $ 299 charge related to his
purchase of an automobile.

The 1st District Appellate Court upheld a lower court's dismissal of Bruce
M. Hayman's lawsuit seeking class action status against Autohaus on Edens
Inc. in Northbrook and Toyota Motor Credit Corp. The appeals court found
that Hayman's allegations against the defendants were moot because
Autohaus' check for $ 299 to Hayman dated Nov. 25, 1998, represented a
refund of the total amount he demanded.

Hayman refused to accept the check, court documents state. Shortly
thereafter, a lawsuit was filed in the Cook County Circuit Court on
Hayman's behalf alleging common law fraud and conversion.

Plaintiff's exceptional haste in making contact with his lawyer is not
enough to create a right to recover compensatory damages in this case,"
Justice Warren D. Wolfson wrote for the three-judge panel. Even if we were
to seriously consider the plaintiff's claim that he was entitled to
interest for the three days Autohaus held his $ 299, the amount would be
too trivial to justify the administration of civil justice."

E. Steven Yonover, the attorney for the plaintiff, responded, One of the
purposes of class actions is to protect a group of people who may suffer
minimal damages and that the cost of recovery of each individual action
would not justify an individual going forward with litigation.

This opinion, as I read it, allows the defendants to engage in this kind of
behavior by charging unknowing purchasers of vehicles $ 299 where no right
of contract permits it," Yonover said. Furthermore, the decision does not
right the historical wrong the defendants have engaged in with other
similarly situated purchasers who have not discovered the wrongful charge."

Yonover, who heads a Chicago law firm bearing his name, said he plans to
ask the Illinois Supreme Court to review the decision.

Stuart Berks, a lawyer for Autohaus, said that the auto dealer has not
imposed the $ 299 for some time. I'm sure they concluded that the charge
was inappropriate, but not illegal," he added.

Berks welcomed the Appellate Court's decision.

A lot of class actions arise out of somewhat de minimis situations," said
Berks, a partner with Deutsch, Levy & Engel Chtd. in Chicago. I think this
decision goes a long way toward establishing a principle that where there
is no real injury, the courts are not going to entertain such claims."

The underlying dispute arose from Hayman's November 1995 agreement with
Autohaus to lease a 1996 Toyota Camry for three years. The agreement listed
the estimated value of the vehicle as $ 17,314.

The least expired on Nov. 21, 1998, and Hayman exercised an option to buy
the Camry. The cash price of the vehicle on the purchase agreement was $
17,613, representing $ 299 more than listed in the lease agreement.

Hayman paid the higher amount and later discovered the discrepancy. He then
called Autohaus requesting an explanation.

On Nov. 23, 1998, an Autohaus finance agent represented to Hayman that the
$ 299 amount was a service fee," the appeals court decision said. Hayman
protested the hidden inclusion of the charge and demanded return of the $
299.

Hayman was told that he could take the car with payment of the service fee
or could return the vehicle for a full refund, according to the decision.
An angry Hayman then contacted Yonover, who started to prepare a lawsuit
against Autohaus.

In the meantime, Autohaus must have had second thoughts about its treatment
of its customer," the panel said, adding that two days later the company
sent Hayman a check for $ 299 refunding the full amount of the disputed
service fee.

Hayman received the check on Nov. 28, 1998, but refused to accept the
money. A month later the lawsuit was filed.

Yonover asserted that Hayman's exposure of the improper service charge
resulted in Autohaus returning the $ 299.

Lawyers for Toyota Motor Credit contended that the company had no
connection to Autohaus' imposition of the $ 299 charge.

The defendants sought dismissal and following a Sept. 8, 1999, hearing
Circuit Judge Lester D. Foreman dismissed Hayman's second amended complaint
seeking class action status. Foreman held that Hayman failed to state any
cause of action because Autohaus had tendered the $ 299 check to Hayman
before litigation started.

Hayman then appealed to the 1st District, which rejected his request to
reinstate the lawsuit.

Because full payment, not a compromise, was offered to Hayman, thus mooting
the controversy, plaintiff had no right to recover compensatory damages in
the trial court," the panel said. He suffered no damage."

Justices Robert Cahill and David Cerda joined in the seven-page opinion.
Bruce Hayman v. Autohaus on Edens Inc., d/b/a Northbrook Toyota, and Toyota
Motor Credit Corp., No. 1-99-3539.

Martin J. O'Hara, a lawyer representing Toyota Motor Credit, said attorneys
for the company were pleased with the decision. O'Hara is an associate with
Quinlan & Crisham Ltd. who worked on the case along with Thomas M. Crisham,
a principal in the firm. (Chicago Daily Law Bulletin, August 9, 2000)


BEHR PROCESS: Consumer of Wood Coating Seeks Nationwide Action in CA
--------------------------------------------------------------------
The consumer in Washington has recently filed a complaint against Behr and
the Company in the San Francisco County, California Superior Court, which
has not yet been served. The complaint seeks nationwide class action
certification for all individuals (other than residents of the State of
Washington) who purchased the subject products, and seeks unspecified
compensatory and punitive damages. The Company is investigating the
allegations of the letter and the complaint and believes that there are
substantial grounds for denial of class certification and that there are
substantial defenses to these claims.


BEHR PROCESS: WA Consumers of Wood Coating Products Seek More Damages
---------------------------------------------------------------------
Masco Corp reveals in its report filed with the SEC that a civil suit is
pending in Superior Court in the State of Washington against Behr Process
Corporation, a wholly owned subsidiary of the Company. The case involves
four exterior wood coating products, which represent a relatively small
part of Behr's total sales. The plaintiffs allege, among other things, that
after applying these products, the wood surfaces suffered excessive
mildewing in the unique humid climate of western Washington. The trial
court has conditionally certified the case as a class action, including in
this case all purchasers of the products who reside in nineteen counties in
western Washington. Behr denies the allegations.

Although Behr believes that the subject products have been purchased by
thousands of consumers in western Washington, consumer complaints in the
past have been relatively small compared to the total volume of products
sold.

In May, 2000, the court entered a default against Behr as a discovery
sanction. Thereafter, the jury returned a verdict awarding damages to the
named plaintiffs. The damages awarded for the eight homeowner claims
(excluding one award to the owners of a vacation resort) totaled
approximately $183,000, and ranged individually from $14,500 to $38,000.
The awards were calculated using a formula based on the product used, the
nature and square footage of wood surface and certain other allowances.
Under the verdict, the same formula will be used for calculating awards on
claims that may be submitted by the subject purchasers of these products.

The plaintiffs have filed a motion seeking in addition treble damages up to
$10,000 per claim under the Washington Consumer Protection Act. The
plaintiffs have also filed a motion seeking an award of attorneys' fees. At
this time, the Company is not in a position to estimate reliably the number
of class members, the number of claims that may be filed or the awards that
class members may seek. Behr believes that there have been numerous rulings
by the trial court that constitute reversible error and that there are
valid defenses to the lawsuit.

Behr believes that there are substantial grounds for reversal and will
appeal this lawsuit.

Behr has tly received a letter from a consumer, on behalf of himself and
all others similarly situated, alleging that Behr has violated the
California Consumer Legal Remedies Act in the sale of exterior wood coating
products. The letter requested that Behr pay all costs required to repair
or replace the wood surfaces of individuals in the United States on which
the products have been applied, and that Behr disgorge all of the profits
received from the sale of the products.


BRIDGESTONE/FIRESTONE: Moves to Settle Suits; More Claims Seen
--------------------------------------------------------------
Bridgestone/Firestone Inc. has moved quickly to settle or begin
negotiations to resolve at least 100 lawsuits filed by motorists and their
passengers who were killed or injured in crashes of vehicles riding on
tires that the company recalled, according to lawyers in the cases.

In each of the cases settled so far, Bridgestone/Firestone has imposed
stringent gag orders that prevent plaintiffs from disclosing what they were
paid to settle the cases or evidence obtained in the lawsuits, attorneys
said. Ford Motor Co., which has sold the tires on its most popular
sport-utility vehicle, has been named in most of the lawsuits and is also
settling many of the cases, sometimes before Bridgestone/Firestone has come
to terms, the lawyers said.

August 9's announcement of the largest tire recall in history is likely to
accelerate the filing of such lawsuits, bring more victims to the fore and
put the company at a disadvantage while trying to settle the cases out of
court.

Extending the recall over the next year could expose motorists using the
6.5 million tires to grave danger and Bridgestone/Firestone to significant
future losses, said Sean Kane, a partner at Strategic Safety, an Arlington
consulting firm that advises lawyers and publishes a newsletter on
vehicle-safety issues.

Thus far, Kane's investigation has found 50 deaths involving the
tires--four more than confirmed by the National Highway Traffic Safety
Administration. The company's plan to recall the tires in phases risks more
lives, he alleged. The first phase will get tires to consumers in Southern
states by Oct. 1.

"To drag it out for a year, you can anticipate there will be additional
death and injury and will open them up to punitive damages simply because
the company has acknowledged a defect and they haven't taken every action
to take those tires off the road immediately," Kane said.

