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             Wednesday, October 11, 2000, Vol. 2, No. 198


ANCHOR GAMING: 1997 NV Fed Securities Suit Dismissed; State Suit Stayed
BRIDGESTONE/FIRESTONE INC: CNN Coverage on Ono’s Resignation
BRIDGESTONE/FIRESTONE INC: Firestone CEO Says Apology Doen’t Mean Fault
BRIDGESTONE/FIRESTONE INC: Ono to Retire As Firestone's Top Executive
BUYING CLUB: Not A Racket Under Federal Law, 7th Cir Rules

CREDIT CARD: Fleet Bank Sued for Violating Pledge on Fixed Interest Rate
DESAIGOUDAR, HENKE: Former CA Micro Executives Will Be Retried for Fraud
L.A. POLICE: More Than 100 Whistle-Blowers Allege Retaliation
LARIAM DRUG: The Washington Post Cites Psychiatric Side Effects
LEXINGTON EYE: Keller Rohrback Files Purchasers' Laser Eye Surgery Suit

MICROSOFT CORP: Bias Complaint May Be Wake-Up Call to High-Tech Industry
NETWORK SOLUTIONS: Hare, Wynn Files Suit Alleging Restraint of Trade
PHILLIPS PETROLEUM: Toxic Explosion Suit Settles for $21.5 Million
STAR TELECOM: Denurrer in World Access Merger Case under Appeal
PALM BEACH SCHOOL: Talks Collapse; Suit Dismissed; Fight over Fees Go on

PUBLIX SUPER: Hit Again With Gender Discrimination Lawsuit
TEXAS: Violated Decree to Improve Health of Poor Children, Fed Ct Says
TOBACCO LITIGATION: Flight Attendants’ Attys Don’t Have to Rehash Issues
VITAMIN PRICE-FIXING: Ryan Announces Historic $255M Antitrust Settlement
WORLD ACCESS: Securities Suits in GA Re Product and Sales Consolidated


ANCHOR GAMING: 1997 NV Fed Securities Suit Dismissed; State Suit Stayed
Several securities class action lawsuits have been filed against the
company and certain of its current and former officers and directors. The
lawsuits were filed in various jurisdictions following the company’s
announcement in early December 1997 that its results for the December
quarter might not meet analysts' expectations. The lawsuits have been
brought on behalf of a purported class of purchasers of Anchor Gaming’s
stock and allege violations of state and/or federal securities laws arising
out of alleged misstatements and omissions to state material facts over
various periods of time covered by the suits. The lawsuits were
consolidated in Nevada, both in federal and state court. The consolidated
federal action, captioned In re Anchor Gaming Securities Litigation, Civil
Action No. CV-S-97-01751-PMP (RJJ), was dismissed on January 6, 1999 with
the court entering a judgment in our favor. The consolidated state action,
captioned Ryan, et al. v. Anchor Gaming, et al., Civil No. 98-A383456-C,
has been stayed by order of the court. Certain other actions have been
transferred and/or dismissed.

BRIDGESTONE/FIRESTONE INC: CNN Coverage on Ono’s Resignation
    LINDA STOUFFER, CNN ANCHOR: Well, Deborah, it looks a big shake-up at
Bridgestone/Firestone is in the works. The company has scheduled a news
conference for this afternoon. Both the "Wall Street Journal" and
Associated Press are reporting that Bridgestone/Firestone CEO Masatoshi Ono
is about to be replaced amid the continuing controversy over defective
tires. And in what may have been his last full day on the job, Ono was in
front of lawyers suing his company.

CNN's Susan Candiotti has this side of the story.


    SUSAN CANDIOTTI, CNN CORRESPONDENT (voice-over): Masatoshi Ono, after a
day-long grilling in a prospective class-action lawsuit, as the Japanese
company's top U.S. executive, Ono's been the target of repeated reports
management's moving him out, a victim of the recall.

In a deposition, Ono said he offered to step down after the recall.

interests in retiring. Mr. Parazachi (ph) asked him to not to do that

    CANDIOTTI: Is now the time?

Attorneys suing the Bridgestone/Firestone suggest retirement talk was
prompted by one thing and one thing only.

    GORDON BALL, PLAINTIFF'S ATTORNEY: And when I asked him if that had
anything to do with the recall, his answer was absolutely not.

    CANDIOTTI (on camera): Do you believe him?

    BALL: No.

    CANDIOTTI: Why not?

    BALL: Because I think it had everything to do with the recall.

    CANDIOTTI (voice-over): Attorneys from Tennessee, Florida and
Mississippi, the first to depose the tiremaker since the August recall
began. How long did the company know about admitted problems in those ATX,
ATX II and Wilderness AT tires?

    MARY PAT VILES, PLAINTIFFS' ATTORNEY: Bridgestone/Firestone still, to
this day, has failed to discover the defect in the tires.


    MASATOSHI ONO, BRIDGESTONE/FIRESTONE CEO: I apologize to you and the
American peoples.


    CANDIOTTI: What's more, lawyers say, Ono now appears to be backing off
congressional testimony acknowledging defects in some tires. In Ono's
words: "At present, we have not concluded whether or not there was a
defect. However, we have to acknowledge there may have been safety-related
problem -- there were safety problems."

The National Highway Traffic Safety Administration is investigating links
between 101 deaths, more than 400 injuries, and the 6 1/2 million recalled
Firestone tires most commonly found on Ford Explorers.

(on camera): Next week, a federal court hearing in Illinois. Lawyers on
behalf of Firestone customers asking a judge to take charge of the recall,
arguing Bridgestone/Firestone is running the recall for its own benefit,
not for consumers or victims.

Susan Candiotti, CNN, Nashville.

BRIDGESTONE/FIRESTONE INC: Firestone CEO Says Apology Doen’t Mean Fault
One month after apologizing to Congress for the circumstances surrounding
the recall of 6.5 million tires, the chief executive of
Bridgestone/Firestone Inc. testified that his apology did not mean the
tiremaker was admitting to defects in the tires linked to more than 100

Masatoshi Ono, testifying on Tuesday in a deposition in Nashville, said his
apologetic testimony before Congress was meant to express his sympathy for
people who lost loved ones and family members, not admit fault. "This
[apology before Congress] was a sympathy expressed for those individuals
who operated vehicles using our products and got into accidents," Ono said,
challenging the question of a plaintiff's attorney. "So it's not as you
state in your question an issue of a defect."

Gordon Ball, a lawyer representing consumers, pressed Ono again, asking:
"Are you denying that Bridgestone/Firestone is at fault for the property
damage and/or personal injury of the people who have used the tires that
are subject to your voluntary recall?"

Replied Ono: "If we are deemed responsible for the accidents, that is
another matter. However, there are maybe outside causes that had caused the
accidents. Then, I wouldn't say we're responsible for those accidents."

Later, Ono also offered a different perspective from the congressional
testimony of John Lampe, executive vice president of Bridgestone/Firestone,
who, when asked if the tires had a defect, acknowledged that a small number
of tires made in Firestone's Decatur, Ill., plant "could pose a safety
problem." "I do not know on what basis Mr. Lampe stated there were
defects," Ono said. "Right now what I can say is we have not discovered

After the deposition, Ball said Ono had completely reversed his testimony
before the House. "That is totally contrary to what he said in the
congressional testimony," said Ball, an attorney from Knoxville, Tenn.,
who, along with Don Barrett, represents clients who are suing
Bridgestone/Firestone to expand the recall.

A transcript of the deposition, which lasted about eight hours, was
provided by Bridgestone/Firestone. A spokesman for the company issued a
prepared statement saying that Ono merely reiterated many of the well-known
facts of the case.

"Mr. Ono again expressed his sympathy for the families and Firestone's
commitment to finding the root cause of the problem," Firestone spokesman
Dan Adomitis said. "As you know, we are still looking for answers. To this
end, we have called in an independent investigator and we continue to work
closely with [the National Highway Traffic Safety Administration] and

Last month, Ono apologized before subcommittees of the House Commerce
Committee investigating the recall.

"As chief executive officer, I come before you to apologize to you, the
American people and especially to the families who have lost loved ones in
these terrible rollover accidents," Ono told the House panels. "I also come
to accept full and personal responsibility on behalf of
Bridgestone/Firestone for the events that led to this hearing."

The difference between the congressional testimony and the deposition
highlights the ongoing dilemma facing Firestone going into the House and
Senate hearing--how to provide thorough and open answers to Congress
without damaging the company's legal defense.

Tuesday's deposition was part of the pretrial fact-gathering for a
class-action lawsuit filed in federal court in East St. Louis, Ill., that
seeks to expand the recall to other tire lines and to change the terms of
the reimbursement to consumers for the recalled tires.

Two more depositions are scheduled this week: Tomorrow, Gary Crigger,
executive vice president of business planning, will be questioned, and on
Thursday, lawyers will depose Lampe, the No. 2 company official in the
United States under Ono. Lampe is to be questioned by Michael Hausfeld of
Washington's Cohen, Milstein, Hausfeld & Toll, which is also involved in
the case.

