/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000912.MBX C L A S S A C T I O N R E P O R T E R Tuesday, September 12 2000, Vol. 2, No. 177 Headlines ALBERTSON'S: Workers Win Settlement for Back Pay for Past Work ARIZONA: Lawyer Seeks Cert. for Sex Abuse for Children in Foster Care BRISTOL RETAIL: Settles 1997 Securities Suit in New York CARDINAL HEALTH: Acquired Allegiance Assumes Baxter’s Latex Gloves Cases CARDINAL HEALTH: Emerges from Lawsuit over Brand Name Prescription Drugs CHARTER PACIFIC: Card Data Porn Scandal Opens Floodgate to Privacy Suits CRAYFISH CO: Hit with NY Suit Filed by Shalov Stone & Bonner over IPO CROSSROADS SYSTEMS: Milberg Weiss Extends Securities Suit Period in TX DT INDUSTRIES: Schiffrin & Barroway Files Securities Lawsuit in Missouri FEDERATED DEPARTMENT: Milberg Weiss Files Securities Lawsuit in New York HOLOCAUST VICTIMS: Brooklyn Court to Get Swiss Banks' Compensation Plan IRONWORK CONTRACTORS: Black Workers Allege of Discrimination IXL ENTERPRISES: Milberg Weiss Files Securities Lawsuit in Georgia MICROSOFT CORP: MD Looks into Issues Re Special Ct for High Tech Cases OPTIONS EXCHANGES: Settles with DOJ over Charges of Stifling Competition ROBERT MUGABE: Sued in U.S. over Violent Zimbabwe's Elections Campaign SALT LAKE: Officials Could Face IOC Suit over Geld Document TOBACCO LITIGATION: The Recorder Presents Issues about Securitization WATER DISTRICT NO. 1: Workers Challenge Retirement Benefits Policy WEYERHAEUSER CO: Settlement Notice & Claims Begins for Hardboard Siding ********* ALBERTSON'S: Workers Win Settlement for Back Pay for Past Work -------------------------------------------------------------- The following was released on September 8 by United Food and Commercial Workers Union: Albertson's will have to compensate up to 150,000 current and former employees for back pay according to a settlement of eight class action lawsuits approved on September 8 by federal Judge B. Lynn Winmill. The United Food and Commercial Workers International Union (UFCW), through its Worker Advocacy Project, mobilized and organized Albertson's employees to fight back against the company for not paying workers for all their work time and for discouraging workers from filing worker's compensation claims. Eight suits were filed in 1997 and joined together into one class action suit in federal court. Today's ruling insures that the eligible employees will receive the monies owed them for past work. Workers joined together in the collective legal action to fight back against what seemed to be company policy of enticing managers to increase the number of unpaid work hours they could squeeze out of employees. The workers claimed that Albertson's "did not record and compensate employees for all time it permitted, encouraged, or required them to work, failed to permit employees to take rest breaks on the employer's time, an threatened discipline for employees who reported violations." Employees regularly worked through lunch and break time, worked before and after their shifts, all at the encouragement of managers yet were not paid for their work time. The company practices ended, ultimately, when workers joined together for legal remedy to these problems. Albertson's insisted on excluding several classifications of employees from this settlement. The UFCW has authorized a new lawsuit for those employees who are excluded from this settlement. Claim forms to file for back pay compensation will be mailed to the 150,000 eligible employees in the next six weeks. Workers must submit a new back pay claim form in order to be paid. Attorneys have set up a website -- www.albsuits.com -- and a toll free number (1-888-BACK PAY) for workers to update contact information and to get updates on the suits. ARIZONA: Lawyer Seeks Cert. for Sex Abuse for Children in Foster Care --------------------------------------------------------------------- A lawyer representing 300 children allegedly sexually abused in the state's foster care system wants the case heard as a class action lawsuit. Larry Berlin said he expects to ask for direction from the Arizona Supreme Court after courts at both the trial and appellate levels refused this year to hear the suit as a class action. The individual cases of 13 children have already been concluded either by settlement or jury awards, costing taxpayers a total of $2 million. The cases date from 1986 to the present. They are rife with stories of children who were taken from their biological families because of abuse or neglect only to reportedly be caused further harm in foster care. "The Supreme Court will be telling all these other courts in the state what exactly is their duty in protecting its children," Berlin said. "It has never been done before, and it has been done in precious few other states." The class action seeks financial compensation for the alleged victims, as well as a court order that the state enforce its own standards of care in foster homes. Flora Sotomayer, acting program administrator for Arizona Child Protective Services, said she thinks the claim of 300 victims is exaggerated. She said the state does its best to screen foster families but it's not foolproof. The Arizona Attorney General's Office said it's up to Berlin to decide whether it will remain alive. Berlin, who filed the case in 1994, wants to ensure class action status and that children who are older than 18 are still allowed to be included. Currently, about 100 of the 300 children are older than 18 years and six months - the statute of limitations on when they can qualify as plaintiffs. (The Associated Press State & Local Wire, September 11, 2000) BRISTOL RETAIL: Settles 1997 Securities Suit in New York -------------------------------------------------------- On or about August 7, 1997, a class action complaint was filed against Bristol Retail Solutions Inc. and certain of the Company's officers and directors. Underwriters for the Company's initial public offering were also named as defendants. The class action plaintiffs are Lincoln Adair, Antique Prints, Ltd., and Martha Seamons, on behalf of themselves and all others similarly situated. In addition to seeking to have themselves declared proper plaintiffs and having the case certified as a class action, plaintiffs were seeking unspecified monetary damages. The plaintiffs' complaint alleged claims under the federal securities laws for alleged misrepresentations and omissions in connection with sales of the Company's securities. On December 23, 1997, the Company filed a motion to dismiss the complaint, and on May 14, 1998, the court denied the Company's request. On May 3, 1999, the Company and the plaintiffs agreed to settle the class action complaint against the Company and a stipulation has been filed with the United