Christine Karbowiak, vice president of public affairs for Bridgestone/
Firestone, rejected the assertion that consumers were at risk and defended
the phased recall, saying it posed no "significant possibility of
additional injury." Regarding the lawsuits, Karbowiak provided little
information. Only one case has gone to trial in state court in Arizona.
Bridgestone/Firestone won that case in a jury verdict, she said.

Fifty-one cases are still pending, Karbowiak said, but she declined to say
how many of the cases have been settled. "We really don't discuss pending
litigation," Karbowiak said.

Bruce Kaster, an Ocala, Fla., lawyer who has represented people who have
sued over Firestone tires for more than a decade, said there are 107
related cases, in about 90 of which he has confirmed a direct link to the
tires recalled.

The lawsuits allege errors in the manufacture and design of the tires,
particularly mistakes involving the adhesion of rubber to the tires' steel
belts and failure to use safety-belt designs to prevent the steel from
separating from the rubber in the tires.

"The problem is generic, lack of adhesion between the tread and upper steel
belt to the lower steel belt and carcass" of the tire, Kaster said.

Two national class-action lawsuits, one in Texas and another in Florida,
have been filed in the past few weeks. The first was filed by the law firm
of Harris & Watts in Corpus Christi, Tex., and seeks compensation for
consumers who bought tires, but not recovery for injuries sustained in
those crashes. Roger Braugh, the Texas lawyer who filed the suit, believes
injury and death cases should be filed separately.

With the recall, Braugh expects the pace of settlements to quicken.

"My prediction is that Firestone, because of the publicity, will settle the
meritorious claims," Braugh said, "and pick a case where tire abuse is
prominent and try to regain credibility with the public. But they'll
quietly settle the majority of the claims."

Gary Mason, of Washington's Cohen, Milstein, Hausfeld and Toll, which filed
the other class-action suit in Florida on Monday, said that for years, the
problem with the tires had not become widely known, in part because of the
gag orders.

"These cases get quietly litigated, documents are sealed and they get
settled confidentially," Mason said.

A majority of the cases have been filed in the South and Southwest, in
states such as Florida, Georgia, Texas, Arizona and California. Warm
weather is thought to be a factor in the problem with the tires.

Many of the cases involve gruesome traffic deaths. Ten-year-old Athena
Lingenfelser was killed when the tire on her mother's Ford Explorer blew
out while driving on a freeway in Duval County, Fla., and the vehicle
flipped two and a half times. Lingenfelser, who was wearing a seat belt,
was partially thrown from the Explorer and her head was crushed. Her mother
sued last month in Jacksonville, Fla.

The plaintiffs' attorneys also plan to seize on Bridgestone/Firestone's
decision to begin recalling the tires a year ago overseas, first in the
Middle East, then in Thailand, Malaysia, Venezuela, Colombia and Ecuador.

"The same tire was recalled in seven foreign countries in August of 1999,
meaning this actually could have been prevented," said Tad Griffin, a
lawyer representing the girl's mother. "Why would Ford and Firestone recall
the tire in seven foreign countries and do nothing about it in the United
States? Prompting the question: Are we chopped liver over here?"

Tab Turner, a Little Rock lawyer who has 10 cases pending against
Bridgestone/Firestone, said that the problems found with the specific model
of tire are prevalent with other tires too. "I don't believe the recall
adequately covers the defective tires," Turner said. (The Washington Post,
August 10, 2000)


BRIDGESTONE: Says 50 Individual US Suits Filed But No Class Action Yet
----------------------------------------------------------------------
Bridgestone Corp vice president Tadakazu Harada said the company faces 50
lawsuits by U.S. individuals following a U.S. government probe into the
possibility that the company's tires caused fatal traffic accidents.
However, he added that there are no class action suits as yet.

Earlier, Bridgestone said it will book an extraordinary loss of 350 mln usd
in 2000 in connection with the recall of 6.55 mln all-terrain tires.

Harada declined to comment on the total amount being sought in the lawsuits
but added that the company's U.S. unit, Bridgestone/Firestone Inc, will
cover all legal expenses. "We understand the risk of lawsuits as well as
(consumer) campaigns" against Bridgestone/Firestone tires, he said, adding:
"We will try to minimise the impact."

He said 193 accidents involving the tires that are being recalled have been
reported since 1995, with 80 pct of these cases involving Ford Explorer
model vehicles.  The accidents occurred because of cracks in the tires that
caused blowouts as the vehicles were being driven, he said. "I'm sure no
cracks were made in the production process in the Decatur plant (in
Illinois)," Harada said, adding that the company has no plans to stop
production there.

However, he added that the company is still investigating with Ford and the
U.S. National Highway Traffic Safety Administration the actual cause of the
accidents and will immediately start investigating any problems in the
plant.

In Japan, some 300-500 Ford Explorer vehicles have been sold, he said,
adding that the company will contact Ford Japan to decide whether to recall
these vehicles. "In Japan, there have been no accidents reported so far,"
Harada said.

Bridgestone managing director Hiroshi Kanai said the company has no plan to
change its dividend payment at present as a result of the lawsuits. (AFX -
Asia, August 10, 2000)


BROKER-DEALERS: 2d Cir Defers to SEC; Dismisses Suit Re Fee Disclosure
----------------------------------------------------------------------
The U.S. Court of Appeals for the Second Circuit has affirmed the dismissal
of two proposed class actions against certain broker-dealers that allegedly
failed to disclose the receipt of fees from money market funds for
"automatic sweeps" of uninvested money in shareholder accounts. The court
deferred to the Securities and Exchange Commission's finding that the funds
themselves adequately disclosed the payments, even though they did not name
the actual brokers who received them. Press et al. v. Quick & Reilly Inc.
et al., Nos. 97-9153 and 97-9159 (2d Cir., July 10, 2000).

"Although we are skeptical that the disclosure in the prospectuses would
actually alert an investor that his broker-dealer received such payments,
we cannot say the SEC's determination regarding disclosure is plainly
erroneous," said the court. It concluded that any omissions regarding the
payment of fees were not material as a matter of law and could not sustain
the allegations of securities fraud made by the plaintiffs.

The defendants included Quick & Reilly Inc., Bear Stearns & Co. Inc., the
Pershing Division of Donaldson Lufkin & Jenrette Securities, and National
Financial Services Corp. These broker-dealers "sweep" uninvested balances
in their client accounts to certain money market funds and receive payment
from the funds for the aggregated assets invested over time.

According to the plaintiffs, while the money market funds selected by the
defendants for automatic sweeps are among the poorest performers in the
industry, the broker-dealers chose these funds due to the fees that they
receive. The essence of their complaint was that the defendants
intentionally failed to tell their clients about the arrangement (in
violation of Rules 10b-5 and 10b-10 of the Exchange Act) because it
presented a potential conflict of interest.

Under Rule 10b-10, broker-dealers are to disclose the source and amount of
any remuneration. The Southern District of New York concluded that the
defendants failed to comply with the SEC's disclosure requirements.
However, it also ruled that the funds' prospectuses, which specify that
"monies are paid to broker-dealers and other financial intermediaries for
their distribution assistance," negated any inference of fraudulent intent.

When its decision was appealed, the circuit court requested an amicus
curiae brief from the SEC. The agency specifically addressed whether the
disclosures by the funds failed to c omply with Rule 10b-10 but refused to
address the allegations of fraud due to the case-specific nature of the
claim.

The SEC noted that although the broker-dealer defendants did not make any
direct disclosure about the fees, they could rely on the disclosures in the
fund prospectuses to satisfy Rule 10b 10 obligations. The SEC said that a
broker-dealer is no t required to repeat information contained in a
prospectus and, contrary to the lower court's ruling, the defendants had
not violated any disclosure requirements.

According to the SEC, the issue was whether "the difference between the
information that was disclosed and the greater information that plaintiffs
claim should have been disclosed is material."

Since the court adopted the SEC's conclusion that the defendants' Rule
10b-10 disclosure obligation was satisfied by the fund prospectuses, it
could not find that the broker-dealers omitted material information under
the fraud provisions of federal securities laws.

"By concluding that the disclosures were sufficient, the SEC must have
determined, as a policy matter, that the broker-dealer defendants' conflict
of interest was sufficiently disclosed to plaintiffs," concluded the court.

The plaintiff-appellants were represented Stuart D. Wechsle r, Gary P.
Weinstein and Frederick W. Gerkens III of Wechsler Harwood Halebian &
Feffer and by Andrea B. Bierstein of Kaufman Malchman Kirby & Squire in New
York.

The defendants-appellees were represented by Robert Pietrzak, Judith
Welcom, Elizabeth Storch and Maria D. Melendez of Brown & Wood; Stephen L.
Ratner and David A. Florman of Rosenman & Colin; James N. Benedict, Mark A.
Kirsch, Judith M. Reily and James P. Masterson of Rogers & Wells in New
York. (Derivatives Litigation Reporter, July 31, 2000)


CHRISTIE'S: Former Chairman Alleged of Ignoring Price-Fixing Suit
-----------------------------------------------------------------
The Times (London) reports that American lawyers are seeking a default
ruling against Sir Anthony Tennant, the former chairman of Christie's
International, alleging he has ignored a price-fixing lawsuit that names
him as a defendant.

Christie's has been co-operating with an American federal investigation
into alleged price-fixing in the art market in exchange for a conditional
amnesty. Both Christie's and Sotheby's were hit with lawsuits brought on
behalf of customers when the inquiry became public knowledge.

Class action lawyers have now asked a federal judge to enter a default
ruling against Sir Anthony because, they claim, he has failed to respond to
their lawsuit.

The Wall Street Journal quoted an affidavit submitted by a London detective
agency that had been employed to serve Sir Anthony with the complaint. The
affidavit claimed that the agency attempted to serve Sir Anthony as he
tried to get into his Saab car, but he allegedly shouted "Go away" and
threw the papers on to the street.

The default ruling can be the first stage in obtaining a default judgment,
which means that a defendant is found liable without further proceedings.
The Wall Street Journal reported that Sir Anthony has vigorously denied
involvement in price-fixing. The US inquiry into the two auction houses is
continuing.

The class action lawsuit claims that, from as early as 1992, Christie's and
Sotheby's conspired to fix the buyer's commission at 15 per cent for items
that sold for less than $ 50,000 at auction. For items that were sold for
more than $ 50,000, the two auction houses fixed the rate at 15 per cent
for the first $ 50,000 and 10 per cent of anything above that.

The auction houses also face an allegation that, since 1995 or earlier,
they fixed the commission paid by customers selling items at auction.

Although several class action law firms are involved, Boies, Schiller and
Flexner has been nominated to lead the lawsuit. David Boies, one of the
firm's principals, is widely known for his high-profile role in the
Department of Justice's successful antitrust case against Microsoft, which
has so far resulted in a court order mandating a break-up of the software
company, although this is subject to appeal.

Sir Anthony's stint as chairman of Christie's lasted from 1993 until 1996;
he is now an adviser to Morgan Stanley Dean Witter. Currently on holiday,
he refused to comment. A spokeswoman for Christie's also refused to
comment.

After the inquiry was launched, Alfred Taubman, chairman of Sotheby's, and
Diana Brooks, chief executive, resigned. Both are among those named as
defendants in the class action suit. Sotheby's is facing pressure from Ron
Baron, its biggest outside shareholder, over Mr Taubman's continued
involvement with the company. (The Times (London), August 10, 2000)


CITIES: Susman & Watkins Files MN Suit over Housing Gross Revenue Bonds
-----------------------------------------------------------------------
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Franklin High Yield Tax-Free Income Fund, a series of the Franklin Tax-Free
Trust, a Massachusetts trust, Plaintiff,

vs.

The City of Baudette, the City of Badger, the City of Roseau, and the City
of Thief River Falls, Defendants

and

Ord Matek and Betsy S. Matek, on behalf of themselves and all others
similarly situated, Intervenor Plaintiffs.

Court File No. 98-CV-1576 JMR/RLE

SUMMARY NOTICE OF PENDENCY OF CLASS ACTION AND PROPOSED SETTLEMENT

TO: All Persons who purchased or otherwise acquired the Northwest Minnesota
Multi-County Housing and Redevelopment Authority Governmental Housing Gross
Revenue Bonds (Pooled Housing Program) Series 1995 on or before June 23,
1998, or who have been assigned any claim with respect to said bonds,
except Franklin High Yield Tax-Free Income Fund and such otherwise eligible
persons who: (i) have sold all such bonds; (ii) do not own any of such
bonds as of May 25, 2000 (the date of the Settlement Agreement described
herein); and (iii) have no legal or equitable interest in any such bonds as
of May 25, 2000.

You are hereby notified pursuant to Rule 23, Fed. R. Civ. P., and order of
the Court, that this case has been certified as a class action on behalf of
the following Class:

All persons or entities who purchased or otherwise acquired Northwest
Minnesota Multi-County Housing and Redevelopment Authority Governmental
Housing Gross Revenue Bonds (Pooled Housing Program) Series 1995 ("Series
1995 Bonds") at any time on or before June 23, 1998, subject to the
exclusions set forth below. The Class also includes Persons to whom the
above-described Persons have assigned claims relating the Series 1995
Bonds.

Excluded from the Class are:

  *  Franklin High Yield Tax-Free Income Fund;

  *  Otherwise eligible Persons who: sold all of their Series 1995 Bonds
     prior to May 25, 2000; do not own any Series 1995 Bonds as of May
     25, 2000; and do not have any legal or equitable interest in any
     accounts holding Series 1995 Bonds as of May 25, 2000.

You are further notified that all parties to this lawsuit have entered into
a settlement of this matter, subject to the Court's approval. The
Settlement provides, among other things, that (a) each of the defendant
Cities will be obliged to make payments towards operating deficits that may
be incurred on the housing projects for which the Bonds were issued, not to
exceed annual limits, for each fiscal year from 2000 through 2027, and (b)
the Cities' insurer will make a cash payment. Class Members who do not
request exclusion from the Class will be releasing claims related to the
lawsuit, the Bonds and the housing projects. Intervenor Plaintiffs' Counsel
believe that the Settlement is fair, adequate, reasonable and in the best
interest of all Class Members.

The Settlement is in part contingent upon approval of a supplemental trust
indenture by Bondholders who hold at least 51% of the principal amount of
all outstanding Bonds.

You are further notified that a Fairness Hearing will be held before the
Court on November 3, 2000, at 9:00 a.m., in the United States District
Court for the District of Minnesota, Minneapolis, Minnesota, Judge James M.
Rosenbaum presiding, in order to determine:

1. Whether the proposed Settlement of this action on the terms and
    conditions set forth in the Settlement Agreement is fair, adequate
    and in the best interest of the Class, and should be approved;

2. Whether an Order of Final Judgment and Dismissal in the form
    specified in the Settlement Agreement should be entered; and

3. Whether the applications of the Class Counsel and Franklin High
    Yield Tax-Free Income Fund for attorneys' fees and reimbursement of
    litigation costs and expenses should be approved.

The Court may adjourn the Settlement Hearing without further notice to
members of the Class.

This notice is only intended as a summary. For additional information
regarding the settlement of this lawsuit, please request a detailed Notice
of Pendency of Class Action and Proposed Settlement, copies of which have
been mailed to all known Class Members. Requests should be directed to:

John R. Wylie Susman & Watkins Two First National Plaza Suite 600 Chicago,
Illinois 60603

In addition, you may review the Complaints, the Settlement Agreement, the
Second Supplemental Indenture and other documents filed in this action at
the office of the Clerk, United States District Court for the District of
Minnesota, Room 202, 300 South Fourth Street, Minneapolis, Minnesota.

PLEASE DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE

Contact: Susman & Watkins John R. Wylie Two First National Plaza, Suite 600
Chicago, IL 60603


FIRESTONE: A Takeover With Problems for Bridgestone, the NY Times Says
----------------------------------------------------------------------
Ever since the Bridgestone Corporation bought Firestone in one of the many
high-profile Japanese takeovers of the 1980's, the United States tire maker
has been a problem child.

Bridgestone, the world's second-largest tire producer after the Goodyear
Tire and Rubber Company, paid $2.6 billion for Firestone in 1988 and spent
billions more to expand its faltering operations, reduce heavy debt and
trim fat. The initial results were disappointing as Firestone sustained big
losses, failed to increase its market share, and suffered from a bitter
labor dispute.

But just as Firestone seemed to be growing up, with its tire sales to auto
dealers accelerating in recent years, the company announced a recall on
Wednesday of 6.55 million tires that are the subject of a United States
government safety investigation into at least 46 deaths.

The tire recall, though not nearly as extensive as the recall of 14 million
tires that Firestone undertook in the 1970's is expected to cost
Bridgestone as much as $500 million, according to estimates by industry
analysts, and is potentially damaging to the Firestone brand name. Some
analysts have predicted that the company will suffer a loss in market
share, especially since many of the tire accidents under investigation
involved Ford Explorer sports utility vehicles that are popular with
families.

Rumors of the tire recall, which have been circulating in the business
community in Tokyo for several days, sent Bridgestone shares tumbling in
heavy trading on Wednesday in anticipation of a company announcement in the
United States.

Bridgestone's stock declined 8.2 percent, to 2,075 yen, or about $19.23 at
current exchange rates on Wednesday. In early trading on Thursday, it fell
another 11 percent, to 1,834 yen.

The company's shares have dropped 17 percent since reports emerged last
week that consumer groups considered the tires unsafe, and that Sears,
Roebuck & Company, a leading American retailer, had stopped selling the
tires in question. Bridgestone has made 48 million of the tires since it
began manufacturing them in 1990.

Analysts said that Bridgestone, which had operating profit of $2.18 billion
in the fiscal year ended March 31, could easily absorb the initial impact
of the recall but some expressed concern about the long-term impact, which
they said would be largely determined by the outcome of the government's
investigation and whether Firestone could escape the stigma of a tainted
brand.

The inquiry is being conducted by the National Highway Traffic Safety
Administration, which has received 270 complaints, including reports of 46
deaths and 80 injuries, concerning Firestone truck tires.

Firestone has recalled tires before. In 1978, the company recalled 14
million of its 500-series tires that suffered tread separations and
blowouts. Government regulators also fined the company $500,000 for
concealing the safety problems. Partly as a result of the recall, Firestone
suffered financial problems and was later acquired by Bridgestone.

Bridgestone, which has headquarters in Tokyo, declined to comment on the
recall, referring inquiries to its Firestone division in the United States.
Bridgestone sought to portray the situation as largely an American problem,
but Firestone accounted for 40 percent of the parent company's consolidated
sales last year.

Some analysts have criticized Japanese companies for being slow to respond
when their American operations faced problems that resulted in public
relations nightmares.

Last year, the Toshiba Corporation agreed to a $1 billion settlement of a
class-action lawsuit contending the company, had sold five million
defective laptop computers in the United States since 1987.

In 1997, the Mitsubushi Motors Corporation agreed to a number of steps to
improve job opportunities for women and minorities, but only after the
United States government brought one of the country's largest sexual
harassment suits against its American subsidiary and civil rights advocates
threatened a car boycott.

Daiwa Bank, one of the biggest banks in Japan, also has been haunted by a
failure to fix problems at its American operations. In 1996 Daiwa pleaded
guilty to criminal charges in the United States that its managers had
covered up more than $1 billion in trading losses at the bank's New York
branch over many years. (The New York Times, August 10, 2000)


FIRESTONE: Florida Attorney Files Class-Action Suit for Tire Owners
-------------------------------------------------------------------
A Hollywood attorney filed a lawsuit late Wednesday in Miami-Dade Circuit
Court, requesting class-action status for thousands of Florida Firestone
tire owners, seeking a refund plus punitive damages.

The suit, filed by attorney Darren Blum, charges Bridgestone/Firestone and
Ford Motor Co. with negligence; intentional, reckless or negligent
misrepresentation; breach of warranties; and strict liability, linked to
Firestone ATX, ATX II and Wilderness tires. The suit is filed on behalf of
lead plaintiff Jeffrey Margolis, a Miami-Dade teacher who has owned a Ford
Explorer since December 1999. It is the latest in a barrage of lawsuits
covering product liability and wrongful death already filed against
Firestone and Ford nationwide, including at least 20 in Florida.

"The companies made a mistake, screwed up, and they need to pay, and pay
enough, so people can get tires of their choice, within what is
reasonable," Blum said. "They knew or should have known that the tires were
defective." Blum said he is seeking a refund of the cost of the tires,
because he does not trust that the recall will provide car owners with
competing brand tires, though Firestone said it will. He said the cost of a
comparable set of tires is about $ 500.

"Driving your car is very important for people and families," Blum said,
"and to be driving and worrying whether your tire is going to blow out is
nerve wracking, and people are going to have to wait."

Tampa products liability attorney Omar F. Medina, who is handling six
Firestone tire cases, applauded the lawsuit, saying he hopes it "goes
through and is successful."

"People need to buy whatever tires they choose," Medina said. "There is no
reason to trust Firestone at this time -- they had these facts for two
years and hid them." (The Miami Herald, August 10, 2000)


FIRESTONE: News and Observer Says NC May Have to Wait a Yr for Exchange
-----------------------------------------------------------------------
Many North Carolinians may have to wait as long as a year to exchange the
Firestone radial tires on their light trucks and sport utility vehicles
under a phased recall announced Wednesday by Bridgestone/Firestone Inc.

The company recalled 6.5 million tires - all 15-inch Firestone ATX and ATX
II tires produced in North American plants, including one in Wilson, and
Firestone Wilderness AT tires produced at the company's plant in Decatur,
Ill. The National Highway Traffic Safety Administration had received 270
complaints, including reports of 46 deaths and 80 injuries, about the
failing truck tires.

Most of the accidents reported to NHTSA came from states in warm climates,
so heat may be a factor, Bridgestone/Firestone officials said. The
complaints allege that Firestone tires peel off their casings, sometimes
while vehicles are traveling at high speeds.

The recall includes original equipment and replacement tires in size
P235/75R15 and will affect, among others, drivers of the best-selling sport
utility vehicle, Ford Explorer, which comes with Wilderness AT tires.
Between 60 percent and 70 percent of the recalled tires are on Ford Motor
Co. vehicles.

Firestone retailers - among them 2,500 Ford dealerships - are offering free
inspections of the recalled tires and may be able to replace them right
away, depending on the supply. But new production of replacement tires is
being funneled to the four states that are first in the recall line, a
company spokesman said. North Carolina is among 39 states in the recall's
third and last phase, expected to begin next summer.

The recall left several local Ford dealers and customers frustrated as they
scrambled to learn how to deal with the tires but found few answers.

At 2:30 p.m., Peter Duerksen, service director at Capital Ford in Raleigh,
was still awaiting word from Ford as the frantic calls poured into his
department. "We had 200 to 250 calls today about this," he said. "It's been
frustrating not having all the answers to give to them."

Duerksen has asked callers to be patient for one day. But the dealership
still exchanged nearly half a dozen tires free of charge for concerned
customers Wednesday. To prepare for the overwhelming response, Duerksen
ordered a couple hundred additional tires Monday. "I don't have a place to
put all the tires I have coming," he said.

While it was a madhouse for many Ford dealerships, the workday was worse
for Firestone maintenance centers around the area.

Managers were not allowed to comment on the recall, but it took one at the
Firestone Tire and Service Center in downtown Raleigh several minutes just
to say "no comment" because he was interrupted by so many urgent calls and
questions from employees.

Sweat streamed from the face of one worker assigned to the garage marked
TIRES as he pulled tire after tire from its rim. When asked whether it was
busy because of the recall, he responded: "Oh, Lord, is it busy."

Bridgestone/Firestone will write to customers with recalled tires informing
them of the steps they need to take. Customers may also call the toll-free
customer service number at (800) 465-1904, although it was difficult to get
through Wednesday.

Company officials said that more than 80 percent of the tire separations
occurred in Arizona, California, Florida and Texas, so recall efforts will
begin there. Spokesman Walt Sharp said that less than 1 percent of the
reported tire failures occurred in the 39 states in the last recall phase.

But the NHTSA, which is investigating the tires, said it does not have a
state-by-state breakdown of the complaints and could not say how many
incidents occurred in North Carolina.

Until new tires are available, Firestone officials recommended keeping the
tires properly inflated at the pressure recommended by the vehicle
manufacturer.

"We felt we must take this extraordinary step as a precaution to ensure
consumer safety and consumer confidence in our brands," said
Bridgestone/Firestone executive vice president Gary Crigger. "So, no matter
how many tires, no matter how many miles they have on them, we will replace
them with new tires." The mounting safety concerns already had prompted
Discount Tire, Montgomery Ward and Sears Roebuck and Co. to stop selling
the tires.

Ford has already replaced Firestone tires for free on vehicles sold in
Venezuela, Ecuador, Thailand, Malaysia, Colombia and Saudi Arabia after
tires failed in those countries. The company had resisted pressure to do so
in the United States, saying the matter was under investigation.

Ford and Bridgestone/Firestone, a subsidiary of Japan's Bridgestone Corp.,
have insisted the tires are safe but moved forward on the recall after
meeting with NHTSA investigators.

Company officials did not say how much the recall would cost or how it
might affect the company financially. In addition to the recall, the
company faces several class-action lawsuits over the tires. South
Carolina's attorney general promised to file suit on behalf of his state if
it wasn't moved to the top of the tire-replacement list by Monday.

Cost may prove to be an important issue. In 1978, Firestone Tire & Rubber
Co. was still an independent operation based in Akron, Ohio, when it was
forced into one of the largest product recalls in U.S. history. Hit with
complaints of tread separation, the company agreed, after a long fight, to
recall as many as 12 million Firestone 500 tires; about 8.7 million were
replaced at a cost of $ 150 million. The effort nearly bankrupted the
company, prompting years of cost cuts and plant closings.

In 1989, Bridgestone Inc. of Japan bought the company for $ 2.6 million.
The merged company was renamed Bridgestone/Firestone Inc., and the North
American headquarters moved to Nashville, Tenn.

The Bridgestone/Firestone plant in Wilson, which employs about 2,200
workers, is the company's second-largest North American facility. It is
among several plants that produced the ATX models. Daren Mercer, who has
worked at Bridgestone/Firestone for 14 years, said he had heard no word on
how the problems might affect the Wilson plant. "We made a mistake, but we
make a whole bunch of different tires," he said.

Plant officials referred inquiries to corporate spokesmen.

Company officials divided the recalled tires into two categories: the
Wilderness AT line produced at the Decatur, Ill., plant, and certain
15-inch ATX tires produced at various other plants, including Wilson. About
14.4 million of the recalled tires were produced, but only 6.5 million are
still in use.

Company officials said Wednesday that the Wilderness tires from the Decatur
plant had a higher rate of accident reports and claims than other tires.
About 2.7 million of the recalled tires are the Wilderness brand from
Decatur. Those tires are no longer made in Decatur.

Bridgestone/Firestone said it would have to increase production at several
facilities to meet demand for replacement tires but did not say what that
might mean to the Wilson plant. Most U.S. tire plants have been running
near capacity to meet strong demand, which may make it difficult for
Bridgestone/Firestone to provide enough replacement tires once the recall
gets going.

If supply runs low, the company may even use competitive brands. Customers
who have already replaced their tires will be reimbursed after sending in
documentation, but officials at Bridgestone/Firestone did not have further
information Wednesday. (The News and Observer (Raleigh, NC), August 10,
2000)


HOLOCAUST VICTIMS: Polish Government Wants No Tax on Compensation
-----------------------------------------------------------------
Poland's Solidarity government proposed a measure Tuesday that would make
any payments to former Nazi-era slave or forced laborers exempt from taxes.

Prime Minster Jerzy Buzek said he has ''no doubt'' that parliament will
pass the measure, which would require President Aleksander Kwasniewski's
approval. A number of U.S. states have passed or proposed similar measures.

Surviving Polish victims are to receive a total of some 1.8 billion marks
(dlrs 850 million) from the 10 billion marks (dlrs 4.7 million) fund set up
by German government and industry. Payments will average 5,000 marks (dlrs
2,300).

German companies proposed the compensation fund under pressure of
class-action lawsuits in the United States, and will receive guarantees
backed by the U.S. government that judges will be asked to divert future
lawsuits to the foundation. (AP Worldstream, August 8, 2000)


INMATES LITIGATION: Court-Ordered Secrecy Clouds Plight of Mentally Ill
-----------------------------------------------------------------------
A schizophrenic inmate in solitary confinement set himself on fire, spent
months in a hospital burn unit, and was then ordered back to a specially
designed cell, where he remained alone, untreated, and at times incoherent
for three years.

A 16-year-old inmate lived most of five years in isolation, his multiple
mental illnesses treated with medication. The official penalties for
repeated suicide attempts: being shackled into "restraining chairs,"ordered
naked into"strip cells,"or locked in a "dry cell,"a room without lights or
running water where urine and feces were removed once a week.

A public advocacy group reported those cases and others in a class action
lawsuit seeking better treatment for mentally ill state prison inmates.

New Jersey officials last year agreed to almost all demands in the lawsuit,
promising changes at every level in the system treating mentally ill
inmates. The Department of Corrections said it would hire more staff, offer
better training, build treatment facilities, and rewrite disciplinary
procedures to consider an inmate's illness.

But the outside review of treatment programs required by the deal that
settled the lawsuit is shrouded in court-sanctioned secrecy.

At one time, the Attorney General's Office and the Inmate Advocacy Clinic
at Seton Hall University Law 1 School were courtroom enemies. Now they're
fighting together to keep progress reports by outside observers from
becoming public.

"New Jersey might have had one of the worst records on inmate treatment in
the country. Now it might be leading the way in terms of things they agreed
to do. We don't know," said lawyer Bruce Rosen, who represents the New
York-based Human Rights Watch.

The Whitman administration paid $ 16 million this year for improvements
ordered by the settlement and budgeted $ 17.7 million for the next fiscal
year.

The state also agreed to pay $ 1.2 million in legal fees, according to a
copy of the settlement summary.

Both sides said a forensic psychiatrist would visit state prisons four
times a year, interview inmates, and review procedures.

Last month, Human Rights Watch asked a federal court to allow those
progress reports to be inspected by the public as well. U.S. Magistrate
Judge John Hughes plans to issue his ruling this month on that request.

The settlement, which Hughes approved, allows those reports to be seen only
by the state, the private contractor that provides inmate medical services,
and the Inmate Advocacy Clinic, all original parties in the lawsuit.

Human Rights Watch plans to include New Jersey in its national review of
prisons and mental health treatments, Rosen said. "We see nothing. We get
nothing. All we get is a stone wall,"he said.

Other inmate advocate groups disagree with the fight to keep the status
reports private. "How are you going to monitor compliance if you keep it
under wraps,"said Ed Martone of the Association on Correction.

There is a need to preserve patient confidentiality, but taxpayers who paid
for the improvements deserve to know how the money is spent, Martone said.
So do legislators who approved budget increases. "By the same token, we're
not talking about two companies involved in a copyright spat. We're talking
about public policy. We're talking about human beings who are wards of the
state,"Martone said.

Lawyer Patricia Perlmutter, who headed the fight for the Inmate Advocacy
Clinic, could not be reached for comment.

A spokeswoman for Attorney General John J. Farmer Jr. said the
confidentiality agreement is part of the settlement. "Both sides agreed to
it. It 1 was settled that way,"Katherine Lyons said.

Since July 1999, the state has built treatment centers at four prisons to
treat inmates, as well as 418 new cells, said Chief of Staff Mary Ellen
Bolton. Guards now get 10 hours of training, with half a day dedicated to
dealing with mentally ill prisoners, she said. "People have to be given the
appropriate level of care for their particular disease,"she said.

Some inmates are still ordered to"administrative segregation" or solitary
confinement, Bolton said. If inmates are ill, they are supervised by
medical staff, she said. Bolton said she could not "confirm or substantiate
any allegations made" before she and Commissioner Jack Terhune took office
in 1998. (The Record (Bergen County, NJ), August 10, 2000)


KNOLL PHARMACEUTICAL: Announces Settlement for Synthroid Marketing Suit
-----------------------------------------------------------------------
Knoll Pharmaceutical Company announced that the Honorable Judge Elaine
Bucklo of the United States District Court for the Northern District of
Illinois granted final approval on August 4, 2000, of a settlement of the
Synthroid(R) Marketing Litigation. The settlement in no way implies or
acknowledges any wrongdoing by Knoll, and the safety and effectiveness of
Synthroid (levothyroxine sodium tablets, USP) have never been an issue in
any part of the litigation. The company can now put this portion of the
litigation behind it, and continue to focus on providing health
professionals and their patients with the highest quality products and
services.

The settlement is designed to finally resolve under separate funds claims
by consumers who used Synthroid during the class period as well as claims
by a class of third party payers. It protects the consumer settlement from
claims by other parties, and has different recovery terms for long versus
short-term users of Synthroid.

In accordance with the terms of the approved settlement, an escrow account,
which as of June 30, 2000, holds for the benefit of consumers approximately
$91 million with continuing accumulating interest (less attorneys' fees and
costs), will be paid to consumer class members who release all claims
against Knoll. A total amount of approximately $46 million plus interest
(less attorneys' fees and costs) will be paid to third party payer class
members who release all claims against Knoll, as well as consumer
settlement class members. Knoll believes this is a fair and reasonable
settlement for all parties and a gesture of good faith to the patients who
use Synthroid.

Under the approved settlement and with the award of attorneys' fees and
costs, over 778,000 consumers will receive payments of about $111 each if
they began taking Synthroid before 1/1/95 and about $74 each if they began
taking Synthroid after 1/1/95.

The final resolution of the litigation should permit consumers and third
party payers to receive payments before the end of the year if no appeals
are filed. Appellate action regarding the award of attorneys' fees and the
denial of motions to intervene, however, would delay this process.

Throughout the litigation process, Knoll Pharmaceutical Company's primary
concern has been the 8 million patients who use Synthroid because of its
42-year history as a safe, effective and inexpensive medication for the
treatment of thyroid disease. It was in the interest of reaching a
conclusion to the litigation that is fair and equitable to those patients,
and to third party payers, that Knoll agreed to this settlement.


LA DEQ: Suit Challenges Permit for Power Plant
----------------------------------------------
A group of St. Landry and Acadia Parish residents filed a lawsuit Tuesday
against the state Department of Environmental Quality, alleging the agency
didn't follow rules and regulations when it issued a permit for a new power
plant in Acadia Parish.

The suit was filed in 19th Judicial District Court in East Baton Rouge
Parish, and it was assigned to Judge Curtis Calloway.

The plaintiffs are asking the court to review DEQ's July 13 decision to
grant the permits for air and water discharges for Acadia Power Partners, a
joint venture of power companies, CLECO, based in Alexandria, and Calpine
from San Jose, Calif.

DEQ declined comment Tuesday. Neither CLECO nor Calpine was named as a
party in the lawsuit, but a CLECO spokesman said they expect the challenge
to fail.

The plaintiffs named in the suit are the Acadia-Eunice Citizens for a
Healthy Future Inc., and individuals Darrel Topefer, Ralph Frey, Julius
Bischoff, T.K. Frey, Eric and Catherine Fusilier Bollich, Brandi Doucet and
Dr. Brent Ardoin.

They contend their well-being and quality of life will be affected
adversely by the natural gas-fired plant to be built five miles south of
Eunice. It is scheduled to be in operation by June 2002. The 1,000-megawatt
plant will provide enough reliable, competitively priced electricity to
power 1 million households.

Plaintiffs complain in the lawsuit that they are concerned about the
threats of pollution from the plant.

Lafayette attorney Charley Hutchens filed the lawsuit. He represents a
group of residents in Morgan City who are challenging a DEQ permit issued
to GTX Inc., which plans to operate a hazardous waste incinerator in
Amelia. That case, which is being reviewed by the 1st Circuit Court of
Appeal, includes some of the same arguments about DEQ's permitting process
that have been raised in the power plant lawsuit.

CLECO opponents had said after the permits were granted that they would go
to court. But CLECO said it would continue with its plans to build the
plant. Coincidentally, the company announced Tuesday morning that workers
are needed to help build the $500 million facility. Applicants were advised
to call Zachry Construction Corp. at its Eunice office at 337-550-8847.

During construction, an estimated 600 craftsmen will be employed by the
project. Upon completion, the plant will create 33 permanent jobs with an
estimated annual payroll of $2.2 millionThe lawsuit also says that DEQ
Secretary Dale Givens breached his public trust by granting the permits.
Alternative sites and projects were not considered, the lawsuit says.

The lawsuit contends that DEQ has failed to formulate rules and regulations
required by state law.

Opponents had expressed concern that the plant would use a large amount of
groundwater, but the lawsuit's only reference to that complaint is alleged
"inappropriate use of natural resources ..."CLECO spokesman Mike Burns said
the lawsuit wasn't unexpected.

"Acadia Power Partners anticipated the filing of an appeal of the permits,
and we are now in the process of reviewing it with legal counsel," he said.
Burns said the project received exhaustive review by DEQ for nine months
with a public comment period extended four times. "We believe, therefore,
DEQ's decision to grant the permits will be upheld in court," Burns said.

Acadia Power Partners says its plant is designed to reduce water usage, and
it will use up to 40 percent less fuel per kilowatt hour of electricity
than existing gas-fired plants. (The Advocate (Baton Rouge, LA.), August 9,
2000)


MICROSOFT CORP: "They Were Getting Something for Nothing?" Pollak Asked
-----------------------------------------------------------------------
Often a judge's casual comments provide insights into his thinking. So when
San Francisco Superior Court Judge Stuart Pollak quietly quipped in a
Microsoft Corp. antitrust case, his words may have carried greater meaning.

A Microsoft attorney argued that buyers of the firm's Windows 95 and
Windows 98 operating systems were fortunate to also get its Internet
Explorer browser built into them.

"They were getting something for nothing?" Pollak asked smiling. "I've got
a bridge to sell you." It wasn't much, but it offers some insight into the
judge's thinking on plaintiffs attorneys' motion for class certification in
Lingo v. Microsoft, 301357, which seeks unspecified damages against the
software maker for alleged antitrust violations and unfair business
practices.

Micosoft attorney Charles Casper argued against certifying the class
because its purported members were a disparate group. Not all purchased the
same software from Microsoft's 37-item product line. Not all paid the same
price. "There are people in the class who didn't pay more than they should
have," said Casper, a partner in the Philadelphia firm of Montgomery,
McCracken, Walker & Rhoads.

But plaintiffs lead counsel Eugene Crew said it was his burden to prove how
much Microsoft charged in its alleged monopoly pricing as compared to what
the cost would be in a competitive market. He proposes creating two
classes; one for those who purchased Microsoft's operating system and the
other for those who bought its applications. "There are many ways to skin
this cat," said Crew, a name partner in S.F.'s Townsend and Townsend and
Crew. He said economists will build a model on which to ascertain how
Microsoft controlled the price of its products through original equipment
manufacturers and resellers. "Microsoft obtained and retained a monopoly of
the market through illegal means," Crew said.

Casper said it was impossible to trace each individual's alleged harm in a
class action. "You're almost looking at an individual investigation,"
Casper told Pollak, who listened with a bemused look on his face.

The judge took the matter under submission but promised to rule soon on
whether he would certify the class action against the Redmond, Wash.,
software giant.

But Pollak also seemed to enjoy his colloquy with Casper, who rolled out
charts and graphs to emphasize his points. Casper argued that by giving
away its Internet browser, Microsoft forced Netscape to reduce the cost of
its browser and eventually to also give it away.

But the judge jumped on that argument, saying the problem is that the
bundling of the browser with the operating system is what plaintiffs
lawyers argue led to the monopoly. "Isn't it like saying the fourth tire of
the car is free?" the judge asked.

Casper disputed that, as Microsoft has consistently done, contending
instead that the browser was not separate from the operating system. "They
Microsoft decided to put a higher-quality radio into the car," Casper said,
in response to Pollak's tire analogy.

But the judge also expressed concern over whether buyers of Microsoft's
early 3.0 and other earlier operating systems should fall into the same
class certification as the purchasers of Windows 95 and 98.

Crew said the manner in which Microsoft markets its products is the same,
making it easy to track the alleged price gouging. "The percentage of
overcharge will be the same" for all the systems, he said. --^Dennis J.
Opatrny (The Recorder, August 8, 2000)


NETSCAPE: Changes Its Download Software After Privacy Suit
----------------------------------------------------------
Web browser designer Netscape Communications said it will revise a program
for downloading files from the Internet so that it will no longer collect
data about users' online activity.

The software, called SmartDownload, is the subject of a federal
class-action lawsuit that claims it violates a federal law protecting
computer users' privacy.

The program is designed to make it easier for people to download large
files. If a transfer is interrupted, SmartDownload allows a user to resume
from the interruption instead of starting over.

It also provides information to Netscape about what kinds of files a user
is downloading.

Andrew Weinstein, a spokesman for Dulles, Va.-based America Online, which
owns Netscape, said the information was designed to give Netscape's
technical experts insight into what kinds of files were difficult to
download.

Weinstein said neither Netscape nor AOL ever looked at the information and
that it is regularly purged from Netscape's databank.

Because the information is never used, Weinstein said the new version of
SmartDownload will not collect the data.

Regardless, it is illegal for Netscape to collect the information at all
under the Electronic Communication Privacy Act, said Joshua Rubin, the
plaintiffs' lawyer in a class-action suit filed against Netscape in U.S.
District Court in the Southern District of New York.

"The SmartDownload product essentially spied on SmartDownload users," Rubin
said. It's unclear exactly how many people use SmartDownload. It is not
included with Netscape's popular Navigator Web browser, but users can
download SmartDownload any time they update the browser or visit Netscape's
home page.

The law allows aggrieved parties to collect damages up to $10,000 a person,
Rubin said.

AOL's Weinstein said the class action suit is "totally without merit." No
release date had been set for the new version. (The Associated Press,
August 10, 2000)


NOS COMMUNICATIONS: Complex calculations on TCUs Lead to High Prices
--------------------------------------------------------------------
Gail DeLong says she was offered a long-distance deal too good to refuse:
less than 8 cents a minute during business hours.

But the great rates evaporated after two months. Starting with the third
bill, the phone company suddenly started billing her in a mysterious unit
called "TCUs" (total call units) instead of minutes.

Although she didn't notice at first, the company, NOS Communications,
started multiplying the length of every call by an unusual formula to
include overhead costs. A nine-minute phone call, for instance, would
translate into 18.5 TCUs -- essentially doubling her rates.

"It's so misleading," said DeLong, an oil broker who lives in San
Francisco. She said she was never told about the TCU billing method when
she signed up.

DeLong is hardly alone. State regulators in California and across the
country have received scores of similar complaints. And attorneys in at
least four states have filed class-action lawsuits on behalf of former NOS
customers, accusing the Las Vegas firm of pulling off an elaborate
bait-and-switch.

In court documents filed in June, San Francisco law firm Girard & Green
likened NOS to a service station that advertises gasoline for $1 per gallon
-- then charges $1 per quart. "Their entire business is based on scamming
customers," said Charles Carbone, a consumer attorney for the law firm.

However, NOS attorneys say the company has never been fined or sanctioned.
They also have an easy way to swat away the lawsuits with a simple defense:

Its unorthodox rates are spelled out in a thick set of legal documents,
called tariffs, filed with the Federal Communications Commission and the
California Public Utilities Commission. Legally, companies are not required
to tell consumers about key details as long as they are mentioned in the
tariffs.

So even if NOS salespeople never mention that the low rates they are
quoting will last for only two months, subscribers are still on the hook.
"Customers need to ask," said Danny Adams, a Washington lawyer who
represents NOS.

                        Array of Price Plans

The complaints against NOS illustrate one of the downsides to relaxed
regulation in the long-distance market. With relatively few standards in
place, companies have developed a stunningly complicated array of pricing
plans, often laden with hidden fees and catches.

However, because the old tariff system in still in place -- a vestige of
the monopoly days when regulators closely scrutinized rates -- customers
often have little recourse when they are misled.

Still, NOS stands out. So many customers have complained that the FCC and
state regulators in California, Florida and Wisconsin are investigating
NOS. "They advertise 7.9 cents per minute, but bill at 7.9 cents per TCU,"
said Steven Foemmel, a Wisconsin consumer protection investigator.

In California, both the attorney general and the state PUC have contacted
NOS to investigate the allegations, Adams confirmed. The PUC received 334
complaints about the firm last year, according to a Chronicle analysis, an
astonishing figure for a long-distance company with only 175,000 customers
nationwide. Sprint, with at least 20 times more subscribers, drew only 40
percent more gripes.

DeLong, who filed a complaint with the PUC a year ago, said she noticed the
rate she was quoted was listed as "promotional" in the fine print of a
one-page flyer the company faxed her. But when she asked about it, she
insists she was told "these would be the rates I would see all the time."

In a Florida case last year, NOS confirmed a sales agent misled a customer
about the promotional period. "We have reviewed the tape," an NOS lawyer
wrote the state, "and regrettably, the agent did indeed respond incorrectly
to (the customer's) inquiry."

Adams, the NOS lawyer, insists those are exceptions. He said the company
installed a $5 million tape recording system, in part, to make sure
telemarketers do not give misleading information.

"This is not some rogue company trying to make a quick buck," Adams said.

Moreover, he said, telemarketers are supposed to use phrases such as
"limited time offer" to make it clear the initial rates are good for only a
few months. But customers could easily interpret that to mean they must
sign up right away to receive the low rates.

                       When Asked, Don't Tell

In addition, two former NOS sales workers said they were ordered not to
tell prospective customers about the TCU billing method. If people asked,
they were instructed to transfer the calls to a special department. (Adams
confirmed the policy.)

Once customers sign up for the service, Adams said, all the details are
spelled out clearly in a "welcome kit."

To convert minutes into TCUs, Adams said, the company multiplies the number
of minutes by 2 and adds 0.5 for calls that are 20 minutes or less. For
longer calls, the company adds 20.5. The company then multiplies the number
of TCUs by the same rate initially quoted to customers for the "per minute"
costs.

"What it boils down to is that you are paying twice as much as you think
you are," said Dan Baldwin, a former NOS customer in San Diego, who set up
a Web site critical of the company.

Adams insists that's an exaggeration. Although short phone calls are
roughly doubled or more, longer ones are increased by a smaller percentage.
The price of a 40-minute phone call, for example, works out to only 51
percent more.

And even with the increase, Adams insists, the rates are a good deal for
many business customers, who often pay higher rates than residential
callers.

A friend of his, Glenn Lloyd in San Carlos, said he also couldn't decipher
the surcharges on his NOS bill. "There was zero explanation," Lloyd said,
"and if you called the 800 number, you couldn't actually talk to anyone."

However, even a former NOS president, Neal Bobys, could not explain the
company's billing method under oath.

In a deposition taken in October, a Florida attorney asked Bobys for the
price of a one-minute call at 14.9 cents per minute. Bobys couldn't give a
precise figure.

"More is the answer," Bobys said, referring to the 14.9 cents. Bobys said
the final price would also have to include "equivalent call units based on
the tariff."

                           A Minute Defined

Indeed, a Wisconsin state representative found the billing method so
confusing that he proposed legislation requiring telephone companies to
charge by the minute. Just to be safe, he also defined a minute as 60
seconds long.

But lobbyists from AT&T and other major long-distance companies helped
defeat a Senate version of the bill in March over concerns that the
legislation would also ban rounding. Phone companies often round calls up
to the nearest minute, so a 61-second call would still be billed as two
full minutes. "In no other industry do you have that," said state Rep.
Sheldon Wasserman, D-Milwaukee, who entered the debate after his brother
felt burned by NOS. "Go to any state and a quart is always a quart."

Traditionally, NOS targeted small and midsize businesses, employing vast
banks of telemarketers to sign up customers. But more recently, NOS also
set up an "ethnic call center" in Los Angeles to recruit customers who make
frequent overseas phone calls, especially to China, South Korea and the
Philippines; the lion's share of those 75,000 customers live in California,
Adams said.

Indeed, many of the complaints in the Bay Area came from San Francisco
residents with Asian surnames, the PUC data show.

Last year, Adams said, NOS started charging those residential customers a $
25 "termination fee" if they switched to another long-distance carrier
after less than six months. Plus, NOS boosted the rates for customers'
final bill. But NOS never told customers about the termination fee in
advance. Although technically legal, because NOS inserted the change in its
tariff, many customers were caught off-guard and complained to the PUC.

Adams said the company received so many complaints that it gave all the
customers refunds and eliminated the termination fee after six months.
Adams also said NOS recently agreed to stop pitching introductory rates in
"cents per minute" to appease the FCC. Instead, the company plans to tell
customers up front they will be charged by the calling unit. Adams said NOS
actually started implementing the change in June but said it will take
several months to teach all the telemarketers the new pitch. "The company
has tried to respond to criticisms and made a lot of refinements," Adams
said.

Despite the complaints, NOS says it is growing at a torrid pace. The
company's Web site boasts it is now a "$400 million telecommunications
giant" with more than 3,000 salespeople in Las Vegas and Los Angeles. The
company also operates under a half-dozen other names, including Affinity
Network, QuantumLink Communications, HorizonOne Communications and the
Internet Business Association.

Plus, NOS touts its ties to WorldCom, the country's second-largest
long-distance company.

But WorldCom spokeswoman Linda Laughlin denied the companies are partners.
She said WorldCom must sell its service to NOS, like any other customer,
regardless of how many complaints it receives. "We are not the police
patrol," she said.

                         Florida Investigating

The real telecom police, however, appear poised to step in. The Florida
Public Service Commission, for instance, has proposed fining NOS $300,000,
said PSC spokesman Mark Swanson.

Swanson said staffers believe that NOS' "unorthodox rate structures,
conversion charts and rates" might violate two state rules. One bars
utilities from misleading customers. Another says tariffs must be written
in simple language and "avoid unnecessarily long, complicated or obscure
phrases." (Girard & Green, the San Francisco law firm, made this same
argument.) But Swanson said NOS has responded to the allegations, and staff
members are now mulling over what to do next.

Separately, Wisconsin's consumer protection agency last week recommended
the state's attorney general prosecute NOS for false advertising,
overbilling customers and slamming, or switching customers' service without
permission.

Any fines, however, would come too late for DeLong and her husband. She
said the couple lost hundreds of dollars because they were promised rates
they never received. "They were awful," she said. (The San Francisco
Chronicle, August 8, 2000)


OMNIBANK: Sp Ct May Soon Decide on Force-Placed Protection Liability
--------------------------------------------------------------------
Based on a certified question from the 5th U.S. Circuit Court of Appeals,
the Mississippi Supreme Court may soon decide if a lender's commercial
general liability policy encompasses consumers' claims for property damage,
bodily injury and accidental injury arising from force-placed collateral
protection insurance. The insurer argues it has no duty to defend where the
lender intentionally force-placed the CPI, even if the insured negligently
selected high-priced insurance. (Ramsay, et al. v. Omnibank, et al., No.
99-60349 (5th Cir. 6/20/00).)

Georgia Ramsay financed the purchase of her new car through Omnibank.
Omnibank required Ramsay to maintain insurance on the car. When Ramsay
allowed her insurance to lapse, Omnibank force-placed insurance coverage on
the vehicle and charged Ramsay for the premiums and interest. Omnibank had
both a commercial general liability policy and an umbrella policy with
United States Fidelity and Guaranty Co. The general policy covered claims
for bodily injury, property damage and accidents. The umbrella policy
"provided additional insurance limits but not wider coverage."

Ramsay filed a class action against Omnibank alleging the lender
"wrongfully force-placed" CPI. Ramsay, who later filed an amended
complaint, also raised claims of fraud, breach of contract, negligence.
loss of property rights, injury to credit, creation of fictitious
indebtedness, and mental and emotional distress.

When Omnibank asked USF&G to defend it in the action, USF&G refused to do
so. OmniBank then filed a complaint naming USF&G and Deposit Company of
Maryland as third-party defendants.

Subsequently, Ramsay moved to dismiss the claims against Omnibank. The U.S.
District Court for the Southern District of Mississippi granted her motion.

Meanwhile, USF&G moved for summary judgment asserting lack of coverage.
USF&G argued that because Omnibank intentionally force-placed CPI on the
car, any damages complained of by Ramsay and the other borrowers were not
the result of "an accident even if Omnibank negligently chose exorbitantly
priced insurance."

The District Court granted USF&G's motion as to OmniBank's bad faith claim.
On April 15, 1999, the court ordered USF&G to pay Omnibank 10,856 in costs
associated with OmniBank's defense of the Ramsay claims.

When USF&G appealed to the 5th Circuit, the court defined the question
presented: "Whether an insurer's duty to defend under a general commercial
liability policy for injuries caused by accidents extends, under
Mississippi law, to injuries unintended by the insured but which resulted
from intentional actions of the insured if those actions were negligent but
not intentionally tortious." Determining that this issue involves state
law, the court certified the question to the Supreme Court. (Consumer
Financial Services Law Report, July 24, 2000)


QUALITY SYSTEMS: Counsel Disqualified in CA; Investor Will Seek New One
-----------------------------------------------------------------------
On April 22, 1997, a purported class action entitled JOHN P. CAVENY v.
QUALITY SYSTEMS, INC., ET AL. was filed in the Superior Court of the State
of California for the County of Orange, in which Mr. Caveny, on behalf of
himself and all others who purchased the Company's Common Stock between
June 26, 1995 and July 3, 1996, alleges that the Company, and Sheldon
Razin, Robert J. Beck, Gregory S. Flynn, Abe C. LaLande, Donn Neufeld, Irma
G. Carmona, John A. Bowers, Graeme H. Frehner, and Gordon L. Setran (all of
the foregoing individuals were either officers, directors or both during
the period from June 26, 1995 through July 3, 1996), as well as other
defendants not affiliated with the Company, violated California
Corporations Code Sections 25400 and 25500, California Civil Code Sections
1709 and 1710, and California Business and Professions Code Sections 17200
et. seq., by issuing positive statements about the Company that allegedly
were knowingly false, in part, in order to assist the Company and the
individual defendants in selling Common Stock at an inflated price in the
Company's March 5, 1996 public offering and at other points during the
class period. The complaint seeks compensatory and punitive damages in
unspecified amounts, disgorgement, declaratory and injunctive relief, and
attorneys' fees.

On January 25, 1999, the court denied plaintiffs' motion to certify the
class representative and class legal counsel. Plaintiffs have appealed that
decision. On February 25, 2000, the Fourth District Court of Appeals
affirmed the order disqualifying the class legal counsel. On May 9, 2000,
the Court of Appeals issued its Remittur certifying its decision as final.
Plaintiff will seek new class counsel, however, the named defendants will
again have the opportunity to oppose class certification.

The Company and its named officers and directors deny all remaining
allegations of wrongdoing made against them in these suits, consider the
allegations groundless and without merit, and intend to vigorously defend
against these actions.

                   Wendy Woo Case Dismissed

On May 14, 1997, a second purported class action entitled WENDY WOO v.
QUALITY SYSTEMS, INC., ET AL. was filed in the same court. This complaint,
which has been consolidated with the Caveny lawsuit, essentially repeats
the allegations in the Caveny lawsuit and seeks identical relief. The
Company and the other named defendants successfully demurred to the
plaintiffs' claim under California Civil Code Sections 1709 and 1710, and
that claim, which served as the only basis for plaintiffs' request for
punitive damages, has been dismissed from both actions.


QUALITY SYSTEMS: Reaches Agreement to Settle Derivative Complaint in CA
-----------------------------------------------------------------------
On March 23, 1999, a purported class action and derivative complaint
entitled IRVING ROSENZWEIG v. SHELDON RAZIN, ET AL. was filed in the
Superior Court of the State of California for the County of Orange, in
which Mr. Rosenzweig, on behalf of himself and all non-director
shareholders, and derivatively on behalf of the Company, alleges that
Sheldon Razin, John Bowers, William Bowers, Patrick Cline, Janet Razin and
Gordon Setran (all of the foregoing individuals are directors of the
Company) breached their fiduciary duties by allegedly entrenching
themselves in their positions of control, failing to ensure that third-
party offers involving the Company were fully and fairly considered, and/or
failing to conduct a reasonable inquiry to assure the maximization of
shareholder value. The complaint seeks declaratory and injunctive relief,
an accounting of monetary damages allegedly suffered by plaintiff and the
purported class, and attorneys' fees. Defendants demurred to each of the
causes of action alleged in the complaint and the court sustained those
demurrers with leave to amend in December 1999. Rather than file an amended
complaint, plaintiff filed a motion for attorney's fees. Defendants, in
turn, filed a motion to dismiss the action for failure to file an amended
pleading within the time limit specified by the court. Those motions are
currently pending.

The parties agreed to a settlement of action and stipulated to a final
judgement and order which was entered by the court on May 15, 2000 at which
time the action was dismissed. The final judgement and order provided for a
dismissal of the action with prejudice, releases given to each of the
defendants, and payment of the nominal sum of $100,000 (paid by the
Company's Directors and Officers Liability Insurance Company) in full
settlement of plaintiff's motion for attorney's fees. The settlement
further expressly provided that it did not constitute an admission of any
liability of defendants, which defendants continue to vigorously deny.


QUALITY SYSTEMS: Securities Claim in CA Stayed Pending Other Claims
-------------------------------------------------------------------
On July 1, 1997, a third purported class action entitled WADE CHENEY v.
QUALITY SYSTEMS, INC., ET AL. was filed in the United States District Court
of the Central District of California, Southern Division. The complaint
makes essentially the same factual allegations as in the Caveny and Woo
complaints, and purports to state claims under Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and under
Section 20(a) of said Act. By Court order dated August 13, 1997, this
action was stayed temporarily and the Court reserved jurisdiction to lift
the stay after all matters are final in the Caveny and Woo actions or if
otherwise appropriate, and on August 15, 1997 the case was removed from the
Court's active caseload. The Company denies all allegations of wrongdoing
made in this suit, considers the allegations groundless and without merit,
and if the stay is ever lifted, the Company intends to vigorously defend
against this action.



TOSHIBA CORP.: Citibank Says Logistical Problems Slowed Claims Proces
---------------------------------------------------------------------
This letter has been mailed to Claimants in the litigation against Toshiba
Corp. relative to defective floppy drive controllers in Toshiba-brand
laptop computers:

                FDC Class Settlement Claims Administration
                                PO Box 9344
                          Garden City, NY 11530

                                                       August 9, 2000

                    Shaw, et al., v. Toshiba, et al.
             (E.D. Tex., Beaumont Division, No. 1:99CV 0120)
              ---------------------------------------------

Dear Class Member:

      Citibank, N.A. ("Citibank"), and its agent, ACS Financial and
Securities Services ("ACS") are responsible for performing claims
administration services in processing claims of Class
Members in the above-referenced class action.  Citibank and ACS has
anticipated that certain payments would have been mailed to Class Members
during the month of July.  Unfortunately, certain logistical difficulties
were encountered that slowed down the claims process.  Those logistical
issues have been identified, are in the process of being remedied on a
priority basis, and Citibank and ACS anticipate that they will begin
distributing the remedies required under the class action settlement at the
end of September.  Citibank and ACS wish to emphasize that any delay in
processing claims has not been the fault of the Court, Class Counsel, or
the parties to the action.

      As a reminder, if you have any questions please call the Claims
Administrator at 1-888-353-8138 or Settlement Class Counsel at
1-888-353-8139.  Do not contact the Court, the Clerk's office, or the
undersigned for information.

                                                      Sincerely yours,
                                                        /s/ Gary L. Franco
                                                      Gary L. Franco
                                                      Vice President
                                                      Citibank, N.A.


UNIVERSALSCIENCE.COM: SEC Cracks Down on So-Called Free Stock Offering
----------------------------------------------------------------------
The Securities and Exchange Commission cracked down again on so-called free
stock offerings, filing and settling charges against an Internet company
that allegedly gave away unregistered shares.

Universalscience.com Inc. gave 100 shares of stock to members who agreed to
surf the Internet for pay, according to the SEC. In addition to giving away
shares, the company allegedly offered to sell stock, offering members up to
1, 000 shares of stock at $ 1 a share. Universalscience didn't register the
stock it gave away or the shares it attempted to sell, a violation of
federal securities laws, the SEC alleged. (The Atlanta Journal and
Constitution, August 10, 2000)


WWII LITIGATION: Slave Labor Suit Filed in CA against Japanese Firms
--------------------------------------------------------------------
Three former Filipino nationals who are now U.S. citizens have filed a
lawsuit demanding compensation from two Japanese companies they say used
them as slave labor during Japan's World War II occupation of the
Philippines, their attorneys said.

According to the suit filed at the San Francisco Superior Court, Alberto
Saldajeno, 80, was forced to work in a copper mine operated by Ishihara
Sangyo Kaisha Ltd. while Acelopio Galedo, 79, was forced to work on
constructing a road to the mine. Generoso Jacob, 78, says in the suit he
was forced to work in a coal mine operated by a predecessor organization of
Taiheiyo Cement Corp.

The plaintiffs say in the suit that they were poorly fed and beaten. ''By
all standards, the treatment of these laborers was illegal, immoral and
outrageous,'' their attorney Joseph W. Cotchett said.

The suit was filed under a California law passed last July giving state
courts jurisdiction to hear World War II slave labor cases and extending
filing deadlines to Dec. 31, 2010.

The law allows former slave laborers to sue Japanese and German companies
as long as branches of the firms conduct business in the state.

Thousands of people could qualify as class-action members under the
lawsuit, according to a statement by the plaintiffs' attorneys.

Officials from both Ishihara Sangyo and Taiheiyo Cement said they were
unable to comment on the proceedings because they had yet to receive
notification that the lawsuit had been filed. (Japan Policy & Politics,
August 7, 2000)


                              *********


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

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

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

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