The deposition was Ono's first over the recalled Firestone ATX, ATX II and
Wilderness AT tires, but many trial lawyers also suspect it could be his
last. Published reports say that company officials are indicating that the
chief executive for the subsidiary of Bridgestone Corp. is likely to be

Ono also testified that he offered his resignation after the recall was
announced. In a conversation with Yoichiro Kaizaki, president of
Bridgestone Corp., Ono said, "I desire to resign." He said Kaizaki replied,
"I understand, but not immediately."

Ono faced many of the same questions in the deposition that arose before
Congress, but the lawyers said they were able to get more information from
the executive. Ono said Firestone never asked Ford Motor Co. to change the
tire pressure recommendation until just before the voluntary recall on Aug.
9. Firestone says that Ford's recommendation of 26 pounds per square inch
reduced the margin of safety on the vehicle. Ford had suggested 26 pounds
per square inch because it reduced the likelihood of rollovers. After
Firestone formally requested that the tire pressure recommendation be
raised tp 30 psi, Ford agreed. (The Washington Post, October 10, 2000)

BRIDGESTONE/FIRESTONE INC: Ono to Retire As Firestone's Top Executive
Masatoshi Ono, chief executive and chairman of Bridgestone/Firestone Inc.,
is reported to be retiring from the troubled tire maker.
ohn Lampe, an executive vice president, will be named as Ono's successor,
according to a company source who spoke to The Associated Press on
condition of anonymity. The announcement was expected to be made at a news
conference Tuesday afternoon.

Ono, 63, testified during a daylong deposition Monday that he offered to
retire as head of U.S. operations for Tokyo-based parent company,
Bridgestone Corp., about a month after the company recalled 6.5 million

Firestone spokeswoman Anitra Budd would only say, "We have made no formal
announcement of any sort of management change."

Bridgestone/Firestone is planning to name one of three Japanese officers as
its No. 2 executive, giving that person the titles of president and chief
operating officer, The Wall Street Journal reported Tuesday.

Reports of Ono's potential departure have circulated since the recall of
Firestone's ATX, ATX II and Wilderness tires, which are being investigated
in connection with 101 deaths in the United States and more than 50
fatalities overseas.

Ono, top executive of the U.S. operations for seven years, was giving a
deposition Monday in Nashville as part of consumer lawsuits filed against
Firestone and Ford Motor Co.

Gordon Ball of Knoxville and Mary Pat Viles of Fort Myers, Fla., represent
consumers seeking class action status for lawsuits claiming
Bridgestone/Firestone and Ford, which used the tires as standard equipment
on some vehicles, breached their warranties and provided products that were
not fit for their intended use.

None of those lawsuits involved injury accidents. However, the information
gained from the deposition will be shared with attorneys representing
victims and families of people killed or hurt in accidents linked to
Firestone tires.

Ball and Viles are trying to convince the courts to expand
Bridgestone/Firestone's recall to include 24 other tire models and be
overseen by a judge, rather than the tire maker.

The National Highway Traffic Safety Administration has issued a consumer
advisory on 1.4 million more Firestone tires considered potentially unsafe,
and opened an investigation into the Steeltex model.

Ono testified that he told Bridgestone Corp. President Yoichiro Kaizaki in
September he would like to retire from the Nashville-based U.S. division
"because I will be turning 64 next year and I didn't feel I was in
particularly good health either." Ono said he has stomach problems and high
blood sugar, and his retirement request was not related to the recall.
Kaizaki told Ono not to retire immediately, Ono said. Among his other
statements, Ono said the public apologies made by him and other company
executives during September's congressional hearings on the recall should
not be construed as an admission of corporate liability. "At present, we
have not concluded whether or not there was a defect," Ono said. "However,
we have to acknowledge there may have been safety related problems - there
were safety related problems."

Ball suggested Ono was trying to back off of earlier comments
Bridgestone/Firestone executives made to Congress.

But Daniel J. Adomitis, an attorney for the embattled tire company, said
nothing Ono discussed at a Nashville hotel Monday contradicted his
testimony before congressional committees looking into the recall. "There
was really nothing new," Adomitis said.

Last month, Lampe told Congress that tire failure had been responsible in a
"very, very small percentage of these deaths." When asked about Lampe's
testimony, Ono said: "I don't know on what basis Mr. Lampe stated there
were defects. Right now, what I can say is we have not discovered defects."
Lampe was to be questioned by consumer attorneys Thursday in Nashville.
(The Associated Press, October 10, 2000)

BUYING CLUB: Not A Racket Under Federal Law, 7th Cir Rules
Allegations that the officers of a buying club" lied about the prices and
merchandise available to consumers were not enough to support a
racketeering claim against the club, according to a federal appeals court.

The 7th U.S. Circuit Court of Appeals declined to clear the way for two
disgruntled consumers to pursue a class-action lawsuit against United
Consumers Club Inc.

The two consumers failed to present evidence that UCC and others --
including franchisees, wholesalers and manufacturers -- were part of an
organization whose members had a common purpose and engaged in a common
course of conduct, the 7th Circuit ruled last Friday October 6.

The court held that evidence of such an enterprise is required to sustain a
claim under the Racketeer Influenced and Corrupt Organizations Act. And
while the consumers who sued UCC might be able to demonstrate a pattern of
racketeering activity, they would not be able to establish that this
activity was the work of a RICO enterprise, the court said. The court
affirmed a decision by U.S. District Judge Charles R. Norgle Sr. to dismiss
an amended complaint that Edward and Judy Stachon brought against UCC and
five of its officers or directors.

The Stachons contended that the defendants fraudulently represented that
consumers who paid a membership fee would have access to first-quality
goods at special wholesale prices. Instead, the Stachons claimed, much of
the merchandise available to UCC members was of inferior quality and cost
more than the wholesale price. The Stachons also claimed that the
defendants misrepresented the buying power of UCC by overstating the club's
membership. The Stachons contended that the defendants furthered the
alleged scheme to defraud consumers about the benefits of joining UCC by
engaging in a pattern of mail and wire fraud.

The alleged fraud was conducted by an enterprise made up of UCC and the
five individuals named as defendants, as well as UCC members and past and
present franchisees, manufacturers and wholesalers, according to the
Stachons. The Stachons claimed that the defendants had violated RICO, 18
U.S.C. sec1961, and the Illinois Consumer Fraud and Deceptive Trade
Practices Act, 815 Ill. Comp. Stat. 505/2. The Stachons asked that their
complaint be made a class action on behalf of themselves and similarly
situated individuals.

But Norgle granted the defendants' motion to dismiss the complaint under
Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim under
RICO. Norgle also declined to maintain supplemental jurisdiction over the
Stachons' state law claim.

The 7th Circuit affirmed that decision.

Citing Richmond v. Nationwide Cassel L.P., 52 F.3d 640 (7th Cir. 1995), and
Bachman v. Bears, Stearns & Co., 178 F.3d 930 (7th Cir. 1999), a panel of
the court said that some type of organizational structure is required" in
order to establish a RICO enterprise.

While the enterprise may be informal, it must be an organization with a
structure and goals separate from the predicate acts themselves," the panel
said, quoting from U.S. v. Masters, 924 F.2d 1362 (7th Cir. 1991).

But the Stachons failed to offer evidence that UCC and wholesalers,
manufacturers and others ever functioned as an ongoing RICO organization,"
the panel said.

The panel acknowledged that the Stachons had alleged that UCC and the five
officers or directors named as defendants had conducted -- and conspired to
conduct -- a pattern of racketeering activity.

But it takes more than such allegations to adequately allege the existence
of a RICO enterprise, the panel said.

Citing Jennings v. Emry, 910 F.2d 1434 (7th Cir. 1990), the panel said the
7th Circuit has repeatedly stated that RICO plaintiffs cannot establish
structure by defining the enterprise through what it supposedly does."

Instead, plaintiffs must present evidence that some sort of organization --
with a common purpose and a structure that allows decisions to be made by
its members -- is behind the activity targeted in the RICO suit, the panel

The panel said the Stachons failed in that task.

While the Stachons claimed that UCC was merely one member of the alleged
RICO enterprise, they had not presented evidence of a command structure"
that was separate from UCC itself, the panel said.

Here, the mere fact that UCC, for nearly 21 years, had business dealings
with a wide assortment of unnamed manufacturers, wholesalers, and members
in no way establishes that they function with UCC as a continuing unit or
as an ongoing structured organization," Judge Ann Claire Williams wrote for
the panel. Aside from naming a string of participants, the amended
complaint offers no intelligible clue as to the scope and duration of the
enterprise itself; the duration here presumably is a function of UCC's
existence, but that is insufficient because UCC is not the enterprise."

Joining in the opinion were Chief Judge Joel M. Flaum and Judge Kenneth F.

Edward Stachon and Judy Stachon v. United Consumers Club Inc., et al., No.
99-3938. (Chicago Daily Law Bulletin, October 9, 2000)

CREDIT CARD: Fleet Bank Sued for Violating Pledge on Fixed Interest Rate
A lawsuit has been filed against the Fleet Bank, accusing the company of
misleading consumers and violating a pledge to charge a fixed interest rate
on credit card balances transferred to Fleet accounts.