States District Court, Southern District of New York. The Company has insurance that will cover the claim except for a deductible of $250,000 less attorney fees. To date, the Company has spent approximately $150,000 on legal fees and has made an accrual of $100,000 in the accompanying consolidated balance sheet at December 31, 1999. Currently, the settlement money from the insurance company is in a trust fund. Final disposition of funds to the plaintiffs will occur when the Company pays the money owed as agreed to per the settlement. No amounts have been paid as of March 31, 2000. CARDINAL HEALTH: Acquired Allegiance Assumes Baxter’s Latex Gloves Cases ------------------------------------------------------------------------ On September 30, 1996, Baxter International, Inc. and its subsidiaries transferred to Allegiance and its subsidiaries their U.S. healthcare distribution business, surgical and respiratory therapy business and healthcare cost-saving business, as well as certain foreign operations in connection with a spin-off of the Allegiance Business by Baxter. In connection with this spin-off, Allegiance, which was acquired by the Company on February 3, 1999, assumed the defense of litigation involving claims related to the Allegiance Business from Baxter Healthcare Corporation, including certain claims of alleged personal injuries as a result of exposure to natural rubber latex gloves. Allegiance will be defending and indemnifying BHC, as contemplated by the agreements between Baxter and Allegiance, for all expenses and potential liabilities associated with claims pertaining to the litigation assumed by Allegiance. As of June 30, 2000, there were approximately 533 lawsuits involving BHC and/or Allegiance containing allegations of sensitization to natural rubber latex products. Some of these cases are now beginning to proceed to trial. Because of the increase in claims filed and the ongoing defense costs that will be incurred, the Company believes it is probable that it will continue to incur significant expenses related to the defense of cases involving natural rubber latex gloves. At this time, the Company is unable to evaluate the extent of total potential liability, and unable to estimate total potential loss. The Company believes that a substantial portion of any liability will be covered by insurance, subject to self-insurance retentions, exclusions, conditions, coverage gaps, policy limits and insurer solvency. CARDINAL HEALTH: Emerges from Lawsuit over Brand Name Prescription Drugs ------------------------------------------------------------------------ Cardinal Health Inc. and Whitmire Distribution Corporation, one of the Company's wholly-owned subsidiaries, as well as other pharmaceutical wholesalers, were named as defendants in a series of purported class action lawsuits regarding the sale of brand name prescription drugs which were later consolidated and transferred by the Judicial Panel for Multi-District Litigation to the United States District Court for the Northern District of Illinois. On November 30, 1998, the Court ordered judgment as a matter of law in favor of the defendants. On February 22, 2000, the United States Supreme Court denied the plaintiffs' final attempt to appeal the ruling, refusing to grant the plaintiffs' Petition for Writ of Certiorari. The wholesaler defendants, including the Company and Whitmire, entered into a Judgment Sharing Agreement whereby the total exposure for the Company and its subsidiaries is limited to the lesser of $1 million or 1% of any judgment against the wholesalers and the manufacturers and provides for a reimbursement mechanism for legal fees and expenses. The Company and Whitmire have also been named as defendants in a series of related antitrust lawsuits brought by chain drug stores and independent pharmacies who opted out of the federal class action lawsuits, and in a series of state court cases alleging similar claims under various state laws regarding the sale of brand name prescription drugs. The Judgment Sharing Agreement applies to these related cases as well. CHARTER PACIFIC: Card Data Porn Scandal Opens Floodgate to Privacy Suits ------------------------------------------------------------------------ A California bank's sale of credit card data on three million consumers to operators of a pornographic Web site could open the floodgates for privacy legislation, industry critics said. To date, financial services lobbyists have been effective in fighting off tough new privacy laws, but consumer advocates are contending that this latest scandal could push politicians their way. The California incident follows on the heels of U.S. Bancorp's agreement two weeks ago to pay $3.5 million to settle a class action lawsuit charging that it had illegally shared customer information with a marketing firm. "This and the U.S. Bancorp recent settlement with a number of states shows that the Gramm-Leach-Bliley Act isn't enough and that Congress needs to do more," said Ed Mierzwinski, a lobbyist for U.S. Public Interest Research Group. "We will absolutely use the fact that a bank made its customer database available to pornographers who ripped off customers. We'll be using and leveraging this." Privacy hawks in Congress vowed to push for tougher legislation. "This case illustrates the inadequate level of privacy protection at many banks across the country," said a spokesman for Rep. Edward J. Markey, D-Mass. "The public continues to be at risk of having their privacy violated." Industry lobbyists downplayed the case that emerged as an isolated incident, and said that banks and other companies are better policing themselves now. "I don't think this case has any particular implications for financial institutions," said Alan Caskie, executive director for the Financial Services Coordinating Council privacy program. "The sale of account information by financial institutions was widespread several years ago when all this activity took place, but that is no longer the case." The industry is catching a break because most state legislatures have gone home for the year and Congress is expected to adjourn in less than a month. It is unclear whether the California case will stir controversy long enough to prompt action next year. The Federal Trade Commission won a $37.5 million verdict in federal court in Los Angeles against a California adult Web site provider accused of conducting an illegal billing scam. The owners of the operation -- Kenneth and Teresa Taves, and Dennis Rappaport -- bought access to a large database of credit card numbers from Charter Pacific Bank of Agoura Hills, Calif. The Web site owners then used those numbers to make nearly 800,000 fraudulent charges on individuals' credit cards, the FTC said. The agency said that more