/raid1/www/Hosts/bankrupt/CAR_Public/000901.MBX              C L A S S   A C T I O N   R E P O R T E R

             Friday, September 1, 2000, Vol. 2, No. 171


BRIDGESTONE/FIRESTONE: Center for Auto Safety Seeks Safety Data Access
CANADIAN CHURCHES: Natives Sue over Treatment in Assimilation Schools
EPA: Agency Chief Urged to Clear up Bias at Work; Suit Planned
FORD MOTOR: CA Judge Orders Recall; Florida Issues Subpoenas
FORD MOTOR: Struggling for Damage Control after Tire Crisis

GOLF COURSE, SUN-RICH: EEOC Charges 2 Florida Employers of Bias
LOS ANGELES POLICE: City Asks Judge’s Permission to Appeal Rico Ruling
LUTHERAN BROTHERHOOD: Act Can’t Be Used to Defeat Fed Securities Law
MICROSOFT CORP: CA Judge Says Denial Could Result in Repetitious Suits
NISSAN MOTOR: Early-Termination Rules Violated Consumer Leasing Laws

ON POINT: Settlement of Securities Suit Ends Absent GTECH Acquisition
SEATTLE: Minorities File $100 Mil Suit over Racial Profiling
SECRET SERVICE: Black Agents Say Gore Should End Discrimination
TELECTRONICS PACING: Sixth Circuit Decertifies Heart Pacemaker Class
TEXAS MEDICAID: Bush Defends State Health Care

TRANS UNION: 2-Year Limit Can't Be Extended But Events Remain As Support
WEST SUBURBAN: Borrowers Who Signed for Arbitration Can't File Suit
WINSTAR SUTI: Shareholders Awarded over $6 Mil By Federal Claims Court
XEROX CORPORATION: Dennis J. Johnson Files Investors Suit in Connecticut

* Trends in the 21st Century Workplace; Internet and Aging Workforce


BRIDGESTONE/FIRESTONE: Center for Auto Safety Seeks Safety Data Access
Calls Court's Attention to California Court Decision Sharply Criticizing
Ford for Withholding Safety Information in Ignition Switch Case

Attorneys for the Center for Auto Safety in a case recently filed in
federal court in Washington, D.C. against Bridgestone/Firestone, Inc.
("Firestone") and Ford Motor Co. ("Ford") seeking a broad recall of
Firestone tires renewed its request to the federal court in Washington,
D.C. to issue a preliminary injunction granting consumers immediate access
to safety data relating to Firestone tires and called the court's attention
to a just-issued California court decision in a similar case.

The California court decision, Howard v. Ford Motor Co., No. 763785-2 (Cal.
Superior Ct. Alameda Cty.), sharply criticizes Ford Motor Co. for engaging
in an extraordinary pattern of withholding and manipulating safety data
relating to Ford ignition switches. According to the California court, Ford
"concealed vital information related to vehicle safety from the consuming
public" and "withheld responsive information from NHTSA that it was
obligated to divulge." The California court further chastised Ford for a
variety of deceptive tactics, including the "manipulation" of safety tests,
playing "word games" to throw off government investigators, and using
"euphemisms" in a "disingenuous" fashion to conceal the danger posed by its
ignition switches. The court held that "Ford's dissimulation reached its
nadir in the testimony of Bob Wheaton, Ford's witness designated as most
knowledgeable about safety issues when he insisted that safe is too
subjective' and denied knowledge of any written definition of what safe is
within Ford Motor Company.' "

Attorney Michael D. Hausfeld, representing the Center for Auto Safety in
the D.C. case and the class of 1.8 million people with defective ignition
switches in the California case, stated, "Ford apparently does not know the
meaning of the word safe.'" Hausfeld further stated, "It is vital that
American consumers be given immediate access to Ford and Firestone's safety
data. That is what we have asked the court for. The decision by the
California Superior Court demonstrates a disturbing pattern by Ford of
withholding key safety data and manipulating safety tests in a manner that
threatens lives. That is unacceptable."

Contact: Cohen Milstein Hausfeld & Toll, PLLC Gary E. Mason 202/408-4600 or
Matt Pawa 202/408-4651

CANADIAN CHURCHES: Natives Sue over Treatment in Assimilation Schools
Charles Baxter's family were once Cree trappers, but in 1958, he became the
prey. The local Indian agent and Mountie hunted him down. "They went out to
the trapping lines to find me," he says. And so began his eight years of
alleged abuse at an Anglican boarding school. His hands were slapped so
many times that even now, he often recoils from his own wife's touch. Tears
fill his eyes as he recounts his story. "I've been holding it for 41 years.
It's a big load that I carry."

Mr. Baxter is now part of a C$ 12 billion (US$ 8 billion) class-action
lawsuit against the Canadian government and four of the country's major
religious groups. No one denies that the policy of assimilating aboriginal
children into white church-run, federally funded schools was a failure. The
schools, which operated until recent years, were rife with physical and
sexual abuse, and eroded native language and traditions.

But mounting legal fees are pushing churches to the brink of bankruptcy.
The Anglican Church, Canada's third largest with 2.2 million members, faces
35O lawsuits. It operated 37 aboriginal schools, the last one closed in
1969. Earlier this month it announced staff layoffs, as its legal bills
have reportedly topped US$ 1.6 million.

Around the world, several countries are struggling to one degree or another
to come to terms with dark chapters in their histories: African slavery in
the United States, Nazism in Germany. South Africa has endured the
wrenching but ultimately cathartic ordeal of its Truth and Reconciliation
Commission. And earlier this year a quarter-million Australians marched to
demonstrate in favor of reconciliation with their country's Aborigines -
who experienced similar assimilation programs.

In Canada, there is as yet no such broad public movement. In fact, most of
the attention given to this issue is focused on the prospect that pillars
of this country's religious establishment now face bankruptcy.

Of approximately 105,000 people who went through the schools during their
nearly 100-year history, some 6,400 have filed lawsuits against the
government and the Anglican, Roman Catholic, and Presbyterian churches,
plus the United Churches of Canada. The courts have so far ruled that both
the government and churches share responsibility. A handful of cases have
come to trial; only two have been settled.

Many voices, including government officials, are calling for getting the
cases out of the courts and into some alternative forum. John Milloy,
historian at Trent University in Peterborough, Ont., says, "This should be
a wake-up call in terms of a national discussion" of reconciliation of
First Nations and European Canadians, "but that conversation just doesn't
seem to want to happen." University of Saskatchewan historian J.R. Miller
says, "I increasingly think the Canadian population is in a state of

The federal government seems no more energized on the issue than is the
public at large.

The Missionary Oblates of Mary Immaculate of Manitoba, a Roman Catholic
missionary order that operated schools in the western provinces, offered
Ottawa a deal: Oblates' assets in exchange for government assumption of
liability and protection against future lawsuits associated with the
schools scandal. Ottawa isn't responding, however. "We made the offer in
February, and nothing's happened since," says Rhal Teffaine in Winnipeg,
the Oblates' lawyer. "I haven't received a definitive reply."

Ottawa has been likewise unresponsive to a similar offer from the General
Synod of the Anglican Church of Canada. One Anglican official says that if
the church does go bankrupt, "we won't have a place at the table" for
negotiating long-term healing solutions to the issue. "It's an offer - it's
something we will look at," says Lynne Boyer, a spokeswoman at the
Department of Indian Affairs and Northern Development, of the Oblates'
proposal. Ms. Boyer, however, stresses the responsibility of the churches
for wrongdoing at the schools: "The reality is that these schools were run
by the churches."

For the group of natives sitting in a circle at their community center,
telling their stories to a visitor, the concern is that fingerpointing and
hairsplitting are delaying tactics, intended to stall financial settlement
until no survivors are left. "I feel I live the life of a hostage," says
Gilbert Ferris, who attended a residential school in the early '40s.
"Instead of getting healed, I feel the knife is deeper into my back."

The most concrete action Ottawa has taken toward redress has been a
veritable apple of discord within aboriginal communities. A "healing and
reconciliation fund" of $ 350 million (US$ 235 million) was created in
1998, of which $ 66 million has already "flowed into the communities," said
Shaun Tupper, at the Department of Indian Affairs and Northern Development,
in a recent radio interview.

But some victims dismissed the fund as "just another diversion tactic, to
get people fighting among themselves." In a sort of bureaucratization of
tragedy, the fund has become bogged down in concerns about the format of
their proposals and technicalities of mileage reimbursement.

Like many natives, Baxter criticizes Phil Fontaine, former national chief
of the Assembly of First Nations, for accepting too quickly an "apology
that wasn't." Says Baxter, "He had no right to do that." Mr. Fontaine was
widely seen as too accommodating toward Ottawa, and that perception led to
his defeat at the hands of Matthew Coon Come, seen as likely to be much
more assertive of native rights. But his real political clout is limited.

Meanwhile, the right-wing Canadian Alliance has an energizing new leader
and looks more credible as an alternative to Jean Chrtien's Liberal
government. And the Alliance is not any bigger on dealmaking with Canadian
natives than the GOP is big on affirmative action in the United States.

The policy of residential schooling for First Nations has been so widely
repudiated that it is hard for many Canadians to realize not only that many
church people had noble motives for supporting it, but that progressive
elements of society as a whole supported "Christianizing the heathen." "In
those days there were those who thought residential schools were a good
idea and those who thought they were too good for the Indians," says a
church official. "[Canadians] can't escape the heritage of one part of the
national enterprise which had as its goal the obliteration of native
culture." (The Christian Science Monitor, August 31, 2000)

EPA: Agency Chief Urged to Clear up Bias at Work; Suit Planned
Dozens of Environmental Protection Agency employees staged a rally on
August 30 to protest what they called rampant bias at the federal agency,
which was hit earlier this month with a $ 600,000 verdict in a race and sex
discrimination case. Framed by supporters holding placards saying things
such as "End Racism at EPA," about 10 current and former agency employees
related personal stories of discrimination while other EPA workers looked
on at Freedom Plaza.

Anita Nickens, an environment specialist at EPA, fought back tears as she
spoke about being ordered to clean a toilet during a 1993 EPA event in
North Carolina. Nickens said that she was among six employees staying in a
lodge during the business trip. She was the only black employee on the trip
and the one singled out by a supervisor to clean the toilet in anticipation
of the arrival of EPA Administrator Carol M. Browner. "She does not use the
toilet behind anyone else," Nickens said she was told. Worried about the
ramifications of defying a directive, Nickens said she reluctantly followed
the order, only to be devastated when her supervisor later bragged about it
to others. "I went back to my room, locked myself in and cried," she said.
"I was so embarrassed and blamed myself for giving in to that request. . .
. Now, I want to apologize to black women across the nation for not
standing strong."

Nickens's experience, called "intolerable" and an "outrageous" breach of
EPA standards by an agency spokesman, was just one of many alleged
instances of discrimination cited at the rally. Lashanda Holloway, a black
former lawyer at the agency, said she earned $ 30,000 less than a white
colleague with similar credentials. Dana Hawkins, an agency employee in
Atlanta, said a supervisor illegally used her Social Security number to
obtain information about her personal life.

Still other employees complained about arbitrary performance evaluations,
retaliation from supervisors for speaking up about unfair working
conditions, being passed over for promotions or having to endure
retaliation after complaining about environmental or other hazards on the
job. "We have made these complaints known to EPA, but so far they have
fallen on deaf [ears]," said Leroy W. Warren Jr., an NAACP national board
member and chairman of the civil rights group's federal sector task force,
which helped organize the rally.

Speakers at the event said that minority and disabled employees at EPA are
planning to file a class-action lawsuit against the agency, and they called
on Browner to either take strong action to thwart discrimination at the
18,000-employee agency or resign.

EPA spokesman Dave Cohen responded by defending Browner's civil rights
record, pointing to sharp increases in the number of female and minority
managers at the agency during the more than seven years she has been in
charge. "No EPA administrator has been more actively committed to ending
discrimination and promoting diversity," Cohen said. He added that Browner
is willing to meet with NAACP officials to "further our common goal of
equal opportunity for all regardless of race, religion, gender, disability
or sexual orientation."

If minority employees move forward with a class-action lawsuit, EPA would
join a growing list of federal agencies--including the Department of
Agriculture, the Department of Education, the Social Security
Administration, the Secret Service and the FBI--that have been sued in
recent years. Earlier this month, a black senior manager at EPA won a $
600,000 verdict in U.S. District Court, after what she called years of
harassment. (The Washington Post, August 31, 2000)

FORD MOTOR: CA Judge Orders Recall; Florida Issues Subpoenas
A California judge is prepared to order the recall of nearly two million
Ford Motor Co. vehicles after finding the auto giant misled consumers about
their propensity to stall. Alameda Superior Court Judge Michael Ballachey's
preliminary ruling, which if finalized next month could be the first
vehicle-recall order ever issued by a judge, comes as the second-biggest
U.S. automaker battles a tidal wave of bad publicity over the recall of 6.5
million Firestone tires on its trucks and sport-utility vehicles.

On Wednesday Florida launched a civil racketeering investigation into
Bridgestone/Firestone tires and has issued subpoenas to the tire maker and
to Ford Motor Co. In his harshly worded ruling issued late Tuesday, Judge
Ballachey accused Ford of producing a 'blizzard of unpersuasive statistical
evidence' about the reliability of its thick-film-ignition module. 'Ford's
strategy, clearly established by the credible evidence was: If you don't
ask the right question, we don't have to answer with what common sense
tells us you want to know,' the judge wrote.

The multibillion-dollar case involves allegations that Ford placed the TFI
modules too close to the engine in at least 1.7 million California cars and
trucks between 1983 and 1995, creating a condition that made the vehicles
inclined to stall. There are about 3.5 million current and former
California Ford owners represented in the class action.

A Ford spokesman said the automaker would seek a reversal of Judge
Ballachey's preliminary decision at a final hearing Sept. 28 in Oakland,
and if that bid fails the car company will appeal. 'We'll present evidence
to the court again that proves that these vehicles are safe,' Susan Krusel
said. 'In the long term, we are confident that this case will be won on

Ms. Krusel added that Ford also plans to challenge Judge Ballachey's power
to order a recall, claiming that that power lies only with government
regulators. 'We still believe that only the government has the authority to
order a recall, and that will be one basis of our appeal,' Ms. Krusel said.
'There is nothing for consumers to do right now except for continue to
drive their vehicles safely, as they have done, in some cases, for 18

Plaintiffs in the suit charged that Ford could have avoided the risk of
module failure, engine stalling and loss of vehicle control by spending
US$7.75 a vehicle to move the part to somewhere else in the engine

Across the country in Florida, the state served subpoenas on Ford and
Bridgestone/Firestone on Aug. 23, requesting documents related to problems
with tire tread separation and blowouts as part of a 'fact-finding
investigation' that could lead to severe fines, Keith Vanden Dooren,
Florida assistant attorney general, said.

Bridgestone/Firestone recalled 6.5 million 15-inch ATX, ATX II and
Wilderness tires in the United States this month. U.S. authorities are
investigating about 100 accidents and 62 deaths linked to Firestone tires,
most involving Ford's Explorer, the most popular sport utility vehicle in
the United States.

'The key thing is what they knew and when they knew it,' Mr. Vanden Dooren
said. 'The concern is that they may have known something was wrong many
years ago.' The companies have until Sept. 21 to respond to the subpoenas,
he said.

Civil racketeering cases against companies can result in millions of
dollars in fines and restitution. In a case against Prudential Insurance
Co. of America, the company agreed in 1997 to pay Florida US$15-million and
to make restitution to customers to settle allegations it used deceptive
sales practices.

Lawsuits filed in Florida and other states against Bridgestone/Firestone
and Ford allege that the recalled tires are defective and prone to tread
separation and blowouts. (National Post (formerly The Financial Post),
August 31, 2000)

FORD MOTOR: Struggling for Damage Control after Tire Crisis
Ford Motor Co. raced into 2000 in high gear, powered by its popular
sport-utility vehicles and other top-selling models, a string of newly
acquired luxury-car makers such as Volvo and a brash chief executive who is
shaking up the company that invented the assembly line.

There was even talk that Ford might soon eclipse General Motors Corp. as
the world's biggest auto maker, a title Ford hasn't held since it was still
being run by founder Henry Ford at the dawn of the Great Depression.

But now the Firestone tire crisis and a rash of other quality snags at
Ford--whose familiar slogan is that "Quality is Job 1"--has the company
struggling to reassure the world that it is still building reliable, safe
vehicles and is being candid with consumers and the government.

Ford probably has the cash reserves to weather the recalls, warranty
repairs and court fights stemming from these cases, analysts said. But the
rapid-fire sequence of problems is raising questions about whether the auto
maker and its chief executive, Jac Nasser, could see their recent
achievements clouded if a growing number of consumers begin to doubt Ford's

Whether Ford can preclude that from happening and keep consumers confident
about buying its cars and trucks will determine whether the Dearborn,
Mich.-based giant can maintain the momentum that has made it the envy of
the automotive world.

"It's their worst nightmare," said David Cole, director of the University
of Michigan's Office for the Study of Automotive Transportation. "When you
advertise your quality and then the market senses that you're not
delivering, buyers question the whole message."

One issue dogging Ford is the perception--at least among safety advocates
and many consumers--that it has remedied defects far too slowly and only
after widespread public criticism. In the case of problem V-6 engines prone
to head-gasket failures, for example, the company extended warranty
coverage to certain models in three incremental steps that left consumer
advocates charging that the company still failed to make good for hundreds
of thousands of owners.

"The entire issue will circle around how they handle each of these
problems," said George Peterson, president of AutoPacific Inc., an industry
consulting firm in Tustin. "You can generally maintain your corporate
reputation if you handle these things very aggressively and forcefully, and
say to the public , 'Yes, there's a problem and we're going to fix it,' "
Peterson said.

Ford's overriding problem, of course, is the crisis surrounding the
Firestone tires that equipped many of its Explorers, which have been the
country's best-selling SUVs since their debut a decade ago.

Bridgestone/Firestone Inc. launched a recall of 6.5 million tires in the
U.S. on Aug. 9 amid a federal investigation into whether dozens of
fatalities might be linked to faulty Firestone brand tires used mostly on
Ford light trucks.

Yet Ford is grappling with other quality setbacks, too.

                       Judge Hints at a Massive Recall

On Tuesday, a California Superior Court judge--ruling in the largest
class-action lawsuit ever filed against a U.S. auto maker--said he might
order a recall of as many as 2 million Ford vehicles over concerns that
they are prone to stalling because of a faulty ignition/electrical setup.
The recall would cover dozens of Ford models built between 1983 and 1995.

Ford also has been hobbled all year by problems associated with a 3.8-liter
V-6 engine installed in a variety of cars and minivans, ranging from the
Mustang to the Windstar, because the engine is prone to head-gasket
failure. In May, Ford for the third time expanded warranty coverage in
addressing the problem, and now more than 1 million vehicles are involved.
There is also at least one class-action lawsuit being mounted on behalf of
owners of the vehicles.

Ford executives deny that the defect problems indicate any breakdown in the
auto maker's commitment to quality and safety. "We are a victim of
circumstances here," said Ken Zino, a Ford spokesman. "Certainly with the
tire recall, we moved as quickly as we could, once we understood what was
going on." But he conceded that Ford's image is taking a beating: "Any time
you have a recall, it has an effect on reputation."

The company also acknowledged that negative publicity is starting to turn
off auto buyers and hurt Explorer sales. The car maker, which will release
August sales figures this week, is expecting Explorer sales to drop "a
couple of percentage points" from the levels of a year ago, Zino said.

In July, before the Firestone fiasco surfaced, Ford sold 39,550 Explorers,
up 15% from July 1999.

To be sure, faulty parts and model recalls are hardly new in the auto
industry. And some analysts are not convinced that a significant number of
consumers are going to start second-guessing whether to buy a Ford because
of the company's recent setbacks.

"I don't think it will have a negative impact" on Ford's overall sales,
said Michael Bruynesteyn, an analyst at Prudential Securities. "There are
recalls every year, and there are court cases that Ford and GM and
DaimlerChrysler then win on appeal every year. "Clearly the Firestone
situation is worse than anything we've seen," he said, "but the Explorer is
not going to be damaged over the long term. Ford is actively managing this
situation, and they're doing the best they can."

David Healy, an analyst at Burnham Securities, said that "the tire recall
with its nasty, daily headlines has some potential for slowing things down
temporarily" for Ford, "but I think, frankly, it will blow over."

Still, Ford's effort will come under further scrutiny when Congress holds
hearings on the Firestone situation beginning next week. A House Commerce
Committee hearing is set for Wednesday, and a Senate Commerce Committee
hearing, originally set for the same day, is now scheduled for Sept. 12.

Nasser so far has declined to appear at the House hearing, which drew
complaints from some lawmakers. But Ford said Wednesday that both
congressional committees agreed to accept two other Ford executives at
their hearings.

Regardless, some auto-safety groups noted that Nasser is appearing in
television commercials to defend his company. "Ford's reputation is on the
line here," said Clarence Ditlow, executive director at the Center for Auto
Safety in Washington.

Meanwhile, Venezuela's consumer protection agency is scheduled to unveil on
Thursday a report on the results of its investigation of deaths blamed on
failed Firestone tires on Ford vehicles in that country.

Samuel Ruh Rios, head of the consumer protection agency known as Indecu,
was quoted in the El Universal newspaper Wednesday as saying the report
will find that Ford and Firestone share the blame for the accidents.
Moreover, the agency's chief inspector told El Nacional newspaper that the
probe indicates some of the accidents involving Ford Explorers were caused
by problems other than faulty tires.

The report will be turned over to prosecutors so a criminal case can be
pursued. Congressional deputies also have said a legislative inquiry is

                        $ 163 Billion in Sales Last Year

Ford, like GM, is a behemoth by almost any measure. Ford's sales last year
totaled $ 163 billion, and it sold 7.2 million vehicles around the globe.
The company has more than 350,000 employees and 150 manufacturing plants
worldwide. Under Nasser's direction, Ford has been buying up other
companies to expand its line of higher-profit luxury cars. Ford--whose
other domestic brands are Lincoln and Mercury--last year paid $ 6.5 billion
for the car division of Volvo of Sweden, adding to foreign holdings that
include Jaguar and Aston Martin of England. Last month Ford bought British
SUV maker Land Rover, and it owns a controlling stake in Mazda Motor Corp.
of Japan.

Beyond making global deals, Nasser also is boldly trying to change Ford's
culture: pushing the company to develop new models faster, cutting
operating costs, hiring dozens of outsiders for top positions across its
divisions and, in a novel move for Ford, at least, tying executives' pay to
the performance of the company's stock.

The stock, though, has taken a beating in the aftermath of the Firestone
mess, and it has lost 11% of its value so far this year. However, it gained
63 cents Wednesday, closing at $ 25.88 a share on the New York Stock

In the faulty car-ignition case, the class-action suit was brought on
behalf of more than 3 million California residents who now or formerly
owned Ford vehicles equipped with "thick-film ignition modules." An
estimated 1.8 million TFI-equipped vehicles are still on the road and,
under the judge's tentative ruling, they could be recalled or their owners
could be reimbursed by Ford if they replaced the failed modules on their

Either way, the decision by Alameda County Superior Court Judge Michael E.
Ballachey could cost Ford more than $ 100 million, though his ruling could
be revised after he holds more hearings Sept. 28-29.

The TFI module is a device that regulates the flow of electrical current to
spark plugs. Between 1983 and 1995, Ford installed them on about 22 million
Ford, Lincoln and Mercury vehicles. Plaintiffs' lawyers allege that Ford's
decision to mount the device on the distributor exposed it to excessive
heat, causing a high rate of TFI failures and serious problems with
vehicles stalling, both when started up and at highway speeds.

Ford argues that there is no significant difference in the number of
failures of TFI modules mounted on distributors versus remote-mounted ones,
and no evidence of any injuries or deaths caused by the problem. But
Ballachey said evidence shows that Ford was aware that mounting the modules
on distributors would make them "vulnerable to 'thermal stress.' " Times
staff writers Myron Levin and Sebastian Rotella contributed to this report.
(Los Angeles Times, August 31, 2000)

GOLF COURSE, SUN-RICH: EEOC Charges 2 Florida Employers of Bias
Recently, the EEOC decided to file suit for race discrimination against two
Florida employers for what it perceived to be "blatant forms of bias and
bigotry." The suits were part of the agency's increased efforts to
eliminate race and national origin discrimination.

The first suit, filed in federal district court in Orlando, accused the
Sanctuary Golf Course of Sanibel Island of persistent racial harassment of
an African-American male employee. The second lawsuit was filed in federal
district court in Fort Myers against a major agricultural employer,
Sun-Rich of Florida City, claiming that it failed to hire qualified Haitian
and African-American applicants for discriminatory reasons.

                Claims Focus On Discriminatory Comments

Samual Hulsinger, an African-American male who worked for Sanctuary Golf
Course, claimed to have been subjected to frequent and severe verbal racial
harassment, including derogatory racial slurs made in supervisors'
presence. One manager supposedly made repeated references to the employee
about the Ku Klux Klan. The employee also claimed that physical threats
were made against him, with one co- worker brandishing a knife and others
holding up a hangman's noose.

Hulsinger told the EEOC that he had complained to senior management about
the harassment, but nothing was done to correct the problem. As a result,
he suffered from medical ailments, including an angina attack that led to
his hospitalization. He resigned from the company shortly thereafter.

In the suit against Sun-Rich, the EEOC claims that when African-Americans
and Haitians applied for jobs, they were turned away despite numerous
openings. One individual claims to have been told by a manager that the
company "was not going to hire Haitians anymore."

The action filed against Sun-Rich is a class-action lawsuit. The EEOC will
attempt to represent all Haitian and African-American individuals who
applied for jobs at the company between May 1999 and December 1999. The
court will determine if the class action is appropriate.

In both suits, the EEOC seeks compensatory and punitive damages for the
individuals who suffered discrimination. In addition, the agency is seeking
a court order requiring the companies to conduct employer training
(monitored by the agency) and post notices at their workplaces announcing
future compliance with the antidiscrimination laws.

                        Why these two employers?

The two cases were selected for EEOC enforcement because of the agency's
determination that the alleged facts were particularly egregious. In
announcing the lawsuits, the agency's chairwoman, Ida L. Castro, noted that
race discrimination claims continue to account for the highest percentage
of all charges filed with the EEOC. In fact, race claims have climbed by
nearly 400 percent since the 1980s.

Both the regional attorney and the district director for the EEOC's Miami
district office joined Castro in announcing the pending cases.

                         What's the lesson here?

The EEOC often seems like an ineffective administrative delay -- to both
employees and employers. Before employees can sue under most federal and
state antidiscrimination laws, they must file a discrimination charge and
wait a certain period of time before filing a lawsuit.

Employers may feel that the EEOC charge is just paperwork, a required step,
but no big deal. Wrong! As these cases illustrate, the agency is sometimes
looking for the right set of facts to use for setting an example, and that
can put the employer in a very public arena (with accompanying negative
press) if the agency chooses to file suit on the employee's behalf.

It's important to take a good look at the facts claimed by the employee and
to make a genuine effort to address those claims and help the EEOC uncover
the truth. Don't assume that you can treat discrimination charges any less
seriously than you treat lawsuits against your company. The best defense is
usually a good offense.  (Florida Employment Law Letter, August, 2000)

LOS ANGELES POLICE: City Asks Judge’s Permission to Appeal Rico Ruling
The city attorney's office asked a federal judge Wednesday for permission
to appeal his unprecedented ruling allowing the Los Angeles Police
Department to be sued under an anti-racketeering law. A lawyer for the city
told U.S. District Judge William J. Rea that his ruling "is without legal
support and is contrary to the controlling authority" of the U.S. 9th
Circuit Court of Appeals and other federal courts. If applied to the many
other pending Rampart cases, the RICO ruling could dramatically boost the
city's liability, since the act provides for triple damages.

Acting in a Rampart-related lawsuit, Rea ruled Monday that the LAPD could
be sued under the federal Racketeer Influenced and Corrupt Organizations
Act, originally enacted to prosecute mobsters and drug dealers.

Before the RICO issue arose, city officials estimated that payouts in
Rampart civil suits could exceed $ 100 million. Under court rules, Rea's
order cannot be appealed without his consent. Even if Rea gives his
approval, the appeals court could refuse to hear the matter.

In a document delivered to his chambers late Wednesday, Deputy City Atty.
Paul N. Paquette asked the judge to allow the city to challenge his ruling
before the 9th Circuit Court, saying fundamental legal issues are at stake.

Told of the city attorney's action, attorney Brian C. Lysaght, who
represents the plaintiff in the case, said: "We think this is a frivolous
exercise on their part. We doubt that Judge Rea will certify an appeal or
that the 9th Circuit will be interested in reviewing it in the pretrial

Rea's controversial ruling came in a case filed on behalf of Louie
Guerrero, 36, who said he was arrested by Rampart officers in 1997 on
fabricated charges. After serving his time and being released from prison,
he sued for alleged civil rights and racketeering violations.

The judge rejected the city's motion to dismiss the lawsuit Monday.
Furthermore, he ruled that Guerrero has a right to use the RICO law against
the police because he claims that he lost his job as a result of his

But Paquette contended Wednesday that under the RICO law, Guerrero must
allege that the police arrested him for the specific purpose of causing him
economic losses.

"There are no authorities, including those relied on by the court, which
have allowed a RICO claim to proceed based on such tangential allegations
of injury to business or property," Paquette wrote.

The city's lawyer charged also that Rea cited an inappropriate 9th Circuit
precedent when he ruled that Guerrero could seek a sweeping injunction to
bar Rampart officers from committing a variety of illegal acts.

Paquette said the judge should have relied instead on a 1983 U.S. Supreme
Court case growing out of the LAPD's use of chokeholds.

That case, he said, addressed the same allegations raised by Guerrero in
precisely the same context, and the high court found them insufficient to
warrant an injunction.

The city attorney also argued that Rea misinterpreted a 1994 U.S. Supreme
Court decision when he ruled that Guerrero was entitled to file a civil
rights action, even though his conviction has not been overturned in state

So far, about 100 convictions have been overturned as a result of the
Rampart scandal, in which police officers are accused of evidence planting
and courtroom perjury.

Stephen Yagman, co-counsel to Guerrero, said Rea's ruling on this point
would greatly expand the number of people who can become plaintiffs in
legal actions against the police.

Yagman and Lysaght want Rea to certify the Guerrero lawsuit as a class
action, covering everyone who claims their rights were violated by members
of the Rampart Division's now-disbanded anti-gang unit.

Paquette said that after receiving his request, Rea sent back word that he
wanted a written response from Guerrero's lawyers before he takes any
action. (Los Angeles Times, August 31, 2000)

LUTHERAN BROTHERHOOD: Act Can’t Be Used to Defeat Fed Securities Law
Plaintiffs in a putative class action concerning variable insurance
policies cannot defeat federal subject matter jurisdiction on the grounds
that the Gramm-Leach-Bliley Act mandates that federal securities laws be
interpreted as leaving the regulation of insurance to state lawmakers,
according to a recent ruling by the District of Minnesota. The ruling arose
after the plaintiffs moved for a remand of the suit to state court. In re
Lutheran Brotherhood Variable Insurance Products Co. Sales Practices
Litigation, No. 99-MD-1309 (D. Minn., July 11, 2000).

A number of plaintiffs filed putative class action suits against Lutheran
Brotherhood and Lutheran Brotherhood Variable Life Insurance Co.
(collectively, Lutheran) in state and federal courts in Ohio and Michigan.
The cases desired to represent classes of persons who have or had an
ownership interest in whole life, universal life or variable life insurance
policies issued by Lutheran.

Four of the suits, Thompson, Eifler, Locke and Watson, were removed to
federal court on the basis of federal question jurisdiction. The suits did
not state federal causes of action, but removal was justified by Lutheran
on the grounds that the variable insurance policies at issue were
registered securities under the Securities Act of 1933, 15 U.S.C. @ 77 et
seq., and the Securities Litigation Uniform Standards Act of 1998, Pub. L.
105-353. The suits were consolidated and transferred by the Judicial Panel
on Multidistrict Litigation to the U.S. District Court for the District of

Prior to consolidation, the Thompson plaintiffs filed a motion to remand
the suit to state court. They motion took the position that the SLUSA did
not apply to variable insurance contracts. U.S. District Judge Donovan W.
Frank denied the motion in August 1999. The Thompson plaintiffs then
requested leave to amend their complaint to remove the counts concerning
variable insurance policies; they also made another request for a remand.
The district court denied relief in January 2000, stating that the
plaintiffs were attempting to forum shop in order to avoid federal law that
could hinder class certification.

Following consolidation, the plaintiffs filed a third motion to remand,
arguing that federal law is inapplicable to the suit. They also asked that
in the alternative the claims of plaintiffs with only nonvariable policies
be severed and remanded.

U.S. District Judge Paul A. Magnuson explained that a removed case may be
remanded at any time prior to final judgment if it appears that the court
lacks subject matter jurisdiction. The party opposing remand has the burden
to prove federal subject matter jurisdiction, he continued.

In support of their motion, the plaintiffs reiterated the assertion that
the SLUSA did not apply to the case because the variable insurance policies
sold by Lutheran are not covered securities under the statute. Judge
Magnuson rejected this position, stating that the SLUSA intends to prevent
state court abuse litigation concerning the purchase and sale of
securities. The statute defines covered securities by referencing the
National Securities Markets Improvement Act of 1996, Pub. L. No. 104-290,
which provides that covered securities are registered securities listed on
national exchanges or those issued by registered investment companies.
Lutheran is a registered investment company under the Investment Company
Act of 1940, 15 U.S.C. @ 77r(b)(1) and (2), he said. Variable policies are
discussed in the NSMIA and Congress intended to include those policies, he

The plaintiffs also contended that the Gramm-Leach-Bliley Act, 15 U.S.C. @
6701 et seq., evidences the intent of Congress to leave to the states the
regulation of variable insurance products. Therefore, the SLUSA and the
Private Securities Litigation Reform Act, 15 U.S.C.S. @ 78 et seq., must be
interpreted as preserving the regulation of insurance to the states, the
plaintiffs said.

In response, Judge Magnuson stated that Gramm-Leach-Bliley makes it clear
that the McCarr an-Ferguson Act, 15 U.S.C. @ @ 1011-1015, is still in
effect. McCarr an-Ferguson ensures that the states have the primary
responsibility to regulate insurance, and federal laws will not be read to
invalidate or impair state insurance law absent clear Congressional intent,
the judge elaborated.

The application of the SLUSA to the plaintiffs' suit is not barred by
McCarran-Ferguson, the judge held. He explained that the variable insurance
policies at issue are hybrid insurance-investment products and not pure
insurance products, citing to Securities and Exchange Comm'n v. United Ben.
Life Ins. Co. , 387 U.S. 202 (1967). Further, the Securities and Exchange
Commission has applied federal securities law to variable insurance
products on a consistent basis, the judge observed. In addition, even if
the variable policies at issue were pure insurance products, the
plaintiffs' suit does not rely on or discuss a state insurance law that is
allegedly invalidated or impaired, Judge Magnuson said.

The judge concluded his opinion by ruling that the district court would
exercise supplemental jurisdiction over the claims of the plaintiffs who
own or owned nonvariable policies and who asserted only state law claims.
(Bank & Lender Liability Litigation Reporter, August 10, 2000)

MICROSOFT CORP: CA Judge Says Denial Could Result in Repetitious Suits
In the first state case against Microsoft, plaintiffs claim the firm's
software monopoly hurt consumers. According to the Investor’s Business
Daily, some 62 similar suits are in the works nationwide. A judge said an
untold number of consumers could be represented in the trial. They claim
they were forced to pay unreasonably high prices for Microsoft products.
The judge said denying the suit "could result in repetitious litigation."
(Investor's Business Daily, August 31, 2000)

The Chicago Tribune says that California, traditionally a gold mine for
Microsoft Corp., now looms as a potential minefield for the giant

A San Francisco judge's decision Tuesday to certify a private antitrust
lawsuit against Microsoft as a class action, representing millions of
California consumers, will put its pricing policies on trial in what is
probably its most lucrative market.

If successful, the suit could cost Microsoft billions of dollars because of
laws that triple the damages in antitrust cases, said Herbert Hovenkamp, an
antitrust expert who has followed the legal battle against the

Most of the 137 consumer lawsuits filed against Microsoft nationwide have
either been dismissed or transferred to a Baltimore federal court.

The California case has a long way to go before attorneys will get their
chance to prove their allegations: that Microsoft has gouged Californians
who bought Windows operating systems, word processing and spreadsheet
programs since 1994.

The fate of the California case--scheduled for a 2002 trial--probably will
be intertwined with Microsoft's appeal of the antitrust verdict handed down
against the company in its long-running federal case.

NISSAN MOTOR: Early-Termination Rules Violated Consumer Leasing Laws
In a decision that could affect thousands of people who leased Nissan
automobiles during the mid-1990s, a federal appeals court ruled Wednesday
that Nissan's early-termination provisions violated consumer leasing laws
by not disclosing significant penalties. In one case, a Montgomery County,
Pa., man was required to pay more than $ 5,000 when he ended his lease 10
months early.

"An early-termination clause that fails to reveal an otherwise unknowable
variable used in determining an early-termination penalty cannot be
regarded as reasonably understandable' in any meaningful sense of the
term," wrote U.S. Circuit Judge Samuel A. Alito Jr. in the unanimous
opinion by the U.S. Court of Appeals for the 3rd Circuit.

The decision reversed a lower-court decision favoring Nissan. The appeals
court sent the case back to U.S. District Judge Norma L. Shapiro "for the
award of appropriate relief."

Scott Vazin, a spokesman for Nissan Motor Acceptance Corp., of Irving,
Texas, said company officials would not comment about a possible further
appeal because they had not yet seen the 3rd Circuit opinion.

Cary L. Flitter, who filed the suit three years ago on behalf of Montgomery
County resident Leonard Applebaum, could not be reached for comment. But
Michael D. Donovan, a Philadelphia lawyer working with Flitter on a
companion class-action lawsuit against Nissan that is pending in federal
court here, called the ruling "a significant victory for consumers who want
to make a knowledgeable decision about leasing."

The Applebaum suit and the class action filed on behalf of Bensalem, Pa.,
resident Brian S. Miller are part of a series of lawsuits filed nationwide
during the last five years over the termination penalties in closed-end
leases used by Nissan until late 1997.

Donovan said the New York-based U.S. Court of Appeals for the 2nd Circuit
has also ruled that the lease violates the Consumer Leasing Act. The 7th
Circuit, based in Chicago, however, has ruled in favor of Nissan Motor
Acceptance Corp. While all the consumers knew they would pay a penalty for
terminating their leases early, the lawsuits say that nothing in the lease
explained how that penalty would be computed or that it could be

In the Applebaum case, for example, Applebaum signed a 36-month lease in
1994 for a 1995 Nissan Maxima and then traded it in 10 months before the
lease expired for a 1997 model. According to court documents, Applebaum was
told he owed an early-termination charge of $ 5,611 but no one -- neither
the dealer nor Nissan Motor Acceptance Corp. -- could explain how it was

Donovan maintains the large termination charge was the result of a Nissan
marketing strategy to lower the monthly lease payments by inflating the
value of the vehicle at the beginning of the lease. Nissan based its
termination charges on the vehicle's initial value. "It turned out that
early-lease terminators were subsidizing Nissan's loss," Donovan added.
(The Philadelphia Inquirer, August 31, 2000)

ON POINT: Settlement of Securities Suit Ends Absent GTECH Acquisition
During the second quarter, three separate shareholder class actions were
filed against On Point Technology Systems Inc., certain of the Company's
directors and officers, and the Company's auditors in U. S. District Court,
Southern District of California seeking unspecified damages on behalf of
all similarly situated shareholders, and alleging violations of federal
securities laws as a result of the restatement of the Company's financial
statements in prior periods. A settlement of these actions involving the
Company and it's directors and officers was agreed upon by attorneys for
the plaintiff's and the Company's attorneys in connection with the
Company's discussions with GTECH Corporation concerning a restructured
acquisition agreement. The settlement is terminable if an acquisition of
the Company by GTECH does not occur. Discussions with GTECH regarding an
acquisition have been discontinued. As a result, the Company is in the
process of terminating the settlement and will be vigorously defending
these claims.

SEATTLE: Minorities File $100 Mil Suit over Racial Profiling
Stalin Harrison Jr. was driving into downtown Seattle after closing up his
South End barbershop when, he says, he was racially profiled. Joseph
Kimball Edwards, a 43-year-old carpenter from Des Moines, was driving to
his office when he was stopped. And J.R. Harris, a 33-year-old sports agent
from Federal Way, says he has been pulled over by police more times than he
can remember.

The three black men are among a handful of named plaintiffs at the heart of
a $100 million class-action claim filed on August 29 on behalf of Seattle
minorities who believe they have been victims of racial profiling. Along
with the $100 million price tag, the claim asks for remedies that include
video cameras in each patrol car, sensitivity training and victim
counseling. In addition, Wheeler said the Police Department should be
required to maintain computer records of every motorist stopped.

The city has 60 days to respond.

Deputy Mayor Maud Daudon said the city had not yet seen the claim and could
not comment.

"This is not an obscure issue," said attorney Mark Wheeler, who announced
the claim at a morning news conference outside his Leschi law offices.
Wheeler said Seattle police officers should pay a stiff price for
practicing "ongoing, continuing and systemic" race-based stops that leave
victims humiliated and angry.

Next month, the Seattle City Council is scheduled to vote on a plan that
calls for officers to begin recording the race of each person they stop.
The similar timing of the claim and the city's move are coincidental, said
attorney Bradley Marshall. "This is a cry for help," he said. Stalin
Harrison said the cry is long overdue.

Harrison, 30, owns Stalin's Style Center in South Seattle and said he has
been repeatedly pulled over as he drives to and from his home in the
Central District.   As recently as last week he experienced something
Wheeler said is all too familiar to minorities in the city.   An officer in
an unmarked police car made a U-turn just before sundown and pulled
Harrison over near the corner of 23rd Avenue South and Rainier Avenue South
for having a dead headlight. After showing the officer that both of his
lights were operating fine, Harrison said the officer checked his driver's
license, then asked if he had a gun in his car.   Harrison who said he
doesn't own a gun, called the experience "very embarrassing." (Seattle
Post-Intelligencer, August 30, 2000)

SECRET SERVICE: Black Agents Say Gore Should End Discrimination
The Washington Times (8/31, Seper) reported, "Black US Secret Service
agents who say a limit was placed on the number of them who can serve on Al
Gore's security detail demanded the vice president provide the 'moral
leadership' to end racial discrimination within the agency. Attorney John
P. Relman, who represents 38 black agents in a class-action discrimination
suit, said Mr. Gore was aware of complaints of racial problems within the
Secret Service and on his security detail, but made no effort to address
the issue." Gore spokesman James Kennedy "said Mr. Gore was unaware of any
discrimination on his security detail 'other than what has appeared in news
reports.' But he said Mr. Gore 'is opposed to discrimination of any kind. '
Regarding the call for Mr. Gore to provide 'moral leadership' to address
the accusations, Mr. Kennedy referred the request to the Secret Service,
which he said 'handles staffing matters.'" (The Bulletin's Frontrunner,
August 31, 2000)

TELECTRONICS PACING: Sixth Circuit Decertifies Heart Pacemaker Class
The Sixth Circuit has decertified a class of plaintiffs who claim that
heart pacemakers manufactured by Telectronics Pacing Systems malfunctioned,
causing injury to a patient's heart and blood vessels. In re Telectronics
Pacing Systems Inc., Nos. 99-3476 , 99-3477, 99-3478, 99-3479 and 99-3480
(6th Cir., July 19, 2000).

This products liability class-action litigation was brought on behalf of
individuals implanted with the Telectronics Accufix Atrial "J" pacemaker
lead. The lead is implanted in the atrium of the heart as part of a
pacemaker device used to restore normal heartbeat. It was determined in
1994 that some of the lead wires had a tendency to break, coming through
the polyurethane coating and potentially causing injury to the heart and
blood vessels.

TPLC, listed among the defendants and owned by Telectronics, manufactured
the defective leads that were implanted in about 25,000 people in the
United States. TPLC manufactured and distributed these leads in the United
States between 1988 and 1994. Telectronics Pacing Systems is responsible to
hold industrial property rights, real estate and the equity interest in

Numerous state and federal court actions were filed against the defendants.
Many of the suits became part of a multidistrict litigation proceeding in
the Southern District of Ohio cited as In re Telectronics Pacing Systems
Inc., 953 F. Supp. 909 (S.D. Ohio, 1997). The district court addressed the
issue of class certification of the MDL several times before entering the
final decision that ultimately certified the class as a mandatory,
non-opt-out class under Federal Rule of Civil Procedure 23(b)(1)(B).

The issue brought before the U.S. Court of Appeals for the Sixth Circuit
sought review of the district court's decision to certify the multidistrict
litigation. The appellate panel applied the recent Supreme Court class
action case of Ortiz v. Firbreboard Corp., 527 U.S. 815, 119 S. Ct. 2295,
144 L. Ed. 2d 715 (1999). The Ortiz decision holds that a "mandatory" class
-- a class that does not give individual notice to members or allow them to
opt out -- may not be certified, or a settlement approved, under Rule
23(b)(1)(B). Other reasons the circuit court decertified the class were
because the panel found no merit in arguments concerning issues of
settlement, limited funds and arms-length negotiation among parties.

The panel concluded that the Supreme Court's opinion in Ortiz requires that
the mandatory Rule 23(b)(1)(B) class certified by the district court here
must be decertified, and that the settlement approved by the district court
must be disapproved. (Medical Devices Litigation Reporter, August 11, 2000)

TEXAS MEDICAID: Bush Defends State Health Care
George W. Bush dismissed criticism of the way Texas provides health
treatment for poor children, saying that a court order demanding action
came from ''an activist, liberal judge'' and that Democrats were only
trying to change the subject from their own poor record.

U.S. District Judge William Wayne Justice said in his order that Texas was
not adequately providing regular checkups, dental care, transportation to
doctors or information about what services are available to children in
Medicaid, despite the state's promise four years ago to make changes.

Bush, commenting Thursday on his campaign plane on the way to Cincinnati,
defended his record. ''We are doing everything in our power to take care of
the disadvantaged children of the state of Texas,'' he said. He criticized
the federal government for refusing to grant waivers that he said would
have made the process easier. In addition, his spokeswoman, Karen Hughes,
said that in many cases, parents have refused the state's offer to provide
Medicaid coverage for their children.

The judge's order immediately became fodder for the presidential
candidates, with Democrat Al Gore criticizing Bush, the Republican governor
of Texas.

Democrats planned to focus on the ruling beginning Thursday in a number of
ways, including in paid advertising, according to officials familiar with
the ad. ''The reason they're pounding me is because this is an
administration of which Al Gore is a part that has been unable to lead,''
Bush said. ''They're trying to go on the offensive on an issue on which
they are extremely vulnerable.''

He contended anew that the Clinton-Gore administration has squandered an
opportunity to bolster Medicaid during the economic boom. ''If you have not
led, it is hard to make the case that you want four more years,'' Bush

He called the Texas judge ''an activist, liberal judge'' and said the state
is signing up record numbers of children to Medicaid. Judge Justice has
issued major rulings on racial segregation, education for immigrants and
prison conditions since being appointed by President Johnson in 1968.

The judge said Texas officials had failed to live up to a 1996 agreement to
make major improvements to its Medicaid program and that the failure is
hurting poor children.

Gore's campaign regularly says that there are 1.4 million Texas children
without health insurance and that Bush tried to limit eligibility for a new
program aimed at getting coverage to children in working poor families.

The state attorney general plans to appeal. The ruling gives the state 60
days to come up with a solution making it due just before the Nov. 7
presidential election. ''Governor Bush has an obligation to explain that
strong and very troubling court decision,'' said running mate Joseph

Bush's campaign said he is committed to improving the program and pointed
the finger at the Democratic administration that preceded him. Bush was
elected in 1994. The class-action lawsuit that sparked the latest ruling
was filed in 1993. ''This is a decade-long challenge that Texas is
addressing,'' said spokesman Dan Bartlett. ''We are aggressively working to
provide health care to those children.''

The state signed a consent decree promising change in 1996. The court
issued a ruling Aug. 14 saying the state had failed to fix the program,
which serves about 1.5 million Texans under age 18. Another 1.4 million are
uninsured, about 600,000 of whom are eligible for Medicaid but not

In his 175-page ruling, the judge said Texas had failed to inform families
about the benefits available even when they asked. About 1 million kids
never saw a dentist last year, and most who did were there for emergency
treatment such as an inability to eat that could have been prevented.

The court also found major problems with transportation programs and for
children enrolled in health maintenance organizations and other managed
care plans. ''A poor and often-isolated population should not be robbed of
their rights to services,'' wrote the judge. Like other states, Texas is in
the process of moving its Medicaid population into managed care. But the
court found that the checkups ''were grossly inadequate and incomplete''
taking just 12 to 20 minutes when a proper exam would take an hour.
Associated Press writer Connie Mabin in Austin contributed to this report.
(AP Online, August 31, 2000)

TRANS UNION: 2-Year Limit Can't Be Extended But Events Remain As Support
The U.S. District Court for the Central District of California held that an
aggrieved consumer in a Fair Credit Reporting Act suit could not use the
discovery rule or equitable tolling doctrine to extend the act's two-year
statute of limitations, but the events underlying the barred claims could
nevertheless remain as support for the consumer's claim that Trans Union
LLC did not "follow reasonable procedures" to correct his credit report.
(Lazar v. Trans Union LLC, No. CV 00-03361 DT (JWJx) (C.D. Cal.

In 1990, Dr. Gary S. Lazar sought a credit increase on his credit card. He
was denied, however, based on a Trans Union credit report. After getting a
copy of his credit report, Lazar discovered inaccurate and mismerged
information from another "Gary Lazar" who was a convicted felon with
numerous tax liens. Pursuant to Lazar's request, Trans Union removed the
incorrect information and provided him with a corrected report. Similar
problems with inaccurate and mismerged information arose repeatedly over
the next 10 years. Each time Lazar discovered a problem, he notified Trans
Union, which claimed to have corrected the errors. However, these errors
resulted in Lazar being denied credit in several instances and being
charged a higher interest rate when he refinanced his mortgage.

In August 1999, Lazar had difficulties leasing a car after nearly 50
separate incorrect entries appeared in his credit report. Lazar complained
to Trans Union and was given a corrected copy of his report. In September
1999, however, Lazar obtained another copy of his report and discovered
that Trans Union was reporting the other "Gary Lazar" as a "possible
additional consumer file" connected to Lazar's file.


Lazar sued Trans Union under the FCRA and his complaint detailed a long
history of inaccuracies in his credit report as prepared by Trans Union.
Lazar alleged violation of the FCRA's provision that a credit reporting
agency "shall follow reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom the report
relates" and the act's reinvestigation requirements. He also claimed breach
of contract as a third party beneficiary and violation of California state

Trans Union moved to strike and dismiss various sections of the complaint.
The District Court agreed that all claims for conduct between 1990 and 1994
were barred by the FCRA's statute of limitations. Lazar argued that the
"discovery rule" tolled the statute until he learned in 1999 that Trans
Union had not corrected his report as it claimed to have done. The court

In granting Trans Union's motion to dismiss, the District Court followed
precedent, stating that a plaintiff "could not invoke the discovery rule
exception for information that the FCRA did not require the defendant to
disclose." Lazar's argument that Trans Union willfully misrepresented
information about the deletion of inaccurate information was not the same
as an allegation that information required to be disclosed was willfully
misrepresented, held the court.

Additionally, the court ruled Lazar's equitable tolling arguments were
insufficient because, where a statute explicitly states an exception to a
limitations period, additional exceptions cannot be implied. The court
refused to go further and strike the claims, as sought by Trans Union,
because they were relevant to Lazar's remaining claims that Trans Union
failed to follow reasonable procedures to cleanse his report.

Lazar attempted to bring a class action under the California Business and
Professions Code 17200, et seq. The court dismissed this claim after
finding that Lazar's claims were too fact specific. The court ruled any
class claims would vary greatly among consumers and the range of damages,
similarly would be too wide.

                      Third-party beneficiary

The District Court also dismissed the third-party beneficiary claim for
failure to state a claim upon which relief could be granted. Lazar was not
a third-party beneficiary of the contracts between Trans Union and its
subscribers. Instead, he "only incidentally benefited by performance of the
contract," the court held. Furthermore, the contract between Trans Union
and the subscriber is not a single one for each consumer report issued.
Instead, the parties enter into a standing contract for the subscriber to
access reports. "No specific member of the public is an intended
beneficiary of these agreements," Judge Dickran Tevrizian explained.
Accordingly, Lazar could not raise a breach of contract claim as an
"implied" beneficiary.

David A. Szwak of Bodenheimer, Jones & Szwak in Shreveport, La., and Gerald
Sauer of Sauer & Wagner in Los Angeles, represented Lazar. Don Bradley
represented TransUnion. (Consumer Financial Services Law Report, August 21,

WEST SUBURBAN: Borrowers Who Signed for Arbitration Can't File Suit
A federal appeals court ruled Tuesday that borrowers who sign loan
contracts requiring arbitration of disputes may not file class actions
later against lenders for violating consumer protection laws.

The case, Johnson v. West Suburban Bank; Tele-Cash Inc.; and County Bank of
Rehoboth Beach, Del., arose last year when a borrower claimed that, though
his contract barred him from suing as an individual, it did not prevent him
from joining a class action filed under the Truth-in-Lending Act and the
Electronic Fund Transfer Act. The borrower, Terry Johnson, said the lenders
failed to disclose the interest rate on his loan and committed other

In overturning a lower court ruling that had allowed the suit to proceed,
the U.S. Court of Appeals for the Third Circuit in Philadelphia wrote:
"Because neither the TILA nor the EFTA explicitly precludes the selection
of arbitration instead of litigation, a party who agrees to arbitrate but
then asserts that his or her statutory claim cannot be vindicated in an
arbitral forum, faces a heavy burden. That burden has not been met here."

In recent years banks and other lenders have tried to reduce legal costs by
steering disputes with borrowers into arbitration, which is usually faster
and cheaper than litigation. The result has been a flurry of lawsuits
challenging the enforceability of arbitration clauses, the sections of loan
contracts in which both parties agree to forgo lawsuits.

"This is a heavily litigated issue throughout the country," said Alan S.
Kaplinsky, senior partner in charge of the banking practice of the
Philadelphia law firm Ballard Spahr Andrews & Ingersoll. "We are involved
in a dozen similar cases right now."

Mr. Kaplinsky, who filed a friend-of-the-court brief on behalf of the
American Bankers Association in the Johnson case, said the appellate
court's decision was good news for banks dealing with the issue in other
jurisdictions. "I would think that it is likely to be very persuasive in
circuits where the other cases are pending."

The issue has also caught the attention of the Supreme Court, which will
hear Green Tree Financial Corp. v. Randolph on Oct. 3. In Green Tree,
another appeals court ruled an arbitration clause was unenforceable,
because it hid the potential costs of arbitration from the borrower.

However, another element of the Green Tree case not mentioned in the ruling
more closely mirrors the Johnson case. Specifically, it addresses a
borrower's right to appeal a court order compelling him/her to comply with
an arbitration clause.

Some observers predicted that the high court will address both elements of
the Green Tree case, and that activity in other arbitration-related cases
may slow pending the decision.

Trade groups heralded the decision as one more step toward establishing the
validity of arbitration clauses in loan contracts.

"Trial lawyers are attacking it from every angle they can think of, and we
beat back the attacks one by one," said Michael F. Crotty, the American
Bankers Association's deputy general counsel for litigation. "Collectively,
when we win these cases, it creates an almost irrebuttable presumption of
the enforceability of these contracts." (The American Banker, August 31,

WINSTAR SUTI: Shareholders Awarded over $6 Mil By Federal Claims Court
In the latest ruling in the Winstar series of cases, the U.S. Court of
Federal Claims has awarded $3.9 million to a group of shareholders in their
breach-of-contract suit against the government as a result of the passage
of the Financial Institutions Reform Recovery and Enforcement Act of 1989.
The court also directed the government to pay $2.1 million to the Federal
Deposit Insurance Corp. to cover the value of supervisory goodwill that was
lost due to FIRREA. Glass et al. v. United States, No. 92-428C (Fed. Cl.,
July 21, 2000); see Bank and Lender Liability LR, July 21, 1999, P. 8.


In 1985 Sentry Mortgage Corp., via its four principal stockholders, entered
into an agreement with Security Savings Bank FSB, wherein Sentry's non-cash
assets were exchanged for Security stock. In connection with the
transaction, Security submitted a business plan to the Federal Home Loan
Bank-Dallas (FHLB-Dallas). The plan stated that the acquisition anticipated
that certain regulatory forbearances would be granted, including one
allowing amortization of goodwill over a 25-year period. In 1986, the
FHLB-Dallas conditionally approved the sale in a letter dated June 18,
2000, and mentioned all of the forbearances except the one involving
amortization of goodwill. In late June 1986, the Federal Home Loan Bank
Board issued a regulation approving the inclusion of Sentry's non-cash
assets in Security's books. As a result, Security had over $6 million in
goodwill which it proceeded to amortize on a straight-line basis.

When FIRREA, 12 U.S.C. @ 1821 et seq., was passed together with its
regulations, Security was prevented from meeting its tangible capital
requirements with goodwill. It was also limited in its ability to use
goodwill when calculating core capital. Security went into receivership in
May 1990.

The four shareholders sued the federal government in the U.S. Court of
Federal Claims, asserting that the passage of FIRREA breached the
government's promise to let Security use the goodwill when meeting its
regulatory capital requirements. The plaintiffs claimed that there was an
express or implied contract, and also took the position that they were
third-party beneficiaries of a contract between Sentry and the government.
The FDIC as successor to the rights of Security, intervened in the suit.
The FDIC asserted that Security and the government had either an express or
implied contract.

In response, the government alleged that its actions were regulatory rather
than contractual, and claimed that neither the plaintiffs nor the FDIC had
standing to sue. The government took the position that the FDIC was an
instrumentality of the United States and therefore could not sue the
federal government.

In Glass et al. v. United States, No. 92-428C (Fed. Cl., June 15, 1999),
the court stated that the evidence of record indicated that Sentry and
Security entered into an implied-in-fact contract with the government. This
contract allowed the amortization of goodwill. The documentary evidence and
the parties' course of conduct established offer and acceptance,
consideration, and mutual intent, Chief Judge Loren A. Smith explained.
Further, the promise surrounding the goodwill was made for the benefit of
the Sentry shareholders, in order to motivate them to give their assets to
Security. Thus, the shareholders had third-party beneficiary status, the
judge said.

The court of claims went on to reject the government's argument concerning
standing. The FDIC was permitted to bring the suit on behalf of Security,
Judge Smith stated. Although the FDIC's role was multifaceted, its
receivership interest in Security still existed, he said. In addition, the
FDIC was the only party that could sue on behalf of the Security
receivership. The government's motions to dismiss and for summary judgment
were denied, while the plaintiffs and the FDIC were granted summary
judgment on the contract claim.

The Damages

The case then proceeded to an eight day trial on the issue of damages. The
plaintiffs argued that they deserved millions of dollars in damages under
three theories. They sought $5.8 million, a sum equal to the value of
Sentry at the time it invested in the failed bank. The plaintiffs desired a
return of their investment because they relied on thegovernment's promise
to let them use and amortize supervisory goodwill over a 25-year period.
They also requested $72,000 to cover the cost of attorneys' fees and
accounting services in connection with the acquisition of the bank. The
plaintiffs also sought restitution of over $8 million, the amount of the
benefit they gave to the government when they merged Security with Sentry.

In response, the government took the position that the plaintiffs were not
entitled to any damages at all because they previously breached the
contract and this relieved the United States of its contractual
obligations. Further, FIRREA did not harm Security or the plaintiffs,
because the bank would have failed anyway, the government said. The
government also defended by claiming that restitution damages were not
available because the plaintiffs did not confer any benefit on the United
States. In addition, FIRREA did not affect the purpose of the contract, it

If damages are awarded they should be limited to the amount of the
investment in Security, the government asserted, adding that the investment
was no higher than $3.9 million. The United States also disputed the
claimed $72,000 in transaction costs, alleging that the costs were incurred
by Security or Sentry and not the individual plaintiffs.

The FDIC requested between $2.1 million and $2.5 million representing the
value of the goodwill that was lost due to the passage of FIRREA. The
government argued that supervisory goodwill has no value or a negative
value, and in the case at bar, it had a negative value to the bank. The
government also stated that the FDIC did not prove that Security had been
damaged by FIRREA and that its measure of damages was speculative.

The Ruling

Senior Court of Claims Judge Lawrence S. Margolis issued a ruling on July
21, in which he held that the plaintiffs' documentation and testimony
regarding the transaction costs were credible. The expenses were incurred
by Sentry, he said, effectively decreasing Sentry's value at the time of
the merger. Therefore, the plaintiffs were entitled to the $72,000, he

The judge proceeded to award $3.972 million to the plaintiffs . He
explained that the government's defenses were meritless, as there had been
no breach of contract prior to the passage of FIRREA. Also, there was no
proof that the bank would have failed absent FIRREA, and when it did fail
the bank management was not at fault, the judge said. He then confirmed
that FIRREA was the cause of the bank's failure, stating that the
government's repudiation of its promise concerning supervisory goodwill
meant that the plaintiffs could recover their investment.

Judge Margolis held that the plaintiffs did not show that Sentry 's fair
market value was $5.8 million. The court placed Sentry's value at the time
of the merger at $3.9 million, based on government records.

The judge found that the FDIC was entitled to damages equal to the value of
the supervisory goodwill, after ruling that goodwill does in fact have
value. He agreed with the FDIC, which cited to United States v. Winstar
Corp., 518 U.S. 839 (1996), in support of its position seeking damages.
Judge Margolis then held that the FDIC deserved $2.1 million. (Bank &
Lender Liability Litigation Reporter, August 10, 2000)

XEROX CORPORATION: Dennis J. Johnson Files Investors Suit in Connecticut
The Law Offices of Dennis J. Johnson announces that a class action lawsuit
has been commenced in the United States District Court for the District of
Connecticut on behalf of purchasers of the securities of Xerox Corporation
("Xerox" or the "Company") (NYSE: XRX) between January 25, 2000, through
and including July 27, 2000, inclusive (the "Class Period").

The Complaint alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of material misrepresentations to the market during the
Class Period. For example, as alleged in the Complaint, on January 25,
2000, Xerox issued a press release announcing its fourth quarter results
and praising the Company's sales in Mexico, among other places. This
statement was materially false and misleading because the Company's
financial results were materially inflated due to an ongoing accounting
fraud at its Mexican subsidiary. Additionally, notwithstanding this
accounting fraud, Xerox's accountants, KPMG, issued a false opinion stating
that the Company's year end 1999 results complied with Generally Accepted
Accounting Principles. On July 27, 2000, Xerox announced that its second
quarter 2000 results would be dramatically lower than the market had been
led to believe and that it would be forced to take a$78 million charge
relating to its Mexican subsidiary.

Contact: The Law Offices of Dennis J. Johnson Dennis J. Johnson or Jacob B.
Perkinson 1-888-459-7855 LODJJ@aol.com

* Trends in the 21st Century Workplace; Internet and Aging Workforce
Cyber-employment law revolution -- new law of the digital workplace.

The invasion of the workplace (or its empowerment) by the Internet has
inevitably created employment law issues of the first magnitude. They range
from the challenges of establishing employee identity over the Internet to
Internet threats sent in the workplace. Digital communication has dissolved
the wall that separates the workplace from the outside world. The Internet
is an essential recruiting tool and is used in every aspect of hiring,
reaching around the world.

Employers are now facing claims that Internet hiring discriminates against
those who are not computer literate. From discrimination and antiharassment
law to the legal standards for workplace privacy, cybercommunications have
redefined the employment law issues of the 21st century.

Second-generation harassment and discrimination standards -- developing a
new workplace etiquette.

Sexual, racial, and national origin harassment cases (as well as cases
associated with the full range of protected categories) will continue
throughout the first decade of the 21st century. More of the litigation and
preventive activities, however, will focus on second-generation issues.

The issues will include greater protection from harassment on the basis of
sexual orientation and new standards for speech and behavior in the
politically correct and religiously tolerant work-place. As we move into
the second-generation harassment cases, employers will be forced to
continually redefine the boundary between rudeness and illegal harassment.

Aging of workforce and the rise of age consciousness -- the coming age dis-
crimination litigation explosion.

Thanks to medical advances, workers may expect to live longer and
experience a higher quality of life. Their retirement benefits, however,
have not kept pace, and social security payments are inadequate. Workers
will have to work longer, and their knowledge of technology will be
essential. The explosion between employment needs of older workers and the
available opportunities is about to be heard -- not just in the world of
technology, but also in the courtroom.

Hiring, retention, and the impact of the skilled labor shortage --
litigating, legislating, and engineering new employment relationships.

With unemployment at a 30-year low, the "company man" is a dead concept.
Employees no longer expect the employer to loyally promote them and take
care of them in return for faithful service. Employees now see their
relationship with employers differently. What does the employer offer them?
What career development opportunities will this job offer the employee for
furthering his or her life goals?  The impact is enormous: new compensation
structures, new benefits, more flexibility in the terms of work, higher
mobility between jobs, and more lawsuits for misrepresentation against
employers that fail to deliver on their promises.

Expansion of worker privacy rights.

The ability to monitor employees increases constantly. Employers are better
able to monitor computer keystrokes, e-mail content, web sites visited, and
voice mail. Many employers also test for alcohol use, and a growing number
subject employees to genetic tests to screen for a predisposition to
specific diseases. Many employers routinely search purses, bags, lockers,
and even bodies of their workers or use electronic surveillance in
workspaces. With technology offering tools that will explore every corner
of human existence, where will the line be drawn between what is "private"
and what an employer must know to carry out its business objectives? The
answer to this question will define the human resource and legal
departments of the successful employers of the future.

Globalization of employment law issues and standards -- global
considerations are redefining employment law. As the 21st century begins,
international barriers continue to dissolve in the business world. Greater
numbers of domestic businesses have looked to foreign markets for economic
competition and prosperity. The number of multinational companies continues
to grow very rapidly. Employers are seeing tremendous opportunities abroad.
At the same time, employers now face a variety of global employment issues
from immigration legislation and the North American Free Trade Agreement to
multinational workplace conduct policies.

Challenging HR competencies -- investigations, training, and compliance
requirements become new litigation battlegrounds. During the next decade,
lawsuits filed by employees will put the competence of human resources
professionals under a microscope. Every accusation of wrongdoing is subject
to investigation, and every investigation will be subjected to scrutiny.
Was the investigator trained, qualified, and neutral? Was the investigation
fair, timely, and complete? Was the person accused given a chance to
respond to the allegations? Was there a written report? Training will no
longer be an optional function.

Decoding the complexity of leaves and benefits -- litigation floodgates are
opening. As the working relationship between employers and employees
changes and the compensation and benefits offered to employees change,
there will be an explosion of litigation concerning benefits -- from leaves
of absence rights and unvested stock options to HMO reviews and ERISA
confusion. Nearly 20 percent of new employment law cases in the year 2000
are projected to involve an interpretation of employee leaves, and the
numbers will continue to grow until the questions in this rapidly evolving
area are settled.

Decade of employment law class actions, retaliation claims, and alternative
dispute resolutions (ADRs). During the next decade, employers should
prepare for a substantial increase in two particularly expensive and
difficult types of employment litigation: class action claims and claims of
retaliation. The upsurge in employment class actions began during the
1990s, but class actions then were still exceptional. Class actions will
become more common. Retaliation claims will become commonplace because they
are supported under a broad variety of statutes and are relatively easy to
assert. ADRs will increasingly be used to resolve issues.

Increasing workplace safety requirements -- safety will be a growth
industry. Each year, legislation, regulation, and litigation are increasing
the responsibilities of employers. Whenever a workplace fatality occurs,
the affected government agencies review the safety procedures (or lack of
them) that existed at the job site. Given the understandable public
sympathy for injured or dead employees, you must understand that there are
no practical political or emotional barriers to the imposition of further
safety regulations by governments. Worker safety issues -- from violence
prevention and ergonomics regulations to the challenge of pseudoscience in
the workplace -- will increasingly challenge you to keep up with
technological changes and bring the benefits of advances into the


  * Conduct an employment law audit of your organization and
     specifically review each of the above trends for its applicability.

  * Consistent with attorney-client privilege, rate each of the trends
     from one to five (high to low) regarding its litigation risk for
     your organization. Allocate internal resources based on the above

  * Institute a cyber-policy and corresponding technology-based
     employment law training before the end of 2000.

  * Conduct a failure analysis of your HR compliance readiness. This can
     be done by modeling an employee complaint of retaliation and
     reviewing how it would be handled and defended by your organization.

(Nevada Employment Law Letter, August, 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.

This material is copyrighted and any commercial use, resale or
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