Fleet Credit Card Services advertised a 7.99 percent annual rate, then
raised the rate, violating state law, according to the lawsuit, which was
filed last week in State Superior Court.

Peter Wasylyk, a lawyer from Providence, filed the lawsuit on behalf of
Tyler Chavers of Eagle River, Alaska, and asked for class-action status so
thousands of other cardholders could be included.

Mr. Chavers transferred the balances from three credit cards in April to
obtain Fleet's advertised rate. A month later, Fleet told him the rate
would be increased to 9.5 or 10.5 percent, depending on when he had joined,
the lawsuit said. "Fleet believed it could increase the fixed rate at any
time, and in fact, never intended to provide the fixed rate as advertised,"
Mr. Chavers said in the lawsuit.

Fleet is now known as FleetBoston. (The New York Times, October 10, 2000)

DESAIGOUDAR, HENKE: Former CA Micro Executives Will Be Retried for Fraud
The U.S. attorney's office for the Northern District of California has
decided to retry two former California Micro Devices executives whose
convictions were thrown out for trial errors.

A spokesman for the office said on October 6 that former chief executive
officer Chan Desaigoudar and former treasurer Steven Henke would be retried
for stock fraud, illegal trading and conspiracy. The case was one of the
highest- profile criminal stock fraud cases brought in recent years.

Speculation about what U.S. Attorney Robert Mueller III would do surfaced
when the pair's three-year sentences from U.S. District Judge Vaughn Walker
were vacated in August by the Ninth Circuit U.S. Court of Appeals.

The Department of Justice is famously reserved about challenging appellate
court panel decisions, and retrying the case presents unique problems for

The decision comes after the government unsealed two indictments in recent
weeks charging former executives at McKessonHBOC and Informix of unlawfully
manipulating company books.

Now, the office will be juggling three huge criminal cases that could send
shudders throughout Silicon Valley.

Although Mueller, time and again, has stressed that white-collar crime will
not go unpunished, he has also acknowledged that such cases are time- and

Furthermore, the two government prosecutors who handled the Cal Micro case,
Robert Crowe and Pamela Merchant, have since left for private practice.
Crowe was the third lead prosecutor on the case, the previous two having
been hired by Wilson Sonsini Goodrich & Rosati.

Desaigoudar and Henke were convicted in 1998 for pulling off a securities
fraud estimated at $40 million. Judge Walker, however, gave them only
three- year sentences, saying the case was different from other fraud

The defendants appealed to the Ninth Circuit, which ruled that Walker
should have granted a request by defense attorneys to withdraw from the
case. The attorneys argued they could not cross-examine a former
co-defendant who turned state's evidence without violating attorney-client
privilege. The former defendant had participated in joint defense meetings.

The government had also appealed Walker's sentencing decision. When the
convictions were overturned, however, the question was rendered moot.

The closest the Ninth Circuit came to ruling on the merits of USA v. Henke,
00 C.D.O.S. 7191, was declining to overturn the conviction on the grounds
that there was insufficient evidence to support a guilty verdict on the
insider trading charges. The court ruled a reasonable jury could conclude
there was.

On September 28, the U.S. attorney's office announced a 17-count indictment
naming Albert Bergonzi, 50, and Jay Gilbertson, 40, in an alleged scheme to
inflate the financial picture of their company, HBO & Comp., before it was
bought by San Francisco-based McKesson Corp.

Mueller called the case a "poster child for the devastating effect of fraud
by corporate managers."

The office announced it had obtained an indictment against Walter
Konigseder, accusing the former top official of Menlo Park-based Informix
of approving sham transactions and lying to company auditors.

In all three cases, the companies were forced to restate their financial
picture, leading to precipitous stock price drops on the market -- in
McKesson's case $9 billion. The Securities and Exchange Commission filed
separate actions in each case. Last year, it also took action against two
former outside auditors of Cal Micro, accusing them of not following proper
accounting standards.

Class action securities cases were also filed against each company. The
McKesson suit could settle for as much as $1 billion. The Cal Micro class
action has already settled for more than $15 million. (The Recorder,
October 10, 2000)

L.A. POLICE: More Than 100 Whistle-Blowers Allege Retaliation
More than 60 current and former officers are joining a class-action lawsuit
against the Los Angeles Police Department that alleges retaliation against
whistle-blowers, bringing the total number of plaintiffs to more than 100,
an attorney said.

The original lawsuit, filed Aug. 24 in Los Angeles Superior Court on behalf
of 41 former and current employees, most of them officers, claims that the
LAPD has a culture that enforces a "code of silence" that leads to a
pattern of discrimination, harassment and retaliation against those who
report misconduct by other officers.

"The LAPD is really an expert . . . at retaliation," attorney Bradley Gage
said at a Woodland Hills news conference, flanked by a former lieutenant, a
former detective and a former sergeant he represents. Most of the 109
plaintiffs identified so far worked in the West Valley, 77th or Southwest
divisions, Gage said. About 20 are still working for the LAPD in such
divisions as Internal Affairs, which investigates misconduct, he added.

An LAPD spokesman declined to comment because of the pending lawsuit.

Among the new plaintiffs in the lawsuit, which seeks $ 100 million in
damages, is Shelby Braverman, a former narcotics detective in the Harbor
Division. Braverman, who was relieved of duty and then retired, said he
tried to report a supervisor he suspected of stealing heroin seized as
evidence. Braverman said he met resistance from top brass, who told him he
should take the matter with him to his grave.

Braverman said that when he continued speaking out, the department
retaliated by reopening what he said had been a closed investigation of
him, involving a violation of a court order, leading to his arrest and a
30-day jail sentence after he was forced out of his 20-year career.

Lita Abella, a former lieutenant in the Central Division, said she resigned
in February. She said she was retaliated against for what she characterized
as her "activist" role as a union delegate and a vice president of the Los
Angeles Women Police Officers Assn. who over the years had reported or
investigated numerous incidents of alleged misconduct.

She said the department eventually launched a "major personnel complaint"
against her that had been manufactured to get her fired. She quit, she
said, rather than fight the charges because the situation was making her
physically ill. Since filing the lawsuit, Gage said, he has received
hundreds of calls. "We have rejected dozens of individuals . . . because we
wanted to make sure we have meritorious cases," Gage said. "Everybody named
in the lawsuit had reported some sort of misconduct and they were
retaliated against." (Los Angeles Times, October 10, 2000)

LARIAM DRUG: The Washington Post Cites Psychiatric Side Effects
Michael J. Burch, a Washington consultant, had just returned from a visit
to his son, a Peace Corps volunteer working in Ghana, and was having dinner
at a Capitol Hill restaurant last March. Burch had been feeling dizzy, his
legs rubbery. He'd been battling sleeplessness. Now, during dinner, a
sudden surge rose in his chest. He feared a heart attack. It was, he
recalls, as if "something were taking over my body."

Elisa von Joeden-Forgey, an experienced traveler with no history of
psychiatric problems, had trouble sleeping within days of her arrival in
Cameroon, where she was to conduct postgraduate research. She had vivid
nightmares. She grew terrified that if she dozed off she would disappear.
Later, after she returned to the United States, she was too frightened to
leave the house. She couldn't concentrate or even carry on a conversation
very well. Her dissertation stalled. Her marriage faltered.

Not even Hope Trachtenberg-Fifer, a Virginia registered nurse and marathon
runner who teaches others to recognize symptoms of medical conditions, had
any idea what was going on. While serving on a volunteer medical mission to
Kenya in 1997, she dreaded the night, sensed doom and thought she'd never
see her family again. Though she'd never had mental problems or trouble
sleeping back home in Roanoke, she lay balled up in bed, sobbing. She slept
only for brief periods and would wake up gasping and sweating. She wouldn't
eat or drink. She wouldn't leave her room. Her heart rate soared, her legs
wobbled. She was convinced she would die. "I was a nut. I was psychotic,"
she says. "And I was clueless. There I was, a nurse and a health educator,
and I had no idea what was happening to me."

All of these people say they were suffering side effects of mefloquine,
sold in the U.S. under the brand name Lariam. It is the antimalaria
medication recommended as the "drug of choice" by the federal Centers for
Disease Control and Prevention (CDC) in 79 countries where malaria is
resistant to other drugs. Travel clinics and private physicians in the
Washington area, including those serving the State Department, the Peace
Corps and many public and private groups whose personnel travel between
here and Third World locations, prescribe it routinely. American travelers
headed for business or pleasure to India, Thailand and Vietnam, on African
safaris or on tours of the Amazon basin typically are given prescriptions
for Lariam.

Mefloquine is used to prevent (and sometimes treat) malaria, a devastating
disease that kills more than 1 million people worldwide each year, and is
the second-most deadly communicable disease in the world, after
tuberculosis. Mefloquine is over 90 percent effective when used in
prevention, and saves many thousands of lives annually. It is taken by 90
percent of Peace Corps volunteers in Africa and has reduced their
infections dramatically since it was introduced. Last year it was
prescribed at least half a million times. Most who take it for prevention
have only mild side effects or none at all.