than 90% of the Web site's $49 million of sales came from unauthorized charges. Many of the customers who were charged by the site did not even own computers. But Michael Ward, the president of $101 million-asset Charter Pacific, adamantly denied his bank did anything wrong. In an interview, he said the database was not intended as a money-making operation, and was only licensed to specific merchants. Those merchants had complained of excessive chargebacks customers seeking credits for items charged to their cards that they deny buying. The database, Mr. Ward contended, was only set up to help merchants identify consumers who were reported for excessive chargebacks. More importantly, he said, the information supplied by the bank did not include names, addresses, phone numbers, expiration dates, or any data other than the credit card number and whether there were chargebacks. Mr. Ward said that use of those numbers alone should not have been enough for credit card companies to clear purchases or transactions. "Nobody should have been able to charge anything if everybody else was doing their job," he said. "The only reason we had the database was to perform a fraud scrub." Mr. Ward said the bank offered the service to specific merchants for three years, and ceased the practice in September 1999 when reports of misuse surfaced. The bank was never charged by the FTC, but Mr. Ward said the Federal Deposit Insurance Corp. took two enforcement actions against the bank, ordering it to stop the licensing of database information and to stop its involvement with high-risk merchants who make credit card transactions that are not face-to-face. Mr. Ward said the bank sold off its credit card business last month. FDIC officials said the bank's activities violated the Fair Credit Reporting Act, which prevents financial institutions from sharing such customer information except in specific circumstances. Fraud detection is not considered one of those circumstances, said Steven Cross, FDIC director of supervision. (The American Banker, September 11, 2000) CRAYFISH CO: Hit with NY Suit Filed by Shalov Stone & Bonner over IPO --------------------------------------------------------------------- Shalov Stone & Bonner issued the following announcement on September 8: A class action was commenced on behalf of all persons who purchased the common stock of Crayfish Co., Ltd. (Nasdaq: CRFH) in its initial public offering or in the period from March 8, 2000 to August 30, 2000. The lawsuit alleges that the defendants violated the federal securities laws by, among other things, materially misrepresenting the Company's business condition and failing to disclose material facts concerning the impact of the business decline of its major business partner Hikari Tsushin, Inc. The lawsuit was filed in the United States District Court for the Southern District of New York. Plaintiffs are represented by the law firm of Shalov Stone & Bonner, which has extensive experience in the prosecution of class actions on behalf of investors. For more information about Shalov Stone & Bonner, please visit the firm's website at: http://www.lawssb.com Contact: Mark J. Nemetz, Legal Assistant, of Shalov Stone & Bonner, 212-686-8004 CROSSROADS SYSTEMS: Milberg Weiss Extends Securities Suit Period in TX ---------------------------------------------------------------------- Milberg Weiss (http://www.milberg.com/crossroads/)on September 8 announced that a class action has been commenced in the United States District Court for the Western District of Texas on behalf of purchasers of Crossroads Systems Inc. (Nasdaq:CRDS) common stock during the period between Jan. 25, 2000 and July 26, 2000 (the "Class Period"). The complaint charges Crossroads and certain of its officers and directors with violations of the federal securities laws by making misrepresentations about Crossroad's business and earnings growth and concealing the serious problems with its interoperable Fiber Channel storage routers. By issuing these allegedly false and misleading statements, defendants artificially inflated Crossroad's stock price allowing Crossroad's top insiders to sell 205,575 shares of their Crossroad's stock at as high as $52.93 per share, for $ 10.7 million, before the true facts about Crossroad's troubled operations, diminished profitability and stop order were revealed and Crossroad's stock collapsed to as low as $6-3/8 per share. Contact: Milberg Weiss William Lerach, 800/449-4900 wsl@mwbhl.com DT INDUSTRIES: Schiffrin & Barroway Files Securities Lawsuit in Missouri ------------------------------------------------------------------------ According to a September 11 notice by the law firm of Schiffrin & Barroway, LLP, a class action lawsuit was filed in the United States District Court for the Western District of Missouri on behalf of all purchasers of the common stock of DT Industries, Inc. (Nasdaq: DTII, DTIIE) from September 29, 1997 through August 23, 2000 inclusive (the "Class Period"). The complaint charges DT Industries and certain of its officers and directors with issuing false and misleading statements concerning its financial condition for the 1997, 1998 and 1999 fiscal years. Contact: Schiffrin & Barroway, LLP Marc A. Topaz, Esq. and Robert B. Weiser, Esq. 888/299-7706 (toll free) or 610/667-7706 e-mail: at info@sbclasslaw.com FEDERATED DEPARTMENT: Milberg Weiss Files Securities Lawsuit in New York ------------------------------------------------------------------------ On August 24, 2000, a complaint was filed, alleging violations of the federal securities laws by Federated Department Stores, Inc. (NYSE:FD) and certain of its officers and/or directors. The class action was commenced in the United States District Court, for the Southern District of New York on behalf of purchasers of Federated securities during the period between February 23, 2000 and July 20, 2000, inclusive. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. A copy of the complaint can be obtained from the Court, or can be viewed on Milberg Weiss' website at http://www.milberg.com/federated/ Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G. Schulman or Samuel H. Rudman 800/320-5081 federatedcase@milbergNY.com http://www.milberg.com HOLOCAUST VICTIMS: Brooklyn Court to Get Swiss Banks' Compensation Plan ----------------------------------------------------------------------- NEW YORK - The proposed plan for the distribution of the $ 1.25 billion Swiss banks settlement is due to be submitted on September 11 to the federal court in Brooklyn, but it is not expected to specify how most of the classes of Nazi victims covered by the agreement will benefit. The first to be paid from the settlement are those who had Swiss bank accounts that were not restored after World War II. However, it is not yet certain how much of the settlement this deposited-assets class would consume. That will be based on how many accounts exist and the total sum of the accounts, which must be adjusted for current value and interest. Payments for the other three classes of beneficiaries - those who had looted assets or performed slave labor for Swiss-related firms, as well as refugees who were turned away from Switzerland will be based on the residuals, after the bank accounts are covered. In addition, the payments to these four classes will not begin until after the settlement date, a legal term that refers to the period in which appeals against the agreement may be filed. Because there is a lengthy window for possible appeals, there will be no distribution for at least two more years. In July, US District Judge Edward Korman approved the settlement of the class-action lawsuits against the Swiss banks UBS and Credit Suisse. Those cases were originally filed in October 1996. The settlement, which was announced in August 1998, included a wide definition of victims and targets of Nazi persecution. Under the terms of the agreement, this refers to any individual, corporation, partnership, sole proprietorship, unincorporated association, community, congregation, group, organization, or other entity persecuted or targeted for persecution by the Nazi regime because they were or were believed to be Jewish, Romany, Jehovah's Witness, homosexual, or physically or mentally disabled or handicapped. That definition indicates a large group that is potentially eligible to benefit from the deal, and more than half-a-million questionnaires have been completed and filed in the Swiss case. These questionnaires, which are used to make an initial assessment of material losses, indicate a high expectation of benefit on the part of victims. The delay in resolving the Holocaust-era banks accounts irritated Korman, whose July 26 opinion approving the settlement was unreserved in its criticism. A forensic audit of the Swiss banks, conducted under the auspices of a committee headed by Paul Volcker, the former chair of the US Federal Reserve, identified some 54,000 accounts as having a probable or possible link to Holocaust victims. The Volcker Committee issued a report on the accounts last December. On March 30, after an inordinately long and unexplained delay of four months, Korman said, the Swiss Federal Banking Commission authorized - but did not mandate - publication of relevant information relating to the 26,000 probable accounts. But it did not authorize the publication of information on the 28,000 remaining possible accounts. In addition to the delay in indicating whether it would adhere to the Volcker Committee recommendations, the commission failed to mandate the creation of a central database comprising the 4.1 million accounts that were opened in Switzerland between 1933-45. The commission, Korman wrote, has made it much more difficult to carry the mandate of the Volcker Committee that victims who have been long denied justice by circumstances beyond their control - often poor and now aged - deserve every reasonable assistance in establishing a claim. The unwillingness of the (commission) to mandate compliance with the recommendations of the Volcker Committee is inexplicable, Korman wrote, adding that this raised serious questions about whether it would be possible to administer a fair claims process for the bank accounts. (The Jerusalem Post, September 11, 2000) IRONWORK CONTRACTORS: Black Workers Allege of Discrimination ------------------------------------------------------------ What have you done for me lately? That's what black ironworkers are asking their union in a class action alleging that the union, even as it successfully integrated its apprenticeship program, helped "institutionalize" contractors' discriminatory hiring practices. The suit claims black union members still work far fewer hours than white members and lose valuable health and pension benefits as a result. Filed on Septemer 7 by attorneys Alan B. Epstein, Thomas Rapp and Peter Rosenzweig of Spector Gadon & Rosen, along with solo practitioner Andrew F. Erba, the complaint names 23 contractors in the Delaware Valley and Local 401 of the International Association of Bridge, Structural and Ornamental Ironworkers as defendants. It claims that the defendants have violated the terms of a 1982 consent decree in Ray v. Local 401, a suit filed in federal court in 1975. The three named plaintiffs, Leonard K. Brundage, Walter E. Franklin and Christian Williams, seek to represent a class, estimated to contain about 200 people, of "all skilled structural ironworkers of African-American descent who are members of Local 401 of the International Association of Bridge, Structural and Ornamental Ironworkers, who have been or will be denied employment by defendant Union and defendant structural steel contractors, named and unnamed." According to the complaint, structural ironworking jobs in the five-county area surrounding Philadelphia "have long been an almost exclusively white preserve, tightly controlled by almost exclusively white unions." Ray was filed as a challenge to the "nepotistic" and discriminatory grip of the overwhelmingly white union and white contractors on the job market, the complaint says. Pursuant to the Ray consent decree, the suit says, "Local 401 and a class of structural steel contractors agreed ... to the training, acceptance into union membership and distribution of available structural steel jobs in the Philadelphia area to blacks and other minorities." But the plaintiffs in Brundage claim that the promises of Ray were broken. Although gains have been made in union membership for minorities over the last decade, the plaintiffs say, there has been at the same time "a long retreat from the goal of equal access for African Americans to the available work." The suit says that the defendant contractors maintained "a steady, almost exclusively Caucasian workforce" and rarely hired African Americans. And the union, the plaintiffs allege, "has contributed to this discrimination both directly and indirectly." First, the suit says, the union abolished a rule requiring use of its hiring hall, "where discriminatory exclusion could be monitored," and allowed contractors to hire union members directly. "This action institutionalized hiring practices which were inherently nepotistic, given the historical Caucasian dominance of this Local," the suit charges. Because the union has always been dominated by whites, most white union members have friends or relatives who can help them get jobs, the suit says, but few black members have such resources. What's more, the defendants "have done nothing to change the existing reality that all foremen on all jobs are Caucasian, and, since foremen have absolute discretion as to who remains on the job on a long-term basis, the effect is that the Caucasian friends and relatives of the Caucasian foremen remain on the job" while African Americans are typically hired only on a short-term basis. Ironworkers must work a certain number of hours to qualify for health and welfare benefits and pension benefits, the suit says, and far fewer black than white members qualify for the benefits each year. The Equal Employment Opportunity Commission undertook an investigation of the named plaintiffs' complaints, the suit says, and in May the EEOC reported on its investigation. The commission determined that African-American ironworkers "have continued to suffer from discriminatory practices in the industry," the suit says. According to the complaint, the EEOC found, among other figures showing the alleged effects of race discrimination, that 75 percent of the union's white members are steadily employed by contractors, while only 15 percent of the union's black members are steadily employed. The commission also found that white ironworkers who joined the union after the named plaintiffs received substantially more hours than their more senior black counterparts. The complaint asserts claims under Title VII and the Pennsylvania Human Relations Act, as well as a civil rights claim under Section 1981. It requests injunctive relief, compensatory damages and consequential damages for the plaintiff class and punitive damages and compensation for emotional distress for the named plaintiffs. An attorney for the Ironworkers' Union was not available for comment late September 7 afternoon. (The Legal Intelligencer, September 8, 2000) IXL ENTERPRISES: Milberg Weiss Files Securities Lawsuit in Georgia ------------------------------------------------------------------ The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on September 8, 2000, on behalf of purchasers of the securities of IXL Enterprises, Inc. ("IXL" or the "Company") (NASDAQ: IIXL) between February 2, 2000 and September 1, 2000, inclusive. A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/ixl/ The action, numbered 00-CV-2347, is pending in the United States District Court, Northern District of Georgia, Atlanta Division, located at 2211 U.S. Courthouse, 75 Spring Street, S.W., Atlanta, Georgia 30303-3361, against defendants IXL, U. Bertram Ellis (Founder, Chairman and Chief Executive Officer) and M. Wayne Boylston (Chief Financial Officer and Executive Vice President through March 31, 2000). 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 between February 2, 2000 and September 1, 2000, thereby artificially inflating the price of IXL common stock. Specifically, during the Class Period, defendants repeatedly stated that the Company was experiencing strong growth, when, in fact, customer demand for IXL's products and services was significantly declining. When the Company revealed on September 1, 2000 that it was experiencing such a slowdown and would miss revenue expectations in the third quarter and record a pro forma net loss, its stock fell 16% to close at $7 per share, a huge decrease from the Company's Class Period highs in February 2000 of over $48 per share. Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or Samuel H. Rudman 800/320-5081 ixlcase@milbergNY.com http://www.milberg.com MICROSOFT CORP: MD Looks into Issues Re Special Ct for High Tech Cases ---------------------------------------------------------------------- Are today's technology issues too complex for the typical judge to judge? That is a question implicity raised by Microsoft, which in its federal antitrust appeal has contended that the trial it lost was so technical and esoteric that the presiding judge was unable to comprehend the facts. The complexity question is also being raised by a legislative task force in Maryland, which is studying whether there should be a special court for high-technology cases. While several other states, including New York, have created specialized sections of their court systems to hear business cases, none but Maryland have yet sought to make technology and business a special focus. "For Judge Jackson to honestly make the comment that he was ill-equipped says something," said James L. Thompson, a former president of the Maryland State Bar Association, who while still in that position appointed 12 of the task force's 19 members. Mr. Thompson was referring to Judge Thomas Penfield Jackson of the Federal District Court in Washington, who presided over the Microsoft antitrust case and ordered the company split in two. In an interview earlier this year with The New York Times, Judge Jackson said he had backed a proposal by the Justice Department and state attorneys general to break up Microsoft because "there's no way I can equip myself to do a better job than they have done." Mr. Thompson said, "There are a lot of judges, state judges and federal judges, who are in the same boat as Judge Jackson." Mr. Thompson's view is shared by many members of the Maryland Legislature, which has convened a task force to consider the creation of special state courts with judges who would be deemed specifically qualified to consider cases involving high-technology and new business issues. "The idea of it is to have a judge who tries nothing but business and technology cases," said Wilbur D. Preston Jr., chairman of the Maryland study group, which is known as the Business and Technology Division Task Force. Its report is scheduled for Dec. 1. A sample case, Mr. Preston said, might be a company's arguing that it was sold a faulty software system, with the seller defending itself by saying the system had been improperly used. "All of that," he said, "does require by the fact-finder some kind of understanding of what they're talking about." The Maryland bill that authorized the study, passed in April, was part of a package of legislation intended to entice high-technology companies to do business in the state. Other measures included steps to expand online government services and to educate citizens about fraud on the Internet. One consultant to the task force, Robert L. Haig, is a New York lawyer who helped design the commercial division of the Supreme Court of New York County, which opened in late 1995. Last year, 5,884 cases were filed in the New York commercial court, which hears complex commercial and business disputes involving sums of $125,000 or more. Other states with specific judges or special divisions to handle business cases include Illinois, Massachusetts, North Carolina, Pennsylvania and Wisconsin. And Delaware has its 208-year-old Court of Chancery, which is specially equipped to handle legal cases involving the many businesses that incorporate