But there is convincing evidence that the drug exposes a small number of
otherwise healthy travelers to traumatic and sometimes bizarre
neuropsychiatric reactions--and that they are often unaware of the risk of
such reactions. Reports of side effects from mefloquine exposure include
hallucinations, sleeplessness, paranoia, psychotic episodes and suicide
attempts. Some users complain of effects persisting for weeks or months,
even years.

These reactions are documented in scientific studies, surveys and in
thousands of case reports in the files of Lariam's manufacturer, the Swiss
firm Hoffmann-LaRoche, and the U.S. Food and Drug Administration (FDA), the
agency that regulates pharmaceuticals. Adverse reactions were noticed by
the manufacturer and public health officials soon after the drug was
approved 11 years ago. The manufacturer twice agreed to revise the label to
list more, and more serious, side effects, including psychiatric ones.
Regulators in the United Kingdom had already required explicit consumer
warnings, and in 1997 the U.K.'s Malaria Advisory Committee stopped
recommending mefloquine for travelers headed to malarial regions for two
weeks or less.

Even so, U.S. travelers are often unaware of the potential for disturbing
effects. Because pharmacies are not required to distribute the complete
product label with most drugs, the government-mandated warnings are not
routinely circulated to patients. And many physicians--following the advice
of the CDC and drawing on their experience prescribing the drug to patients
with few serious problems--either downplay or are unaware of the symptoms a
minority of people taking mefloquine report. Despite the accumulating facts
about side effects, the CDC has continued to support mefloquine as the
"drug of choice."

As a consequence, many who take the drug and suffer side effects are less
likely to recognize them until considerable mental anguish or physical
injury has occurred. Many people continue taking the medication because
they do not realize that the puzzling, even debilitating symptoms are
associated with the drug they are taking to prevent malaria. Patients often
report being treated by doctors who discount the possibility that their
problems are related to the drug.

People who have called the CDC to report or gather information about the
side effects of Lariam, including several people whose cases were
researched for this story, were told by agency staff that their reactions
were unlikely to be the result of the drug and were advised to consider
other causes, including stress.

While few agree on the number of people who suffer side effects from
mefloquine, there is little question that some of them do.

Andrea Meyerhoff, an FDA medical officer with responsibility for drugs for
tropical diseases and a travel medicine clinician at Georgetown University,
says that while cause and effect between mefloquine and these symptoms may
never be conclusively proven, neuropsychiatric effects are clearly
"associated" with the drug.

Raymond Woosley, chairman of the pharmacology department at Georgetown
University and an authority on drug side effects, says the reports on
mefloquine are sufficiently widespread to eliminate any doubt about the
drug's ability to produce these effects at the preventive doses given
travelers. "Mefloquine is one of the more troublesome drugs people use, and
causes a lot of side effects," he said. "Some of them are quite serious."

Though Lariam can treat a deadly disease, he continued, its use for
prevention needs to be carefully considered. Unlike drugs used to treat a
patient who has already contracted a serious disease, where even powerful
side effects are tolerated in service of the greater good of fighting a
life-threatening condition, Lariam is used to prevent a disease in
otherwise healthy people who are usually choosing to travel to infected

Says University of Toronto professor Jay Keystone, a leading authority on
antimalarials who has served as a consultant to the CDC and to the drug's
manufacturer: "I'm not questioning [the CDC's] intentions or integrity, and
for most people the drug is safe and effective. But they are trivializing
very real and disabling side effects."

Officials at Hoffmann-LaRoche take the position that Lariam has been proven
safe and effective, and that labeling changes approved by the FDA provide
adequate notice of the side effects.

"Lariam has been used since 1985 by more than 12 million people worldwide
for prevention of malaria," said Charles Alfaro, a spokesman for Roche (as
Hoffmann-LaRoche is widely known). "The numbers [of side effects] are
extremely low. There's a lot of data out there, but if you look at the
experts writing about Lariam, the causal association between mefloquine and
serious adverse health events is unlikely."

"The pill is well-tolerated by most people, and the drug's really a good
drug," said Celia Maxwell, who as an FDA medical officer in 1987
recommended the drug's approval, and who as a travel medicine clinician now
frequently prescribes it. Disabling side effects are "very, very rare." But
when they do occur, she adds, "it's 100 percent real--no doubt about it."

The precise odds of having a bad reaction to Lariam are the subject of
intense debate, at least partly due to disagreement over what is meant by
"bad." Some scientists tally only the most severe reactions requiring
hospitalization, while others count users who are unable to continue their
daily activities. Others include only those who stop taking the pill due to
the side effects, thus exposing themselves to the risk of malaria.

A Roche-sponsored study of 145,000 travelers in 1993 estimated the rate of
"serious" side effects--identified in this study as those causing death or
hospitalization--at one in 10,000; this figure is often cited by the CDC
and those who support wide use of the drug. In a 1996 English survey of
2,395 users, one in 140 reported problems severe enough to stop them from
carrying out their daily activities.

The latest studies, presented last year at a tropical medicine conference
but not yet published, suggest that somewhere between 10 and 20 percent of
those who take mefloquine suffer side effects ranging from mild to severe.
One of these surveys, conducted by the Scripps Travel Clinic of La Jolla,
Calif., estimates the ratio of people suffering some side effects at one in

Just who is likely to suffer these side effects? One-third of all patients
with problems have a history of hypersensitivity to mefloquine or other
quinine-related compounds; had been taking beta blockers (a common class of
drugs prescribed for hypertension or heart problems); or had been prone to
seizure disorders.

The other two-thirds of patients who experience neuropsychiatric and other
moderate to severe reactions? They have seemingly solid mental and physical
health histories. Medical experts say there is no way of predicting who
they will be, and virtually no research is being done to find out.

Beyond the statistics from surveys and studies, there are reports by
patients and doctors to various government agencies.

In the United Kingdom, Lariam was suspected of causing 1,505 adverse
reactions between 1990 and 1998, according to doctors' reports compiled by
health officials there. The government subsequently expanded the drug's
warning label. The British press has reported more on Lariam problems than
the U.S. press--sometimes sensationally, adding to arguments that fear
itself contributes to reports of reactions. Letters to the British Medical
Journal have aired disagreements over the proper role of Lariam. Just last
week, the New England Journal of Medicine published a similar exchange
between doctors about the drug's side effect profile.

In the United States, more than 2,070 reports of adverse reactions have
been filed with the FDA in the last 11 years. More than half of those
reports--1,288--involved complaints of "neurological events." The
Washington Post obtained 130 pages of the reports, covering the period 1997
to 1999, under the federal Freedom of Information Act.

Such data are anecdotally suggestive but statistically
unreliable--unreliable because multiple reports may have been filed by a
doctor, patient and drug company for the same patient's experience, and
because filing a report doesn't prove reactions were linked to mefloquine.

In addition, nobody knows how many other people may have experienced
problems they did not report. However, the data do illustrate what some
practitioners and patients believe to be happening.

The reports have few details and consist mostly of the date, the source of
the report (medical professional or patient), a tally of symptoms, the
outcome, a list of drugs reportedly taken and the "primary suspect" of the
reaction's cause. Page after page, the list of symptoms repeats: psychosis,
anxiety, panic attack, thoughts of suicide, hallucinations.

Report number 3057866-X, filed with the FDA on March 19, 1998, lists the
unidentified patient's reactions: "Abnormal behavior, chest pain,
hallucinations, hyperventilation, insomnia, suicidal ideation." Outcome:
"Required intervention to prevent permanent impairment/damage." Primary
suspect: Lariam.

Report 330063-5, filed July 9, 1999. Reactions: "Anxiety, asthma, chest
tightness, cough, dehydration, nausea, panic attack." Outcome: Prolonged
hospitalization. Primary suspect: Lariam.

Report 3413545-8, filed Dec. 3, 1999. Reactions: "Mental disorder.
Paranoia. Suicide attempt." Primary suspect: Lariam.

Report 3074393-4, filed April 30, 1998. Reactions: "Aortic injury. Facial
bone fractures. Successful suicide." Outcome: Death. Primary suspect:

During the Vietnam War, the number of malaria infections among American
military personnel sometimes exceeded battlefield casualties, and U.S.
officials knew something had to be done. Chloroquine, then the drug of
choice, wasn't working as well as it once had, and neither were two
alternatives. The Walter Reed Army Institute of Research screened a quarter
of a million compounds in a quest for a preventive drug.

Army researchers didn't know how mefloquine worked, but it did. Army
experiments in the early 1970s on nearly 400 male subjects, mostly hardy
men, showed high effectiveness and few symptoms besides dizziness,
headaches and insomnia. Hoffmann-LaRoche acquired the rights to develop the
drug commercially and submitted the results of the Army's human experiments
to the FDA.

Medical officer Celia Maxwell of the FDA, one of many officials involved
with the approval process, predicted few adverse reactions other than
dizziness, vomiting and nausea. Mefloquine, she concluded in 1987, "appears
to be effective and safe." In 1989 the FDA licensed the drug. A year later
it was licensed by the United Kingdom. It was immediately popular because
malaria was becoming resistant to chloroquine and air travel to the Third
World was growing fast.

Around the time the FDA approved Lariam, troubling reports began to appear.
In 1989, "serious neurological and psychiatric adverse events attributed to
the drug were brought to the attention of the pharmaceutical company and of
WHO," the World Health Organization stated in a 1991 report.

A notation on the report states that it was "not issued to the general
public" at the time; it was intended only to guide discussions of
scientists and policymakers. A copy was obtained by The Washington Post.

"We knew" about adverse reactions, said Maxwell. "That's why we included
some language about potential effects in the [original] labeling. But at
that time, we just didn't have the numbers of reports" of ill effects that
have emerged since.

The list grew. But Maxwell, now a professor of infectious diseases at
Howard University and a physician at the university's travel clinic, still
favors Lariam, except for use by surgeons or other people engaged in
technical work overseas. (The drug's label suggests caution, due to side
effects, by those who drive vehicles, pilot planes and operate machinery.
Some airlines, hospitals and other companies employing travelers in
sensitive, high-risk jobs restrict use of the drug.) She says that, over 16
years of practicing medicine, only one patient reported to her a
neuropsychiatric side effect from the drug--psychotic episodes in which the
woman heard voices and suspected a plot to murder her.

Even so, the woman instrumental in approving Lariam for the American public
never uses it herself--though, she says, not for reasons unique to
mefloquine. She opts for doxycycline. Explains Maxwell: "I have a
sensitivity to a lot of drugs."

While the number of people who suffer serious side effects from mefloquine
is unclear--and while it's difficult to predict who will be affected--it is
clear that many people traveling to malarial areas, particularly for the
first time, are not well-informed about possible risks.

At Washington-area CVS and Rite-Aid pharmacies, customers do not routinely
receive the drug's FDA-approved and twice-revised label--a folded package
insert of almost 50 paragraphs of small print that lay out the adverse
reactions and contraindications. Instead, customers receive a one-page
printout credited to an independent publisher listing milder effects such
as lightheadedness and insomnia, and advising patients to "call your doctor
if you develop unexplained anxiety, mood changes, depression, restlessness
or confusion." It adds: "If you notice other effects not listed above,
contact your doctor or pharmacist."

To get the full package insert, customers must ask the pharmacist or look
up the drug in the Physicians' Desk Reference, which compiles information
on drugs from all manufacturers.

A sampling in August of Washington-area travel clinics resulted in echoes
of assertions by CDC officials and the pharmaceutical manufacturer that
severe side effects are very rare. And some clinical professionals in the
area have little personal experience with travelers' problems with

Imtiaz Choudhary, director of Howard University's travel clinic and an
infectious disease specialist, offered a common response when asked what
drug he prescribes for patients traveling to most malarial regions.

"Mefloquine is the only one we have available," he said. "I strongly
suggest people take this because its [side] effects are minimal."

Said Samuel Scott, senior clinical associate of Washington Occupational
Health Associates, which functions as a clinic for business travelers and
tourists: "[The CDC's] drug of choice is mefloquine, and so that's
generally what we use." He added that "I've not found it to be a problem.
Bad dreams is the worst of it, and so we warn them about that."

Martin Wolfe, a veteran tropical medicine consultant who advises the State
Department, said a few federal employees have had problems with mefloquine,
but he continues to urge its use as the primary defense against malaria.
Ill effects are "not unheard of" in his practice, but "we generally follow
what the Public Health Service [CDC] recommends."

Meanwhile, other practitioners of travel medicine take a more cautious

"I don't like using mefloquine [on patients] if I can avoid it. I'm not
happy with the side effects," said Robert Edelman, director of the
travelers' health clinic at the University of Maryland Hospital in
Baltimore. He estimates as many as one in four of his patients have a
reaction--insomnia, dizziness, feeling lightheaded or nauseated, if not
something worse.

"The patients are not happy--and that's bad, because they're going on these
trips to get something accomplished or for a good time. They're on business
and they need to be alert and quick, and they have enough problems sleeping
because of time zones. People on vacation spend thousands of dollars on a
trip and suddenly find it ruined. They feel anxious and nervous and have

Edelman, who is also associate director of the University of Maryland's
center for vaccine development, is critical of the CDC's Web site for
failing to spell out percentages of patients who have experienced specific
categories of symptoms, including the more moderate ones. The Web site says
neuropsychiatric events "very rarely" occur, and that statement is deep in
the product information. "If it's one in four," Edelman said, "they should
put it in there and let the patient decide whether that's too high or not.
The problem is, most patients aren't even aware of these side effects
unless you tell them."

For those seeking protection from malaria, there are several other options
(see box, p. 15). In areas where malaria is not resistant to it,
chloroquine is the best choice. In areas where malaria is resistant to
chloroquine, the antibiotic doxycycline is cheaper and has milder side
effects; indeed, it's the antimalarial favored by President Clinton on
foreign forays. (Asked why, former presidential spokesman Joe Lockhart
said, "the usual reasons." Lockhart also chose doxycycline, he said,
because of "the dreams.")

Doxycycline must be taken daily, which is one argument against it: Patients
skipping a single dose can expose themselves to malaria. It's also not safe
for pregnant women or children, and creates acute sensitivity to the sun--a
tendency to burn faster, a considerable difficulty for many travelers. Like
most antibiotics, it can also cause yeast infections.

Malarone (See "Malarone: A New Alternative to Lariam," Page 14) was
approved in July and so far shows effectiveness similar to Lariam's but
with fewer side effects.

The CDC's preference for Lariam, despite the availability of such options
and reports of problems for some users, puzzles some patients and doctors.
Hans Lobel, for years the CDC's chief of malaria surveillance, published
many articles supporting the drug's use, dismissing reports of side effects
as the result of "travel-related stress" or underlying health problems. He
encouraged use of the drug for pregnant women and children, despite the
fact that the drug's label says sufficient research has not been done on
those groups.

In an interview before he retired last fall, Lobel told The Washington
Post, "The scientific data showed us there are no side effects that can be
attributed to mefloquine. . . . The long and the short of it is that
scientific studies have not shown any difference between mefloquine and a

The CDC's current Yellow Book, a biennial compilation of information on
diseases and treatments that is used by doctors, travelers and the media,
describes mefloquine as the "drug of choice" and says it is "very rarely"
associated with neuropsychiatric reactions.

Jay Keystone, the Canadian authority on antimalarials who has consulted to
both the CDC and Roche, calls the language in the Yellow Book "unacceptable
and incomplete." The information, he says, should include a range of
estimates for people who are expected to experience symptoms such as
anxiety, irritability, nightmares and other disturbances that cause them to
stop taking the drug.

As this story was being reported, CDC officials repeated the agency's
long-standing assertion that the best scientific evidence shows no
difference in tolerance between those taking mefloquine and those taking a
placebo. Officials also said mefloquine will remain the agency's "drug of

But late last week CDC officials indicated they may review new data on
Malarone and suggest its use in cases where mefloquine or doxycycline
cannot be used. Monica Parise, a medical epidemiologist of the CDC's
infectious disease unit, said it's now possible that the next edition of
the Yellow Book, to be published in 2001, will acknowledge that patients
and doctors have three options for malaria prevention in
chloroquine-resistant areas--creating not a single drug of choice, but
three choices.

In January 1999, Charles Perry--a $ 160,000-a-year hospital administrator
with seven children--had gone downstairs in his Cincinnati home to retrieve
a gallon of milk. Instead he got a shotgun, angled the barrel against the
base of his skull and pulled the trigger.

He had told his wife, Linda, many times that that was where it hurt the
most. The pain at the base of his cranium, the nightmares and the
hallucinations--they all had started six months earlier, during a safari
trip to Zimbabwe to celebrate their 30th wedding anniversary.

Because of their public health backgrounds, both Perrys had asked about
Lariam's safety--at the pharmacy and at the local health department. They
were told it was fine--in fact, the "drug of choice."

After a week canoeing the Zambezi River, Charles Perry began imagining
there were monkeys in their room.

"I was in bed and Chuck was sitting there just kind of enjoying himself,"
Linda Perry recalls, "and he jumps up out of the chair and says, 'Hey,
there's a monkey under the bed!' " Then he chased "the monkey" into the

Back home a few weeks later, he couldn't sleep. He had vivid dreams. He
heard voices.

"Chuck went absolutely mad," she says. "He couldn't remember anything. He
couldn't write his name. His eyes were just nuts." He called meetings at
work, then forgot why he called them. One night, he called 911--to report
that his wife was going crazy. Finally, he checked himself into the
psychiatric ward.

Then Linda Perry remembered what an African guide had said about how Lariam
can make some people "crazy." The guide said that those who live in Africa
know better than to take it.

"Oh God," she remembers thinking. "It's the Lariam."