in the state. "None of the other states, though, have got the specific technology focus," Mr. Haig said. "Around the country, there is a great deal of dissatisfaction in the ability of courts to solve disputes." Microsoft, in its plea to have a federal appellate court hear its appeal before the case goes to the Supreme Court, argued that the intermediate step was necessary, in part, because of the "complexity of the technologies at issue." But some of the company's critics argue that Microsoft is raising the complexity issue as a smoke screen. And in granting class-action status to a separate suit based on the antitrust case, Judge Stuart R. Pollack of the California Superior Court said that Microsoft "argues that the complexity and changing nature of the software markets over the past six years have been so great as to render classwide analysis impossible in this case." Jim Cullinan, a Microsoft spokesman, said Microsoft did not mean to imply that judges were not up to the task. Rather, he said, it believes the antitrust case "is not something to be rushed through." He said he was unaware of Maryland's study and declined to comment. Not all of the Maryland task force members necessarily see the need for special courts or judges for technology cases. "Judges should probably follow the rest of the world into voluntary specialization," said Judge Steven Platt of the Circuit Court of Prince George's County, Md., and a task force member. "Does that make necessary a formal division? I'll need to be convinced." And if the intent is to produce some elite judicial body, Judge Platt said, he draws a comparison to the creation in various places of specialized family courts. "The rationale was that somehow you were going to get these more sensitive judges," he said. "I don't think you do." Other reasons for skepticism include jurisdiction. For instance, intellectual property disputes, which lie at the heart of many high-technology legal fights, are governed by federal, not state, laws. Three recent, well-publicized technology copyright cases, for instance -- involving the Napster digital-music swapping service, the scrambling technology protecting DVD movie discs and the online music storage service MP3.com -- were all heard by federal courts. In fact, there already is at least one specialized federal court -- the United States Court of Appeals for the Federal Circuit, in Washington, which was created in 1982 to hear, among other cases, appeals of final decisions of the federal district courts in patent cases. Some legal experts, meanwhile, contend that technology cases merit no special consideration. "The Microsoft case is aberrational in terms of how complicated these cases get," said Joseph Angland, a partner in the antitrust group of the New York law firm of Dewey Ballantine. "There's almost an argument that there should be a special court to handle really complex cases" of all sorts, not just technology cases, Mr. Angland said. In fact, that is just what California set up in January, after spending nearly a decade debating whether to create special business courts. "Lawyers who specialize in nonbusiness matters were afraid that the best judges would be drawn away," said Joseph Troy, a partner in the Los Angeles firm of Troy & Gould who served as chairman of California's Complex Civil Litigation Task Force. Instead of setting up courts solely for business litigation, California created courts for complex litigation generally. Even Mr. Thompson, former president of the Maryland bar, who favors creation of a technology court, acknowledges that granting special status to certain kinds of cases could harm other kinds. The issue is similar to the argument used against school voucher programs, he said, adding, "What happens to the rest of the kids?" (The New York Times, September 11, 2000) OPTIONS EXCHANGES: Settles with DOJ over Charges of Stifling Competition ------------------------------------------------------------------------ The four U.S. options exchanges reached agreement Monday with the Justice Department in a lawsuit alleging they have illegally stifled competition in the $260 billion market by refusing to list the same stock options on more than one exchange. At the same time, the four exchanges - the American Stock Exchange, part of the Nasdaq Stock Market; the Chicago Board Options Exchange; the Pacific Exchange and the Philadelphia Stock Exchange - agreed to be censured by the Securities and Exchange Commission for allegedly failing to adequately enforce traders' compliance with their own rules. Without admitting or denying wrongdoing, they also agreed to spend $77 million on market surveillance and enforcement. In addition, the four exchanges agreed to a consent decree in the Justice Department's civil antitrust lawsuit that, if approved by a federal judge in Washington, would resolve the suit. Under the consent decree, the exchanges would be prohibited from continuing their options listing agreement and from harassing exchanges that seek to list options already listed on another exchange. Together, the exchanges' agreements with the Justice Department and the SEC "will prohibit anticompetitive conduct and will restructure the options industry to ensure greater competition," Justice said in a statement. The Justice Department and the SEC have been investigating the alleged improprieties at the options exchanges since last year. Options give holders the right to buy or sell stocks at a fixed prices within a certain period. Critics maintain that by not allowing multiple listing of options, the exchanges are preventing customers from getting the best possible prices. The SEC has previously said that competition among exchanges for options would benefit investors by narrowing the spreads, the differences between the quoted price to buy an option and the quoted price to sell one. "Today more people than ever are investing in the options market," Joel Klein, the assistant attorney general who heads the department's Antitrust Division, said in a statement. "Investors ... expect to receive - and are entitled to receive - the full benefits of competition." According to the Chicago-based Options Clearing Corp., the number of options contracts traded has surged from 287 million in 1995 to 508 million in 1999. In a statement, the American Stock Exchange said it was pleased the matter had been resolved, saying it believes that "these settlements are fully consistent with its mission to continue to provide options investors with fair, competitive and healthy markets." The Chicago Board Options Exchange, which calls itself the world's largest options marketplace, also disclosed Monday it had reached an agreement in principle with plaintiffs to resolve a private class-action lawsuit over the issue of multiple options listings. William Brodsky, chairman and chief executive officer of the CBOE, said it was in the exchange's best interest "to put these matters behind us and allow us to direct our strategic, business and legal resources toward moving forward in a rapidly changing, highly competitive environment." SEC rules prohibit the exchanges from maintaining any rule or policy that precludes multiple listing of options. According to the Justice Department suit, the four exchanges flouted the SEC rules and reached an understanding among themselves in the early 1990s to refrain from multiple listings. As a result, the suit alleges, many frequently traded stock options were traded on only one exchange from the early 1990s until at least the summer of 1999. The suit also alleges that the exchanges enforced their improper agreement by threatening and harassing exchanges and traders that wanted multiple listings of options. Under the agreement with the SEC, the American Stock Exchange will spend $22 million in the rest of this year and next year on surveillance and enforcement; the Chicago Board Options Exchange will spend $34 million; the Pacific Exchange, $13 million; and the Philadelphia Stock Exchange, $8 million. The exchanges also agreed to design an audit trail system to help them conduct more effective monitoring of the markets, traders and customer order handling. And they agreed to tighten penalties for violations of exchange rules governing handling of orders. (The Associated Press State & Local Wire, September 11, 2000) ROBERT MUGABE: Sued in U.S. over Violent Zimbabwe's Elections Campaign ----------------------------------------------------------------------Relatives of three people killed and another allegedly assaulted in the run-up to Zimbabwe's elections have filed a $ 400m lawsuit in the United States against President Robert Mugabe. Lawyers for Maria Stevens, Elliot Pfebve, Adella Chiminya and Evelyn Masaiti hoped to broaden their suit into a class action on behalf of the families of at least 28 others, mainly supporters of the opposition Movement for Democratic Change, killed during a violent campaign, the human rights activist Topper Whitehead said. He told a news conference attended by the plaintiffs the lawsuit accused President Mugabe of human rights abuses. Mr Mugabe was served with the lawsuit while at the United Nations millennium summit in New York, Mr Whitehead said. Zimbabwe's Information and Publicity minister, Jonathan Moyo, denied any such suit had been served. David Stevens was the first white farmer killed by war veterans and ZANU-PF supporters in farm invasions that have had Mr Mugabe's support. Ms Chiminya's husband, a driver for MDC president Morgan Tsvangirai, was burnt to death. (The Independent (London), September 11, 2000) SALT LAKE: Officials Could Face IOC Suit over Geld Document ----------------------------------------------------------- The International Olympic Committee is raising the possibility of suing Salt Lake City Olympic officials for libel, perhaps in a class-action lawsuit, because of the now infamous "geld" document. The 28-page document, released in May, appeared to be a game plan for wooing IOC members to vote for Salt Lake City as host of the 2002 Winter Olympics. In the document, the notation "geld" -- the German word for money -- was listed next to the names of eight IOC members, five of whom were implicated in the Salt Lake City bid scandal. "I'm wondering whether it isn't time . . . for us to condemn people who call into question our personal dignity, who question our honesty. I think we have defended ourselves and perhaps now it's time to attack," Franco Carraro, an IOC member from Italy, said at IOC meetings in Sydney. Later in the day, some IOC officials tried to tone down that reaction. The IOC's ire was raised not only by the Salt Lake City document but also by a similar document reportedly put together by a bid committee in Stockholm, which vied for the 2004 Summer Olympics. The Stockholm document, obtained over the weekend by the Sydney Morning Herald, provides information on 37 influential IOC members. "We all seem to have some sort of police record," said Keba Mbaye of Senegal, head of the IOC ethics commission, "because people try to see what they can do with such a rap sheet." Mbaye was the first to raise the specter of legal action as part of a report to the IOC on the ethics commission's geld investigation. The geld document was written in 1991 and found on the hard drive of a computer belonging to Salt Lake City bid vice president Dave Johnson. Johnson and bid chief Tom Welch were indicted in July in connection with the bid scandal. IOC members received more than $ 1 million in cash and other inducements during Salt Lake City's bid for the 2002 Games. Ten members were expelled or resigned. Sport update: Regina Jacobs, the USA's best hope for a distance medal, is withdrawing from the 1,500 meters with a respiratory problem. The winner of the 1,500 and 5,000 at the trials says she contracted a viral infection last month that reduced her lung capacity by 35%. The two-time World Championships runner-up in the 1,500 was unable to complete a workout last week. Her replacement is fourth-place finisher Shayne Culpepper, in Brisbane, Australia, with her husband, 10,000 team member Alan Culpepper. . . . Vince Spadea replaced Andre Agassi on the tennis team. (USA Today, September 11, 2000) TOBACCO LITIGATION: The Recorder Presents Issues about Securitization --------------------------------------------------------------------- If you thought the tobacco wars were over, look again: Now that billions in settlement money is headed to local governments, the battle has shifted to one between law firms vying to securitize the windfall for hundreds of communities. "All of a sudden, out of the blue, comes an unexpected and unique revenue stream" flowing into county and municipal government budgets, says Roger Davis, head of Orrick, Herrington & Sutcliffe's public finance department. Orrick and a few other firms with expertise in both securitization and municipal finance stand to score a ton of work from county and city governments that opt to hedge their risk against a bunch of uncertainties that could reduce their share of the settlement or restrict its use. Tobacco companies agreed to pay more than $200 billion to state and local governments over the next 25 years, but the exact sums could change in the future. For instance, cigarette sales may drop, or the federal government could seek reimbursement for tobacco-related Medicaid costs that would cut into each state's share. And what if a tobacco company involved in the settlement goes bankrupt? That's a possibility given that manufacturers are still facing lawsuits like the