That may or may not be true--doctors originally were unwilling to blame
Lariam for Charles Perry's mental problems, though one physician wrote a
letter doing so. And the timing of the suicide, six months after exposure
to the drug, is a complicating factor. In many ways, the Perrys' tale is a
classic Lariam parable--a dramatic story of personal suffering and tragedy,
but one that is very hard to prove, either legally or scientifically, was
caused by the drug.

Like many people whose lives have been shattered by what they believe are
side effects of Lariam, Linda Perry has become an activist for the cause.
She filed a lawsuit in federal court in June charging that the drug was
responsible for her husband's suicide. In August, Roche filed a response,
denying the allegations, stating it had taken "reasonable care" in making
and distributing Lariam, and "any such injuries and/or damages alleged by
plaintiff were the result of superseding or intervening causes . . . or
caused by the negligence and/or fault of others." No trial date has been

A number of such lawsuits have been filed charging the manufacturer with
"failure to warn," but none has been successful. An attempt to gather
plaintiffs in England for a class action fell apart as legal bills mounted.
Similar efforts have stalled in Canada and the United States. One case in
New Jersey was settled out of court by Hoffmann-LaRoche, but the case was
sealed and the evidence and terms of the settlement remain secret. An
Indiana woman received a $ 10,000 out-of-court settlement from a pharmacy
after suing for "failure to warn" about Lariam's dangers.

Perry is doing her best to provoke government action, so far with only
modest results. Ohio senators George Voinovich and Michael DeWine have
arranged a conference call for Perry and her husband's doctor with the FDA.
The House Commerce Committee is "actively engaged in conversations with the
FDA over concerns about the drug," said committee spokesman Pete Sheffield,
and is exploring the possibility of holding hearings.

Meanwhile, individuals who believe they are victims of the drug's side
effects hope their stories can help the public understand the possible
risks of taking the drug.

Michael Burch--whose son contracted malaria while in the Peace Corps and
who appreciates the role mefloquine plays in preventing and treating the
disease--says he wishes he had known more before taking the pills.

"I wish I'd known what was happening to me" when he experienced the cardiac
and psychiatric symptoms in the restaurant and thereafter. "I know we have
the best medical system in the world, and I still believe that. But the
system really let me down."

Hope Trachtenberg-Fifer, the nurse and health educator who says she became
"psychotic" after taking Lariam, feels "so used and abused." Before taking
Lariam, she had consulted solid information sources she often turned to for
professional decision-making: the Physicians' Desk Reference and the CDC's
Web site.

"I trusted what I'd been told by my government as an American that this was
the thing to do to protect me. I'd done my research!" she said. "But the
warnings are very minor."

"They only said to be cautious if you have psychiatric problems. I didn't
have any--until I took Lariam."

Keith Epstein, a former investigative reporter with the Washington bureau
of the Cleveland Plain Dealer, is a frequent contributor to the Health and
Travel sections of The Washington Post. Dan Olmsted, a Falls Church writer
and editor, contributed reporting to this story. (The Washington Post,
October 10, 2000)

LEXINGTON EYE: Keller Rohrback Files Purchasers' Laser Eye Surgery Suit
On October 9, 2000, Keller Rohrback L.L.P. filed a lawsuit against
Lexington Eye Institute, Ltd. of British Columbia and Focus Eye Care, Inc.
of Bellevue, Washington, and certain medical professionals on behalf of all
Washington consumers who have purchased or will purchase laser eye surgery
services from some or all of the Defendants since October 9, 2000 (the
"Class Period").

The Plaintiffs in this action are three women who purchased laser eye
surgery services from the Defendants and have suffered severe injury to
their vision as a result of undergoing laser eye surgery. The Plaintiffs
bring this action on behalf of themselves individually and in their
capacity as class representatives. Plaintiffs' individual claims allege
medical negligence. The class allegations include violations of the
Washington Consumer Protection Act ("Act") and contract law. The Act
prohibits "unfair or deceptive acts or practices in the conduct of any
trade or commerce." Plaintiffs allege that Defendants violated the Act by,
among other things, bombarding Washington residents with advertising in
Washington media, providing purchasers pre -- and post -- operative eye
care in Washington, and then, minutes before surgery, requiring purchasers
to sign provisions depriving them of the protections of certain Washington
laws regardless of the severity of the Plaintiffs' injuries.

Contact: Gretchen Freeman Cappio, Esquire of Keller Rohrback L.L.P.,
800-776-6044, or gcappio@kellerrohrback.com

MICROSOFT CORP: Bias Complaint May Be Wake-Up Call to High-Tech Industry
A discrimination complaint filed earlier this month against Microsoft Corp.
by a former black female manager may be a wake-up call to the high-tech
industry to pay closer attention to who gets hired and promoted, legal and
management experts say.

Monique Donaldson, a former program manager in the Microsoft Network
operations division, alleges the company systematically discriminated
against African-Americans and women by denying them promotions and equal
pay. The complaint was filed in U.S. District Court in Seattle and seeks
class action status for multiple plaintiffs.

Microsoft, the Redmond, Wash., software giant, has not responded to the
specific charges in the complaint but said in a statement: "We do not
tolerate discrimination of any kind at Microsoft. We work actively to
recruit, train and promote qualified minority and women employees. We are
committed to treating all of our employees fairly."

Microsoft maintains a diversity department and a full-time diversity

Without commenting on the merits of the Microsoft suit or the company's
practices, experts said high-tech employers, particularly young,
fast-growing companies, can be especially vulnerable to lapses in human
resources practices because of the industry's pell-mell growth.

"What happens quite frequently is they have this amazing explosive growth,
but their human resources department doesn't have a similar explosive
growth. They look at themselves and they're a really big company, yet they
still have the administrative practices of a start-up," said Raymond H.
Hixson Jr., an attorney at Fenwick and West in Palo Alto.

At companies that have experienced fast growth, "so much of the management
focus was on speed and growth that a lot of the fundamentals were not put
in place with regard to supervisory training, policies that are workable,
and quick follow-up on complaints," said Garry Mathiason, chairman of the
high-tech practice group at Littler Mendelson in San Francisco, a large law
firm that represents employers.

The complaint against Microsoft alleges that the company's twice-a-year job
reviews are "overly subjective" because the company gives its managers
"unbounded discretion" to make decisions on compensation and promotions.

In one practice described in the lawsuit, Microsoft managers assess
employees based on the question: "If you were stuck in a lifeboat, who
would you want with you?"

The suit alleges that personnel decisions were often made based on the
"personal popularity" of employees with managers.

It also alleges a pattern of granting lower salaries, smaller bonuses and
fewer stock options to African-Americans and women than their white male
counterparts with similar or lesser experience. More than half of the
company's African-Americans are in the lowest quarter of the pay scale, the
complaint alleges.

Donaldson was employed at Microsoft from 1992 to 1996 and from 1998 until
May 2000.

Her suit said that Microsoft employs about 18,000 people in the United
States, of which about 2.5 percent to 3 percent are African-Americans and
26 percent female.

Equal Employment Opportunity Commission statistics from 1998 show that
computer programming and data processing companies had higher percentages
of whites and Asians but lower percentages of blacks and Hispanics among
their employees and managers than did private industry overall. (San Jose
Mercury News, October 7, 2000)

NETWORK SOLUTIONS: Hare, Wynn Files Suit Alleging Restraint of Trade
A Class-Action suit was filed on September 29 in U.S. District Court
(Northern District of Alabama) against Network Solutions, after the company
refused to release web site domain names whose ownership licenses had
legally expired.

Scott Powell and Don McKenna of the law firm of Hare, Wynn, Newell & Newton
represent Stan Smith-a local businessman-who attempted to register several
domain names with Network Solutions, Inc. in June. Although legal ownership
on each of those names had expired, Network Solutions refused to delete
them from its central WHOIS registry database-denying Smith the lawful
right to assume ownership of those names. According to the complaint filed
by Hare-Wynn, Network Solutions (sometime around May 2000) implemented a
unilateral policy of refusing to delete expired domain names from the WHOIS
database. Reports estimate that the number of expired names withheld by
Network Solutions, Inc. is between one and three million.

"This case is about restraint of trade," says Scott Powell. "By refusing to
release names that should have been returned to the public domain, Network
Solutions has unlawfully attempted to maintain the monopoly power they no
longer have."

WHOIS is the standard label for a name-lookup, or registry database, of
more than 10 million names -- including all .com, .net and .org names --
considered to be a generic utility for the Internet's administrative
community. The database was developed by Network Solutions, who until
October 1998 held a government-sanctioned monopoly for the registration of
non- military Internet domain names. Law now requires that the WHOIS
database remain accessible to all name lookup services.

Powell says Hare-Wynn has sought class action status for the case pursuant
to 15 U.S.C. Sections 1-2 (The Sherman Anti-Trust Act).

Contact: Beckey Askins of Hare,Wynn, Newell & Newton, 205-328-5330, or

PALM BEACH SCHOOL: Talks Collapse; Suit Dismissed; Fight over Fees Go on
After John Schmidt failed to pay $ 7 for an English book at Spanish River
High School in Boca Raton last year, officials unsuccessfully tried
suspending him from school for insubordination.

Officials at the same school in 1991 barred the son of Lori Ronan-Khessali
from graduating because he didnt pay a $ 20 health course fee.

Now Ronan-Khessali, Schmidt and another parent named Charlene Clark are
among a group of parents and former students accusing the Palm Beach County
School Board of violating Floridas constitutional guarantee of a free
public education. They are joined by the South Florida Educational Law
Center, a nonprofit watchdog group.

The case, filed in June 1999, could significantly affect the budgets of
many of the states 67 school districts. Filed as a class action in Palm
Beach Circuit Court, the plaintiffs demand that Palm Beach County public
schools stop charging parents for textbooks, filed trips and art and
science materials. They want the School Board to refund at least $ 30
million that it took from high school students during the past four years.

For now, the protagonists agree on one thing: Floridas first legal
challenge against school boards exacting fees or expecting voluntary
donations to fund classes will ripple throughout the state.

Not all school boards charge such fees. For example, Broward and Miami-Dade
school districts do not charge fees for standard courses, say district
officials. Both counties do allow fees for electives, such as band or an
advanced course that uses sophisticated equipment. And students may pay an
admission charge to a museum or arts performance on a field trip.

According to 1998 audit reports by the Florida auditor general, at least
seven county districts charge fees as a matter of course: Hendry,
Hillsborough, Lee, Polk, Sarasota, Seminole and Volusia. The audit looked
at schools randomly, and the exact number of school districts charging the
fees could be much higher.

The auditors office questioned the legality of fees for academic courses,
referring to the state constitutions guarantee of a free public education.
Auditors also cited a 1978 Florida Supreme Court decision in which a parent
sued the Dade County School Board because educators capped spending for
special-needs students.

These schools are funded by governmental sources and nonresident tuition
fees, not by the people utilizing them, except indirectly as taxpayers,
justices wrote, ruling for the mother. The clear implication is that all
Florida residents have the right to attend this public school system for

Florida wouldnt be the first state to address the fee issue. The Michigan
Supreme Court in 1970 decided that fees for academic courses violated its
state constitutional mandate of free public schooling.

Talks to settle the dispute collapsed in September, and attorneys for
Schmidt and others are going full bore ahead, says lead lawyer Gerald F.
Richman of Richman Greer Weil Brumbaugh Mirabito & Christensen of West Palm
Beach and Miami.

The South Florida Educational Law Center, which Ronan-Khessali founded last
year during negotiations with the board, demanded that the district not
only change its fee policy but also pay $ 1.75 million to fund the
nonprofit watchdog, according to Richman.

While the two sides were close to agreeing on new policy language, Richman
also sought an injunction to enforce it, said Bruce A. Harris of Weiss &
Handler of Boca Raton, interim chief counsel to the School Board.

Meanwhile, the Palm Beach County School Board in September voted to keep
the fee system and refused paying anything to plaintiffs or their legal

The board claims the fees are legal. In court documents, Harris claimed
state laws specifically authorize school boards to adopt policies
concerning fees. School Board policy permits voluntary fees, but states: No
penalty may be imposed upon any student who fails to purchase a requested

However, Ronan-Khessali recently received a letter from Spanish River High
School asking her and other parents with students enrolled in an advanced
English literature course to pay $ 34 for five novels. However, to the
detriment of all students involved, the novels will not be taught if the
costs cannot be covered, wrote principal Geoff McKee on Sept. 27.

This is educational blackmail, she says. For many families, these fees
create hardships, says Ronan-Khessali, a Lynn University Ph.D. candidate in
educational leadership. After creating the Florida Educational Law Center,
she enlisted support from Aronberg, who initially took her case for one
dollar. After filing suit in June 1999 Aronberg asked civil rights
heavy-hitters Richman and Rogow to join the fracas.

And although Palm Beach Circuit Judge James T. Carlisle dismissed the suit
on Sept. 14, 2000, because, he said, the suit attempts to micromanage the
districts funds, he gave plaintiffs 30 days to repackage and refile the
class action.

If plaintiffs gain class status in their suit, the price tag for past fees
will likely exceed $ 30 million, Ronan-Khessali estimates. She surveyed 11
of the districts 18 high schools. She conservatively estimated that every
student pays at least $ 100 in fees a year for four years. Factor in
elementary and middle school fees and the potential costs to the School
Board soar, she adds.

Fed up with what she considers unfair fees, Ronan-Khessali went a step
further last week and asked the School Board to approve a new charter
middle school that would have no fees -- Global Academies.

If the School Board wont provide a truly free education, she said, then we
will. (Miami Daily Business Review, October 10, 2000)

PHILLIPS PETROLEUM: Toxic Explosion Suit Settles for $21.5 Million
A settlement has been reached between Phillips Petroleum Co. and about
16,000 class members stemming from an August 1993 explosion and release of
toxic fumes at a chemical plant in Ohio. Phillips will pay out about $21.5
million to the members of the surrounding community affected by the blast.
White v. Aztec Catalyst Co., No. 93CV111025, settlement agreement (Ohio
C.P., Lorain County, June 30, 2000).

On Aug. 27, 1993, two buildings at the Aztec Catalyst facility in Elyria,
Ohio (then owned by Philips Petroleum Co.), exploded, setting off a chain
reaction and producing a plume of hydrochloric acid. The case took seven
years to resolve.

The 16,000-member class, consisting of people who lived a mile from the
plant or those who owned property there, had some property damage and
experienced transitory health effects.

The settlement agreement provides payments for the following categories:

-- punitive damages (payable to all class members);

-- evacuation damages (payable to all class members who were evacuated
    after the explosion);

-- pollution symptoms and general damages;

-- real property value diminution;

-- medical expenses;

-- non-medical economic loss; and

-- severe or chronic medical conditions and illnesses (payable to those
    diagnosed with a severe or chronic medical condition or illness
    directly caused or exacerbated by the explosion and release).

The class members were represented by Robert Gary of Gary, Naegele & Theado
in Lorain, Ohio, and James T. Murray of Murray and Murray Co. in Sandusky,
Ohio. (Toxic Chemicals Litigation Reporter, September 8, 2000)

PUBLIX SUPER: Hit Again With Gender Discrimination Lawsuit
Twelve women have filed two federal lawsuits against Publix Super Markets
in the latest round of legal action accusing the grocery giant of

The latest lawsuits, filed on October 6 in U.S. District Court in Tampa,
claims the company discriminated against female employees and denied them
promotions in higher-paying, male dominated fields

Eleven other women have filed sexual discrimination cases against Publix.

"It's disappointing to learn of an action like this," said Publix
spokeswoman Jennifer Bush. "But it's a sad reality that in a litigious
society, large corporations - even ones with excellent records - are often
frequently the targets of law firms."

In 1997, Publix settled a class-action discrimination lawsuit and complaint
from the Equal Employment Opportunity Commission for $81.5 million. The
same year, another female employee filed suit claiming discrimination in
the chain's warehouses, but a judge denied class-action status for the

In the recent lawsuits, 11 women claim Publix denied them promotions and
jobs and ignored complaints of sexual harassment. A 12th woman filed her
own lawsuit claiming sexual discrimination.

One plaintiff, Judy Cooper of Publix's Jacksonville warehouse, claimed in
her lawsuit that she tried several times to get a truck-driver job with
Publix, but was not hired. Meanwhile, several men with less seniority
received driver jobs.

At one point, Cooper talked directly with Publix CEO Howard Jenkins, who
referred her to a warehouse superintendent. But that did not resolve the

Tangynita Williams of Lakeland claims a manager sexually harassed her,
kissing her and touching her inappropriately. When she yelled, the manager
offered her $10. The manager was transferred, but not fired.

Della Flo Toalston of Fort Pierce complained of not being allowed to
transfer out of her job and that co-workers looked at pornographic
magazines at work. (The Associated Press State & Local Wire, October 10,

STAR TELECOM: Denurrer in World Access Merger Case under Appeal
On February 14, 2000 and March 1, 2000 identical class action complaints
were filed against Star Telecommunications and certain of its directors and
executive officers which, among other things, sought to enjoin that
company's merger into World Access Inc. On May 5, 2000, the court granted
the defendants' demurrer. On July 14, 2000, the plaintiffs appealed the
court's order granting demurrer.

TEXAS: Violated Decree to Improve Health of Poor Children, Fed Ct Says
The state of Texas has violated several provisions of a 1996 consent decree
to provide health care for 1.5 million indigent children, a federal judge
in the Eastern District of Texas has ruled in a scathing 111-page decision.
The court has given the state 60 days to come up with a plan to comply with
the decree, and Texas Attorney General John Cornyn has said he will appeal
the ruling. Frew et al. v. Gilbert et al., No. 3:93CA65 (E.D. Tex., Aug.
14, 2000).

The class-action suit, begun in 1993, alleged that the Texas Health and
Human Services Commission was failing to provide diagnostic and treatment
services to children enrolled in its "Texas Health Steps" Medicaid program.
The state signed a consent decree in 1996 in which it agreed to take
specific steps to rectify the shortcomings of its health care programs for
poor children. The plaintiffs returned to court in March of t his year to
complain that Texas had not met the requirements of the decree and to ask
the court to enforce the decree.

After a hearing and additional briefings, U.S. District Judge William Wayne
Justice granted most of the motion to enforce the decree after finding that
the state failed to meet its requirements in several areas:

-- failing to provide dental checkups for about one million poor
    children in 1998 and even larger numbers of eligible children last
    year. Most of those who did see a dentist sought treatment for

-- failing to provide sufficient staff and other resources to
    effectively inform eligible recipients about Texas Health Steps;

-- failing to provide needed transportation to clinics and hospitals;

-- failing to provide adequate care to enrollees of the Medicaid managed
    care programs;

-- failing to provide treatment to the children of migrant workers
    enrolled in managed care programs;

-- failing to adequately train health care providers; and

-- failing to obtain adequate data from the HMOs regarding their
    operations and provision of care.

The ruling comes at a time when Texas Governor George W. Bush is
campaigning for the presidency on a platform that includes a policy of "not
leaving one child behind" when it comes to health care and education. His
campaign has pointed out that the problems started, and the suit was filed,
during a previous Democratic administration and that his administration has
been trying to improve the delivery of health care to the state's children.

Judge Justice found that the plaintiffs provided sufficient evidence that
the state had inflated its data about checkups in the managed care system
and that, in fact, the checkups received by managed care enrollees "are
grossly inadequate and incomplete."

Federal law requires full checkups taking up to one hour to complete, but
children enrolled in the Texas Health Steps program received checkups
lasting as little as 12 minutes. Medicaid patients in managed care programs
sometimes received only nine or 10 minutes with a primary care provider,
the court found, and fewer than 10 percent of eligible children have been
fully immunized.

Many parents of managed care patients do not know the name of their
children's primary care physician, cannot get appointments to see the PCP,
cannot get referrals to specialists and are transferred to other PCPs
without their knowledge and consent, the opinion stated. Patients are also
impeded from receiving pediatric and mental health services, it said.

Poor parents who do not have cars have great difficulty in getting vouchers
or arranging transportation to see health care providers, Judge Justice

In addition, the state was to have established toll-free telephone numbers
where parents could call for information about Texas Health Steps, but poor
parents without phones have to wait for long periods of time on pay phones
before getting through to an advisor. One caller waited more than 13
minutes, the court noted. Moreover, when parents do get through, they often
end up talking to people who are unhelpful or do not know the answers to
their questions.

The children of migrant laborers are especially poorly served because they
often have to travel to health care providers whose offices are an hour or
more away, Judge Justice said, and parents who travel around the state
harvesting crops often fail to register with a local PCP and thus are
locked out of the system. Even when parents are diligent in registering
their children with health care providers, by the time children become
eligible for health services and get enrolled in a managed care program,
they may only receive one or two of the services to which they are
entitled, such as immunization, before they move on to another location, he

"Despite the increased health risks faced by class members whose parents
are migrant farm workers, much evidence suggests that defendants have not
adequately ensured that their managed care contractors make efforts to
accommodate them," the court said.

The class-action plaintiffs are represented by Jane Swanson of the Law
Offices of A. Rodman Johnson in The Woodlands, Texas, and by Susan F. Zinn
of San Antonio, Texas. (Health Law Litigation Reporter, September 2000)

TOBACCO LITIGATION: Flight Attendants’ Attys Don’t Have to Rehash Issues
Attorneys for some 2,400 flight attendants who allege second-hand smoke
made them sick are claiming a victory in their battle against Big Tobacco.

Miami-Dade Circuit Judge Robert Kaye late last week issued an order that
essentially says when the cases go to trial, the plaintiffs attorneys will
not have to rehash all of the issues relating to liability, negligence and
breach of warranty -- issues the flight attendants attorneys had argued
were resolved by a 1997 settlement agreement. They will only have to prove
that their particular health problem was caused by second-hand smoke.

Attorneys for the flight attendants claimed that cigarette manufacturers
were attempting to unravel the landmark settlement agreement reached by
Miami attorneys Susan and Stanley Rosenblatt.

This was just another example of Big Tobacco trying to squirm out of the
settlement agreement, and Judge Kaye said no, said Miles McGrane, who
represents the flight attendants.

The agreement grew out of a multimillion-dollar class-action lawsuit filed
in 1991. As part of the agreement, the flight attendants were permitted to
take their individual cases to trial.

Attorneys for the flight attendants argued that if they were forced to try
the cases from scratch, it would take months for each one. Attorneys for
the tobacco companies said they are weighing the option to appeal. (Miami
Daily Business Review, October 10, 2000)

VITAMIN PRICE-FIXING: Ryan Announces Historic $255M Antitrust Settlement
Attorney General Jim Ryan announced a historic $255 million nationwide
settlement of lawsuits against an international cartel of six vitamin
manufacturers for an alleged decade-long price-fixing conspiracy that
violated state and federal antitrust laws.

"We allege that for more than a decade, these companies met secretly around
the world to conspire to drive up the cost of vitamins and vitamin products
costing consumers, businesses and state governments millions of dollars,"
Ryan said. "We are sending a clear message that we will stand together to
fight price-fixing whether our foes are here or abroad."

Ryan's Antitrust Bureau played a leading role in the multi-state effort to
reach the settlements with European giants: Switzerland-based F.
Hoffman-LaRoche, BASF, (Germany) and Aventis -- formerly Rhone-Poulenc
(France) and three Japan-based companies: Takeda Chemical Industries Ltd.,
Eisai Co. Ltd. and Daiichi Pharmaceutical Co. Ltd. These companies
manufacture a wide variety of products including: vitamin pills, feed for
animals and vitamin products that go into foods like milk, cereal and

The settlements mark the largest ever received under state laws that allow
consumers and businesses to recover damages for price-fixing overcharges --
even though the consumers and businesses did not buy directly from the
defendants. Federal antitrust law does not permit these "indirect
purchasers" to recover damages, while the 23 participating jurisdictions
permit such recovery.

Under the agreements, Illinois will receive more than $15 million.
Approximately $12 million of Illinois' settlement fund will be distributed
to non-profit charitable groups for programs that advance the health and
nutrition of consumers. $2.24 million will be repaid to the state for
overcharges on state vitamin purchases.  All 50 states will be compensated
for overcharges on state governmental purchases of products containing the

In addition, a $107 million business settlement fund will be set up to
reimburse businesses in the 23 participating jurisdictions. In Illinois,
grocery stores, farmers and other businesses will be able to make claims on
this fund.

The defendants sold the following vitamin products: vitamin A (astaxathin),
vitamin B1 (thiamin), vitamin B2 (riboflavin), vitamin B5 (calpan), vitamin
B6, vitamin B9 (folic acid), vitamin B12, vitamin C, vitamin E, vitamin H
(biotin), beta-carotene, carotenoids, canthaxanthin, choline chloride and
all blends and forms of these vitamins and premix vitamin products.

The settlements must be approved by the 21 state courts and by the court in
Puerto Rico and the District of Columbia. The settlements cover numerous
pending private class action suits as well as the suits brought by state
attorneys general on behalf of consumers and businesses within their

Other participating states include: Arizona, Florida, Hawaii, Idaho,
Kansas, Maine, Michigan, Minnesota, Nevada, New Mexico, New York, North
Carolina, North Dakota, Rhode Island, South Dakota, Tennessee, Vermont,
Washington, West Virginia and Wisconsin.

Source: Illinois Attorney General's Office

Contact: Lori Bolas of the Illinois Attorney General's Office, 312-814-2518

WORLD ACCESS: Securities Suits in GA Re Product and Sales Consolidated
Plaintiffs have filed 23 class action shareholder suits against World
Access Inc. and some of its current and former officers alleging violations
of the federal securities laws.

These suits arise from alleged misstatements of material information in and
alleged omissions of material information from some of the Company's
securities filings and other public disclosures, principally related to
product development, inventory and sales activities during the fourth
quarter of 1998. Plaintiffs have requested damages in an unspecified amount
in their complaints.

These class action suits were consolidated into a single action for all
pretrial proceedings in the United States District Court for the Northern
District of Georgia under the caption In re: World Access, Inc. Securities
Litigation (File No. 1:99-CV-43-ODE).

The plaintiffs filed an amended consolidated complaint for this action on
or about May 28, 1999. The Company filed a motion to dismiss the amended
consolidated complaint on June 28, 1999. The court denied this motion to
dismiss in an order dated March 28, 2000. The Company filed an answer on
May 5, 2000. On July 21, 2000, competing plaintiffs filed Motions for Class
Certification, Appointment of Lead Plaintiffs and Appointment of Lead
Counsel. Although the Company denies that it violated any of the
requirements or obligations of the federal securities laws, the company
admits that there can be no assurance that the Company will not sustain
material liability as a result of or related to these suits.


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

Class Action Reporter is a daily newsletter, co-published by Bankruptcy
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Washington, DC. Theresa Cheuk, Managing Editor.

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

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