Florida class action that cost companies $145 billion in punitive damages last month. Shifting the risk to a bond lender would also give governments a chunk of money right away -- to finance big projects as well as appease constituencies chomping at the bit for a cut of the settlement. Then, there's the moral dilemma. "The counties also find themselves in this awkward situation of hoping the tobacco industry does well," Davis says. "Now they have an investment in the tobacco industry." So far, just a handful of counties have committed to securitizing their settlements, but many are considering it. Three counties in New York were the first to complete a tobacco settlement- backed bond sale. In California, none have been done, but one could be coming soon. San Diego County hired Orrick last month as bond counsel and selected New York's Brown & Wood, another player in tobacco securitization, as disclosure counsel. According to the settlement agreement, the county is supposed to get $944 million over 25 years. Orrick is also bond counsel for Sacramento County and Orange County, which is awaiting the outcome of a health initiative vote before taking action. "Sacramento is rapidly moving ahead," says Davis, whose firm is considered the nation's leader in public financing. The firm has been approaching government officials about the prospect of securitizing tobacco settlements, but investment bankers are also doing some persuading. "People could see this coming and, of course, whenever there is money, there are investment bankers trying to make it better," says attorney Richard Jones, of Los Angeles' O'Melveny & Myers. O'Melveny has been hired as underwriter counsel in Orange County and is bond counsel to Los Angeles County, which is supposed to get $3.3 billion. But Jones says officials there have not yet made a decision on what to do. (The Recorder, September 11, 2000) WATER DISTRICT NO. 1: Workers Challenge Retirement Benefits Policy ------------------------------------------------------------------ Seven current and past employees of Water District No. 1 in Johnson County have filed a civil lawsuit against the district challenging its retirement benefits policy. Erma Hale of Olathe and six others say the district broke a promise made 12 years ago when Water District No. 1 merged with several smaller districts. Hale, the lead plaintiff, says a merger contract on file with the county outlines retirement benefits owed her were to be based on 20 years of overall service to the water utility industry, not just the years spent with Water District No. 1. Hale, 66, says the district, in calculating her benefits, is not including her eight years of service to Rural Water District No. 3. "I just want what was promised me," said Hale, who still works for the district. District Attorney Mike Armstrong said the water board's policy was clear when it came to how retirement benefits were calculated. Years of service credits would recognize prior service with the rural water district to determine retirement plan eligibility and vesting, Armstrong said. But, he said, benefits accrue only from the date of employment with the district. Armstrong said that he was relying on a 1988 correspondence during merger talks with Rural District No. 2 to support the district's position. He said he had not received the lawsuit and wanted to reserve additional comments until he had read the document. Hale's attorney, Bruce Landeck of Overland Park, said the district was relying on technical language in an amendment to its retirement policy to disallow additional retirement benefits for the seven employees - Hale, Darlene Reed, Robert W. Crowell, Daniel J. Groover, Christopher Anderson, Richard Dale McDaniel and Jacklynn J. Crane Harrington. The lawsuit asks that the seven plaintiffs each receive full credit for their time spent working for the rural districts in determining their retirement benefits. The lawsuit seeks no punitive damages. (The Kansas City Star, September 8, 2000) WEYERHAEUSER CO: Settlement Notice & Claims Begins for Hardboard Siding ----------------------------------------------------------------------- A Court ordered notification and claims process began last month in the proposed nationwide class action settlement related to Weyerhaeuser brand exterior hardboard siding now pending in the Superior Court of California in and for the County of San Francisco in the class action Williams, et al., v. Weyerhaeuser Company, Civil Action No. 995787. The proposed Settlement will pay claims for damages associated with Weyerhaeuser brand hardboard siding as defined by the Settlement Agreement. Under the Settlement reached July 7, 2000, which the Court preliminarily approved on July 12, 2000, Weyerhaeuser has agreed to pay all timely and qualified claims for siding damage with no cap on the total monetary damages to be paid. Class Members affected by the Settlement are those who own or owned a structure in the United States on which Weyerhaeuser brand hardboard siding has been installed from January 1, 1981 through December 31, 1999. A detailed Mailed Notice identifies certain exclusions from the Class, including personal injury claims. The Settlement establishes a claims process to pay monetary damages for valid claims for certain damage to siding, including thickness swell, edge checking, physical degradation, buckling, surface welting, swelling, delamination, sponginess, wax bleed, and raised or popped fibers. Siding damage caused by improper building design or installation will be excluded. The Settlement also provides a compensation formula, which will be used to determine how much money, if any, claimants are entitled to receive. To receive compensation, claimants will be required to prove that their property has Weyerhaeuser hardboard siding. The Settlement Agreement provides a staggered claims program. Under these guidelines, the later the siding was installed, the more time you have to file a claim. Class Members may call or visit the website to receive a Mailed Notice or request a Claim Form. At the hearing on December 21, 2000, the Court will consider whether to grant final approval to the proposed Settlement and the Class Counsel's request for attorneys' fees and costs. Class Members have the right to appear at the hearing if they choose. Class Members may comment on, or object to, the terms of the proposed Settlement by November 13, 2000. The Mailed Notice describes how to submit comments or objections. Those Class Members who do not wish to participate in or be bound by the proposed Settlement must exclude themselves by November 13, 2000, or be barred from prosecuting any legal action against Weyerhaeuser relating to the settled claims. ********* 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *