/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/001121.MBX C L A S S A C T I O N R E P O R T E R Tuesday, November 21, 2000, Vol. 2, No. 227 Headlines AMERICAN ACCESS: Lawsuit over 1999 Stock Price May Become Class Action BRIDGESTONE/FIRESTONE, FORD: Lawyers Agree on Lead Counsel in Tire Case COVAD COMMUNICATIONS: Gold Bennett Extends Period In CA Securities Suit CREDIT CARDS: Wal-Mart Employee Training Tape in Focus in Debit Case EBAY INC: Allegedly Fake Sports Memorabilia Suit Gets Class Status HEARTLAND FUNDS: Investors File Numerous Lawsuits After Revaluation HOLOCAUST VICTIMS: Italian Insurer Promises Policyholders Up to $100 Mil HOLT'S CIGAR: Investors Accuse of Self-Dealing in Going-Private Deal IMPERIAL CREDIT: Securities Suit Filed in 1998 in CA Survives Dismissal IMPERIAL CREDIT: Sued Again in 2000 in CA over Securities Issues McKESSON HBOC: Sees Factual Inaccuracies in Amended Securities Suit MICHIGAN: Durant III Plaintiff School Districts Issue Opinion Piece MICROSOFT CORP: Answers Anticompetitive Charges in Europe MILLER & SCHROEDER: Sued for Underwriting United Homes Debentures OTTAWA: Lawsuit Seeks Restitution For Chinese Head Tax PRESIDENTIAL ELECTION: Circuit Judge Refuses Palm Beach Revote PRESIDENTIAL ELECTION: Eyes Turn to Fla. Supreme Justices PRESIDENTIAL ELECTION: FL Sp Ct Justices Face Questions in Paper War PRESIDENTIAL ELECTION: Republican Lawmakers Homing in on Federal Statute PRESIDENTIAL ELECTION: Florida Supreme Ct Pepper Lawyers with Questions SOTHEBY’S, CHRISTIE’S: Lawyers to Get $27 Mil for Antitrust Settlement * Clinton to Issue New Rules On Medical Data Privacy * Journal Says Are Restatements Are a Principal Cause of Lawsuits ********* AMERICAN ACCESS: Lawsuit over 1999 Stock Price May Become Class Action ---------------------------------------------------------------------- American Access Technologies Inc. is involved in litigation that could potentially develop into a class action filing precipitated by the fall of the price of common stock in August 1999. The suit was filed in United States District Court, Eastern District of New York. Plaintiff alleges in the Amended Complaint that the defendant participated in a conspiracy to inflate the price of the Company's common stock for the purpose of allowing "insiders" to enrich themselves by selling personal holdings at the inflated price. The Company denies not only any wrongdoing, but most of the material factual allegations as well, and intends to vigorously defend this case. The company has filed a motion to dismiss with the New York Courts. The company says that it has paid for legal services as incurred, and dealings with attorneys have not included the advancing of any legal fees for indemnification of defendants who are principals of the Company. However, there is no guarantee that expenses for indemnification of Company principals will not occur in the future. Company defendants have signed Conflict Waivers and Undertaking to Repay Expenses for Defense for indemnification under Florida Statutes Section 607.0850(6). BRIDGESTONE/FIRESTONE, FORD: Lawyers Agree on Lead Counsel in Tire Case -----------------------------------------------------------------------According to Reuters news from Indianapolis, plaintiff attorneys involved in the lawsuits against embattled tire maker Bridgestone/Firestone (5108.T) and Ford Motor Co. (F.N) presented a rare show of unity in pretrial proceedings last Friday, agreeing on a lead counsel to take the suits forward, attorneys said. About 70 lawyers gathered in an Indianapolis federal court to lay the groundwork for how pretrial discovery and motions will be handled before returning the suits to their home courts for trial. Plaintiff attorneys said they would file a motion next week to name as lead counsel in the class action suit Don Barrett. Barrett, of Lexington, Mississippi, was the lead trial attorney in a class action suit against State Farm Insurance Co. that resulted in an award of $456 million in 1999. Plaintiff attorneys said they would also file a motion to name Victor Diaz and Mike Eidson, both of Miami, to lead the personal injury cases. Attorneys said they were confident that Judge Sarah Evans Barker, an appointee of Ronald Reagan and a former U.S. Attorney, would accept the proposals. Doing so, they said, would be an important step to advance the process. ``We want to be taking depositions before Christmas,'' Barrett said. A Ford spokeswoman said, ``We're looking forward to moving these suits along and naming the lead council is the first thing that needs to happen.'' Firestone/Bridgestone recalled 6.5 million tires in August after dozens of reports that they were prone to shred and caused deadly accidents. Most of the tires were fitted on Ford Explorer sport utility vehicles. Ford and Firestone/Bridgestone, the automaker's largest tire supplier, have blamed each other for the tire failures. The class action suit seeks to expand the tire recall and offer broader consumer protection. The personal injury suits seek millions of dollars in damages for those injured or killed. ``I have full confidence that the judge will make her decision based on what's best for Ford, Firestone and the plaintiffs,'' Firestone attorney Anthony Prather said. Bridgestone Corp. of Japan, parent company of Nashville-based Bridgestone/Firestone, was seeking separate council and did not have legal representation at the hearing. Barker told Firestone attorneys to communicate to Bridgestone Corp. that she expected Bridgestone to have legal counsel present at the next and final pretrial hearing on December 6. ``I think (Bridgestone/Firestone) got the message that this is a no-nonsense court and that's a good thing,'' Barrett said. In a news release, Bridgestone/Firestone said its recall of 6.5 million tires was 75 percent complete and was expected to be completed by the end of this month. The company, hurt by falling U.S. sales in the wake of its massive tire recall, said it would cut tire production at two U.S. plants in January, resulting in the temporary layoff of about 1,100 workers. An oversupply of passenger car, light truck and bus radial tires prompted the production cuts beginning Jan. 21 at its LaVergne, Tenn., and Oklahoma City plants. COVAD COMMUNICATIONS: Gold Bennett Extends Period In CA Securities Suit ----------------------------------------------------------------------- Gold Bennett Cera & Sidener LLP announced on November 18 that it had filed a class action in the United States District Court for the Northern District of California, Case No. C-00-4293-BZ, on behalf of purchasers of Covad Communications Group, Inc. (Nasdaq: COVD) common stock during the period between September 7, 2000 through November 14, 2000 (the "Class Period"), including those who acquired Covad shares in connection with Covad's acquisition of BlueStar Communications Group and those who acquired Covad convertible senior notes. Plaintiff seeks to recover damages on behalf of all purchasers of Covad securities during the Class Period. The complaint charges Covad and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants misrepresented the revenues that Covad was deriving from its newly acquired BlueStar business, which, together with defendants' false representations that Covad would post Q3 2000 EPS of $(1.18) and revenues of $ 74.7 million, operated to artificially inflate the price of Covad stock to a Class Period high of $20.93 on September 11, 2000. This upsurge in Covad's stock caused by defendants' alleged false and misleading statements enabled Covad to complete a $500 million bond offering and the $140 million stock-for-stock acquisition of BlueStar. On October 17, 2000, 15 business days after the acquisition of BlueStar was completed and just 18 business days after Covad raised $500 million in a debt offering, Covad revealed that it was in fact suffering a huge decline in revenues, was not posting smaller negative EPS growth, and contrary to defendants' repeated assurances, Covad was forced to reveal the problems it had been experiencing during the Class Period in attempting to grow its business. This announcement caused its stock price to drop to as low as $3.50 (or over $5 per share) on record volume of 70 million shares on October 18, 2000, causing hundreds of millions of dollars in damages to members of the Class. Finally, on November 14, 2000, Covad announced that the Company would be adjusting its previously announced third quarter 2000 financial results, resulting in its stock price dropping over 20% on very high trading volume. Contact: Joseph M. Barton of Gold Bennett Cera & Sidener, 800-778-1822, or 415-777-2230, or fax, 415-777-5189, or Covad@gbcsf.com CREDIT CARDS: Wal-Mart Employee Training Tape in Focus in Debit Case -------------------------------------------------------------------- A Wal-Mart employee-training videotape may prove a key piece of evidence for Visa and MasterCard in the upcoming trial over debit card rules, which had a dress rehearsal of sorts last Friday. The tape shows the difference between Visa and MasterCard debit cards and other types -- and instructs cashiers to encourage customers to use the other types. Visa U.S.A. and MasterCard International have been sued by Wal-Mart and other retailers over the rates they charge for debit card acceptance. The card associations argued at a court hearing last Friday that the videotape was proof that merchants have ample leeway in payment card acceptance, and that Wal-Mart's tardy delivery of the tape to the defense, in addition to other discovery abuses, constituted suppression of evidence. Judge John Gleeson of U.S. District Court for the Eastern District of New York did not rule on the first claim, but denied a motion by Visa and MasterCard to dismiss Wal-Mart from the lawsuit because of evidence problems. The card companies are defending themselves in the class action while awaiting a verdict in the Justice Department's antitrust case against them. They had argued that Wal-Mart -- the original plaintiff in the debit card lawsuit -- should be tossed from the case because it failed to produce the training video during the discovery period, and instead submitted it only after Visa and MasterCard filed their motion about evidence suppression. A lawyer for Wal-Mart said the tape had not been produced sooner because it had been mislabeled at corporate headquarters. Judge Gleeson said that even if he believed Wal-Mart had suppressed or destroyed evidence, he would not decide the case as a matter of law until the evidence could be presented to a jury. No date for the trial has been set, pending a decision by an appeals court on Visa and MasterCard's challenge to the class action status of the trial, which Judge Gleeson had approved. Despite the judge's ruling last Friday, lawyers for the card associations said Visa and MasterCard still have recourse to some form of relief, such as the legal costs of the motion. The lawyers also said that the evidence presented at the hearing will reappear -- perhaps more effectively -- in trial. In the training video, which both sides agreed had been found at several stores (and also at corporate headquarters, Wal-Mart said), Wal-Mart cashiers are told how to identify and process different payment types. They are instructed to encourage debit card transactions -- which the tape said cost the company 10 to 15 cents each, versus 75 cents for a credit card transaction -- and shown the difference between signature-based debit cards, which bear the Visa and MasterCard logos, and PIN-based debit cards, which do not. The tape does not quantify the price difference between the two types of debit, but it explains the company's preference for PIN-based debit cards and says that fostering debit card use means "millions of dollars of savings for our company." A lawyer for the card associations, Brian P. Brosnahan of the San Francisco firm of Heller, Ehrman, White & McAuliffe LLP, said there was great incentive for Wal-Mart to suppress the tape, because it contradicts Wal-Mart's assertion that association rules forbid the retailer to "steer its customers" to use PIN-based debit. Mr. Brosnahan said the tape also undercuts Wal-Mart's claim that Visa deliberately designed its debit cards to look identical to its credit cards. He stopped the tape at a point when cards displaying different electronic funds transfer network logos are shown, and highlighted a shot of the Visa check card. Visa and MasterCard also presented a videotape of testimony by Stephen Hunter, Wal-Mart's director of finance, who, when asked if the company had ever trained its cashiers to identify debit cards, responded, "Not to my recollection." When asked to describe ways that Wal-Mart trained cashiers to recognize payment types, Mr. Hunter said only that "oral communication" had been used. Mr. Brosnahan used that tape to accuse Mr. Hunter of suppressing the training video during discovery. Judge Gleeson asked lawyers for Wal-Mart, "What did Hunter do? Did he forget about this video?" Robert Begleiter of the New York firm Constantine & Associates replied that Mr. Hunter may have forgotten about the training tape. "There were some mistakes made," Mr. Begleiter said. "We're not perfect." But he said Wal-Mart's discovery lapses did not meet the definition of "spoliation," or destruction of documents. Judge Gleeson told Visa and MasterCard that to dismiss the lead plaintiff from the case would be "too onerous ... even if everything you tell me is correct." The judge said, "Maybe you're right. Maybe this Hunter guy is a liar. But why should I decide now as a matter of law before the evidence is presented?" After the hearing, MasterCard's deputy general counsel, Noah Hanft, said that even though his side lost the ruling, "the motion has been successful in forcing Wal-Mart to produce documents." (The American Banker, November 20, 2000) EBAY INC: Allegedly Fake Sports Memorabilia Suit Gets Class Status ------------------------------------------------------------------ A judge gave class-action status to a suit against eBay that alleges the largest Internet auction company is liable for facilitating the sale of fake sports memorabilia. San Diego Superior Court Judge Linda B. Quinn's decision could turn the case into a multimillion dollar complaint involving anyone who says they unwittingly bought fake sports memorabilia over the Web site. The class includes people who purchased autographed sports items from eBay's opening date of September 1995 until the date of trial. "eBay has earned, and continues to earn, fees each time a forged collectible is offered for sale and earns additional fees each time a forged collectible is sold," the plaintiffs claim. San Jose, Calif.-based eBay, which lists about 4 million items for sale daily, has argued it only operates a sales venue and cannot be held liable for fraudulent transactions. The company did not immediately return calls for comment. Seven eBay users sued in April after agents from the FBI, IRS and U.S. Attorney's Office confiscated as much as $10 million of allegedly forged memorabilia from sellers. Many of the items were sold through auctions on eBay, and the seven plaintiffs spent a combined total of $3,400 on fake items, according to plaintiffs' court papers. The lawsuit claims eBay was negligent in allowing the allegedly fake goods to be sold, and that the company violated a California law that requires sport memorabilia dealers to have a certificate of authenticity. The suit seeks damages and a civil penalty of 10 times actual damages. Earlier this month, a San Francisco judge ruled that eBay cannot be sued if its members sell music that infringes on a copyright. San Francisco County Superior Court Judge Stuart Pollak dismissed that suit, saying eBay is immune from liability under the Communications Decency Act. (Bloomberg News, November 19, 2000) HEARTLAND FUNDS: Investors File Numerous Lawsuits After Revaluation ------------------------------------------------------------------- Investors in the Heartland High-Yield Municipal Bond Fund (Nasdaq: HRHYX) and the Heartland Short Duration High-Yield Municipal Fund (Nasdaq: HRSDX) have filed a class action lawsuit after suffering devastating losses from the sudden and shocking revaluation of those funds, according to Shalov Stone & Bonner, attorneys for the investors. The plaintiffs are suing Heartland Advisors, the advisory firm that runs the Heartland funds, as well as Thomas Conlin, the former fund manager of those funds. The revaluations have resulted in the filing of numerous related class action lawsuits. These lawsuits are expected to be consolidated in the near future. Investors in these funds are represented by Shalov Stone & Bonner (http://www.lawssb.com),which currently serves as a Lead Counsel for investors in the Dreyfus Aggressive Growth Fund Litigation, and which is experienced in the representation of mutual fund investors in actions against mutual fund companies. Contact: Ralph M. Stone of Shalov Stone & Bonner, 212-686-8004 HOLOCAUST VICTIMS: Italian Insurer Promises Policyholders Up to $100 Mil ------------------------------------------------------------------------ Italy's largest insurance company, Assicurazioni Generali SpA, has agreed to pay up to $100 million to Holocaust-era policyholders. The accord, signed in Rome, marks the first major settlement between a European insurer and the International Commission of Holocaust Era Insurance Claims. Giovanni Perissinotto, general manager of Generali, said the agreement ''brings closure to a matter of the highest moral concern.'' Lawrence Eagleburger, a former U.S. secretary of state who is chairman of the international commission, called it a ''fair and just settlement'' but added that it had taken ''far longer to reach than I expected.'' The commission and Generali had reached an agreement in principle in July but only resolved the final details last Wednesday November 15, 2000. The agreement obliges Generali, which is based in Trieste and among other companies owns Migdal, the largest insurer in Israel, to pay up to $100 million to the international commission, which is made up of international Jewish and Holocaust survivor groups, American and European regulators, insurance companies and Israel. The commission will then make payments on valid claims submitted by survivors or their heirs, but it is not yet known how many people will be found eligible to receive compensation. Generali has made public the names of 9,000 people whose policies were in force as of 1938 and who may have been Holocaust victims. Those names have been posted on the commission's Web site, which also lists 30,000 other names of possible claimants with policies at other companies, and were mainly recovered from Austrian and German archives. Most of the Generali policyholders were in Eastern Europe before the war, and they or their survivors are scattered across the United States, Israel and Europe. Before the agreement, Generali spent close to $40 million in payments to hundreds of Holocaust-era claims, payments to the commission and funds given to a foundation in Israel that it established in 1997. The up to $100 million the Italian insurance company agreed to provide the commission on behalf of other Holocaust-era policyholders is in addition to the previous sums. ''The agreement with Generali is a model,'' said Elan Steinberg, executive director of the World Jewish Congress. ''It guarantees fundamentally how to bring justice after all these years that every valid claim will be paid.'' Four other European insurance companies that operated during the Nazi period are members of the commission: the French insurer AXA, the German insurer Allianz and two Swiss companies, Winterthur Insurance and Zurich Financial Services. Mr. Eagleberger said that settlements with the Swiss and French companies would likely be agreed upon in the near future. ''Our purpose is to fulfill all our outstanding obligations correctly, and we will try to reach a similar agreement,'' said Klaus Huette, a Winterthur vice president. ''But for us it is likely to be a very low figure. So far, we have only confronted three names, and we have not yet been able to confirm even one.'' German insurance companies fall under an agreement by German industry and government to compensate all Nazi-era victims from a $5 billion fund, from slave laborers to Jews who lost property under ''Aryanization programs.'' The United States, which helped negotiate the accord, pledged to oppose class- action suits filed against German companies in U.S. courts and recommend that the fund be the ''exclusive'' remedy for all Holocaust claims. Two years ago, Generali reached a $100 million settlement with plaintiffs in a U.S. class-action suit. But that settlement was set aside when the international commission was formed. Mr. Eagleburger said that he would ask the Justice Department to file the same kind of brief in U.S. courts to dismiss class-action suits against Generali as it pledged to do on behalf of German companies. (International Herald Tribune (Neuilly-sur-Seine, France), November 18, 2000) HOLT'S CIGAR: Investors Accuse of Self-Dealing in Going-Private Deal -------------------------------------------------------------------- Holt's Cigar Holdings, Inc. (Nasdaq: HOLT) on November 10, 2000 the Company announced that it had signed a definitive agreement to be acquired by HCH Acquisition Corp (which is wholly owned by Robert G. Levin and the Fuente Investment Partnership, a partnership beneficially owned by Carlos A. Fuente, Sr., Carlos P. Fuente, Jr. and Cynthia Fuente-Suarez) as part of a "going private" transaction. The Company reports that it has received a copy of a complaint filed by Lucia Curti, a purported stockholder of the Company. The Complaint, filed in Chancery Court in Delaware, names the Company, each director of the Company and HCH Acquisition Corp. and the stockholders and beneficial owners of HCH Acquisition Corp. as defendants. The Complaint states that it is a class action brought on behalf of the Company's stockholders other than the defendants and their related entities, and alleges, in part, that the "going private" transaction constitutes self-dealing to the detriment of the alleged class for not proposing to pay a fair and adequate price. The suit, as filed, requests injunctive relief, rescission of the consummated "going private" transaction (if completed), damages and attorneys fees. A complete copy of the Complaint has been filed by the Company with the Securities and Exchange Commission as an attachment to Amendment No. 1 to Schedule 14D-9 (Rule 14d-101), originally filed on November 14, 2000, and by HCH Acquisition Corp. as Amendment No. 1 to Schedule TO originally filed with the Securities and Exchange Commission, also on November 14, 2000. The Company denies the merits of the Complaint and intends to defend the lawsuit vigorously. Holt's Cigar Holdings is the parent company of Holt's Cigar Company, Inc., Ashton Distributors, Inc., Holt's Mail Order, Inc. and Holt's Company. The Company, through its operating subsidiaries, is the exclusive worldwide distributor of the highly acclaimed Ashton brand of premium, hand-rolled cigars and accessories. Holt's sells and distributes premium cigars and related accessories nationwide through its mail order catalog, E-commerce site, and its flagship retail stores in Philadelphia. IMPERIAL CREDIT: Securities Suit Filed in 1998 in CA Survives Dismissal ----------------------------------------------------------------------- While the company has reached settlement for a securities suit in Oregon, as previously, it is still defending a complaint in California brought by investors. Imperial Credit Industries Inc. and three of its directors are defendants in a consolidated federal securities class action, In re Imperial Credit Industries, Inc. Securities Litigation, Case No. 98-8842 SVW, in the District Court for the Central District of California. This action, purportedly filed on behalf of a class of persons who purchased our company's securities during the period January 29, 1998 through October 1, 1998, was originally filed in November 1998. Plaintiffs allege that defendants made false and misleading statements and omitted to reveal the truth concerning the value of Imperial Credit Industries, Inc.'s investments in SPFC, resulting in an artificial inflation of the price of our securities. On defendants' motions, the Court dismissed, with leave to amend, plaintiffs' original complaint and their consolidated amended class action complaint. On February 22, 2000, the Court denied defendants' motion to dismiss plaintiffs' second amended consolidated class action complaint. On March 9, 2000, defendants answered the second amended consolidated class action complaint and asserted a number of affirmative defenses. On March 21, 2000, plaintiffs moved for class certification. On August 7, 2000, the Court granted plaintiffs' motion for class certification. The Court has set the pretrial conference for April 30, 2001 and trial for May 8, 2001. IMPERIAL CREDIT: Sued Again in 2000 in CA over Securities Issues ---------------------------------------------------------------- Imperial Credit Industries Inc. and three of its directors, one of whom is a director and one a former director of ICII, are defendants in a putative class action lawsuit filed on March 17, 2000, by John Huston in the United States District Court for the Central District of California, Case No. CV00-02751 ABC. The complaint alleges that ICCMIC's prospectus issued in connection with its initial public offering in October 1997 contained material omissions and misrepresentations concerning the expenses to be incurred by ICCMIC, (2) ICCMIC's ability to reduce the base management fee paid to ICCMIC's management company, (3) the management agreement termination fee payable to ICCMIC's management company in the event that ICCMIC terminated the management agreement, and (4) certain conflicts of interest. The complaint alleges a claim under Section 11 of the Securities Act of 1933 and seeks the certification of a class of shareholders of ICCMIC who purchased shares of ICCMIC at any time between October 22, 1997 and October 21, 1999. On April 4, 2000, defendants moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On June 9, 2000, the Court issued an order denying defendants' motion to dismiss. On June 23, 2000, defendants answered the complaint and asserted a number of affirmative defenses. On July 31, 2000, plaintiff moved for class certification. On October 17, 2000, the Court stayed all proceedings and certified for interlocutory appeal to the Ninth Circuit Court of Appeals its order denying defendants' motion to dismiss. McKESSON HBOC: Sees Factual Inaccuracies in Amended Securities Suit ------------------------------------------------------------------- McKesson HBOC, Inc. (NYSE:MCK), announced that its preliminary review of the Second Amended Complaint filed in the consolidated securities class action pending in the Northern District of California discloses that it contains factual inaccuracies, distortions and erroneous conclusions. Among these is the preposterous allegation in the complaint that the McKesson Corporation Board, and its officers, conspired deliberately to overpay for HBOC and to ignore accounting irregularities; and nowhere does the complaint suggest any reason that they would do so. In determining to proceed with the HBOC acquisition, the McKesson Board carefully considered all the information that was available to it, reviewed it with the Board's advisers, and acted prudently and responsibly. The Company intends to vigorously defend itself against the allegations contained in the Second Amended Complaint. MICHIGAN: Durant III Plaintiff School Districts Issue Opinion Piece ------------------------------------------------------------------- The following opinion piece is addressed to the residents of Michigan, and authored by the members of the Durant III Liaison Committee, which manages the Durant III lawsuit for the 366 plaintiff school districts. This is intended to explain the reasons for the filing of the Durant III lawsuit and a companion suit asking the Michigan Court of Appeals to order the state to fund the programs mandated but not funded since 1978. In November, more than 365 school districts across Michigan filed suit again against the State of Michigan for violating the Michigan Constitution in its funding of special education, and more districts are joining the suit daily. This lawsuit is the third time school districts have been forced into court to receive the special education funding guaranteed them by the Constitution. We are the committee representing the hundreds of school districts and hundreds of thousands of parents and students affected by this illegal funding scheme. We want to make clear to you, the taxpayers of Michigan, why we have taken this step once again. First, here is a brief history of the Durant litigation: May 1980 First Durant lawsuit filed by Fitzgerald Public Schools. July 1997 Supreme Court rules in favor of schools and orders State to pay $212 million to 84 plaintiff school districts for three of 17 years of underfunding. November 1997 The Legislature passes law paying $212 million ordered by courts and pays non-plaintiff districts approximately $800 million in return for their pledge not to sue the state. Governor Engler also signs a new School Aid Act which did not correct the special education funding shortfall. May 1998 Schools file Durant II after determining that the new School Aid Act represents a shell game with special education funding. October 1999 Michigan Court of Appeals declares School Aid Act unconstitutional in its lack of funding for special education programs and services. June 2000 Michigan House of Representatives passes Governor Engler's new School Aid Act by one vote. November 2000 School districts file Durant III lawsuit again claiming the current School Aid Act is unconstitutional. This time, school districts seek specific damages for the State's lack of good faith. As you can see, the State has had numerous opportunities to step up to their constitutional obligation and fund special education programs and services. Each time that opportunity arose, they chose to violate not only the spirit, but the letter of the law as well. The original Durant lawsuit was filed in 1980. Since that time, the State has continued to deny its obligation and construct legal obstacles at every turn. So why are the schools back in court? For several reasons. First, despite what the Governor says, nothing has changed. The state is still playing games with the funding for special education. His new scheme, similar to the last, uses the constitutionally-guaranteed, unrestricted funding from Proposal A in order to meet the State's funding responsibility for special education costs. Most people know that money is either restricted or unrestricted, but the same dollar cannot be both, which is what the State is trying to do. In Durant II, the Michigan Court of Appeals made that point abundantly clear. By counting the same dollar twice, the State is pitting special education and general education parents against each other in a destructive fight for funding. We made a concerted effort to educate legislators about the Durant II issues during the last legislative session trying to resolve this matter once and for all. While we made some gains with legislators, we ultimately were rebuffed and left with the Governor's bill, which represents nothing more than a rehash of the same system the Court of Appeals ruled to be unconstitutional. Second, school board members and superintendents have an obligation to their local taxpayers to use funds wisely. That means ensuring that their local district receives all the funding it is entitled to, as well as spending the money on priority programs. School districts with special education programs are not receiving the funding they are owed, and they are being forced to take funds away from general education students to make up the shortfall. It is the duty of the school board members to fight for what rightfully belongs to their local school district. Third, the State has amply demonstrated that it will not follow the Constitution unless they are forced to by the courts. We believe seeking damages for the State's lack of good faith is the only way to force the State to obey the law. The Durant lawsuits have been going on for more than 20 years with numerous rulings in favor of the schools. We thought that the State would obey the court after the Durant I decision, and surely would after the Durant II decision went in favor of the schools. But the Governor and Legislature inexplicably chose to continue to deny the funding the courts have so clearly said is due the schools. Perhaps this is because, with one exception as a result of the Supreme Court's ruling in 1997, it has not cost the state anything to be found guilty over and over again. Fourth, we are adding additional items beyond special education to the suit. The Headlee Amendment requires the state to fund existing programs at the same level they were funded prior to the adoption of the Amendment in 1978. However, it also requires all mandated programs imposed after 1978 to be funded at 100% of the additional cost. We have found more than a dozen additional programs and activities that have been mandated to school districts since 1978 but have not been funded. Because funding has not been forthcoming for these programs, money has been shifted from other educational programs to pay for these mandates, just as the costs of special education have been paid with revenues earmarked for general education programs. These additional programs range from requiring increases in the school year during which local schools must operate to significant increases in the extent and type of services to be provided for special ed students. We do not dispute that the mandates handed down from the State serve a useful purpose. However, we seek nothing more than that the will of the people in adopting the Headlee Amendment be enforced. The Amendment requires that the State cannot shift the costs of government by mandating programs to local governments unless the State provides funding for those programs. This is not entirely a judicial issue. The parents and taxpayers have the ability to tell the Governor and Legislature that enough is enough. Enough of the budgetary shenanigans. Enough of the empty rhetoric unsupported by action. Enough of accusing school districts of being greedy because they need what the Constitution guarantees them. After 20 years, and hundreds of thousands of dollars wasted in needless courtroom battles, it is time for legislators to honor their oaths and uphold the Constitution. Let your legislators know that you are tired of this process, and tell them to end it now. This is not a lawsuit the school districts of Michigan wanted, but it is necessary. Indeed, we intend to win. The courts have repeatedly sided with the schools' contention that the State is violating the Headlee Amendment and Proposal A, and we expect that to continue with this current lawsuit. It is unfortunate that so much of the taxpayers' time and money is being spent on lawsuits that the State is consistently losing, but that is the path the Governor and Legislature have chosen to follow. It is not the path we preferred, but is the one we must tread if we are to uphold our obligation to the taxpayers in our school districts. Source: Durant III Plaintiff School Districts Liaison Committee MICROSOFT CORP: Answers Anticompetitive Charges in Europe --------------------------------------------------------- Microsoft Corp. is defending itself against charges of engaging in anticompetitive practices in Europe even as it fights to overturn an antitrust ruling in the United States. European Union Commission spokeswoman Amelia Torres said the U.S. software giant had submitted a written response last Friday to charges that it had deliberately discriminated in licensing software to competitors. The company might still request an oral hearing before the commission, but hadn't done so as of Monday, she said. Microsoft spokeswoman Tiffany Steckler in Paris declined to comment Monday on details of the company's defense but called the charges ``unfounded.'' The commission will now review Microsoft's response, with no deadline for producing a decision, Torres said. Such cases can take months or longer. The legal action began in August after a complaint by Palo Alto, Calif.-based Sun Microsystems Inc., which charged the Redmond, Wash.-based Microsoft had withheld crucial software codes and other information necessary for competitors to make compatible servers. Since servers connect personal computers together in a network, it is crucial that their software work with Microsoft's Windows, which has a virtual monopoly in the PC software market. If the commission finds there was antitrust abuse, it is empowered to fine a company up to 10 percent of its annual global sales, although in practice such fines have never exceeded 1 percent. The commission could also force Microsoft to disclose its interfaces to ensure interoperability. In the U.S. case, a judge ruled in June that Microsoft had abused its monopoly power to suppress competition. He ordered it broken up into two companies: one selling the Windows computer operating system, and the other in charge of Microsoft's other software and Internet products. (AP, November 20, 2000) MILLER & SCHROEDER: Sued for Underwriting United Homes Debentures ----------------------------------------------------------------- Head, Seifert & Vander Weide, P.A., and Cochrane & Bresnahan, P.A., announced on November 17 that they commenced a class action suit in the Fourth Judicial District Court for Hennepin County against Miller & Schroeder Financial, Inc. The lawsuit is on behalf of purchasers of debentures issued by United Homes, Inc, a regional homebuilder that operated in Illinois, Michigan and Arizona, in December 1997. Miller & Schroeder underwrote the debentures. The complaint alleges that Miller & Schroeder improperly underwrote the debentures, that it failed to exercise proper due diligence in determining whether to underwrite the debentures, that material facts were not disclosed, and that Miller & Schroeder engaged in deceptive and manipulative practices with respect to the delivery of prospectuses. United Homes has defaulted on the debentures. Plaintiffs are represented by the Minneapolis law firm of Head, Seifert & Vander Weide, P.A., and the St. Paul law firm of Cochrane & Bresnahan, P.A., both of which law firms have extensive experience representing shareholders in class actions. Contact: Head, Seifert & Vander Weide, P.A., St. Paul Vernon J. Vander (612) 339-1601 hsvw@visi.com or Cochrane & Bresnahan, P.A., St. Paul John Cochrane (651) 298-1950 candb@state.net OTTAWA: Lawsuit Seeks Restitution For Chinese Head Tax ------------------------------------------------------ For many Chinese Canadians, including an 86-year-old man who paid the infamous head tax in effect up until 1923, old injustice still rankles. He is one of three representative plaintiffs named by the Chinese Canadian National Council in a legal case it launched against the federal government, seeking redress for treatment of Asians in years past. Hoping to resolve a longstanding issue, it served the justice department with a letter of demand - standard initiation for a proposed class action. "It's a heads-up," according to Chinese council president May Cheng, who said the organization has spent a couple of years researching the feasibility of such a challenge. Adding urgency is the fact that potential plaintiffs are dwindling. In 1995, there were about 1,000 living victims of policies devised to penalize and exclude Chinese immigrants. Cheng acknowledged the timing also reflects a desire to put the issue " front and centre" at the United Nations' World Council Against Racism assembly in South Africa next August. The proposed class action will claim damages for those who paid the head tax (plus widows and descendants), and seeks redress for the law that replaced it, the Chinese Exclusion Act - "which together represent 62 years of legislated racism directed solely against the Chinese community." "It's one of the blights on our national history," Cheng said of Canada's past treatment of Chinese immigrants. She said the council, a non-profit advocacy group, has been involved in a series of such claims going back to 1984 with little or no response from various governments. Ottawa, she said, has often fancied itself a leader in terms of redress, citing the Mulroney government's 1988 apology - and $291 million in restitution to Japanese Canadians held in internment camps in World War II. That's not the way it appears to many Chinese Canadians. The first big migration came in the 1880s, when the Canadian Pacific Railway brought in some 15,000 Chinese men to do the perilous work of building the national line through the Rockies. About 600 lost their lives. In 1885 - just after the railway was completed - Ottawa imposed the first head tax: $50, more than a year's wages for a Chinese railway worker. This was for the "privilege" of landing on Canada's shores, although the law's formal title suggested no such privilege and certainly no welcome: "An Act to Restrict and Regulate Chinese Immigration into Canada." In case the intent wasn't clear, the tax was bumped to $100 in 1900, to $500 in 1904. By 1923, Ottawa was prepared to acknowledge that this act had been unjust and, in response to pleas for abolishing the tax so families could be reunited more easily, repealed the law - only to replace it with the Chinese Exclusion Act, which virtually banned Chinese immigration altogether. Between 1923 and 1947, when this act, too, was repealed and Chinese were given the vote, fewer than 50 Chinese - mostly diplomats and well-to-do merchants - came to Canada. As to the head tax, some 81,000 Chinese are said to have paid $23 million between 1885 and 1923 - in today's dollars, more than $1.2 billion. (The Toronto Star, November 20, 2000) PRESIDENTIAL ELECTION: Circuit Judge Refuses Palm Beach Revote -------------------------------------------------------------- TALLAHASSEE, Fla. (AP) - As the fight for the presidency took a turn into the Florida Supreme Court, a circuit court judge refused on Monday to order a new round of voting in Palm Beach County, where some citizens complained they were confused by the ``butterfly ballot.'' Circuit Judge Jorge Labarga said he did not have the authority to order a Palm Beach County revote. Several voters had filed suit for a new county election, saying they meant to vote for Democrat Al Gore but may have voted twice or for Reform Party candidate Pat Buchanan because of the ballot's design. (AP, November 20, 2000) PRESIDENTIAL ELECTION: All Eyes Turn to Fla. Supreme Justices ------------------------------------------------------------- TALLAHASSEE, Fla. (AP) -- The seven justices on Florida's Supreme Court, all appointed by Democratic governors, are in the eye of the legal storm surrounding the unresolved presidential election. The justices were hearing oral arguments Monday on whether hand recounts should be considered in Florida's official vote tally. Until it rules, the court has blocked Florida Secretary of State Katherine Harris from certifying the state's election results. Hand recounts continued through the weekend in two heavily Democratic counties and were beginning Monday in a third. Excluding the hand recounts, Republican George W. Bush had 930 more votes than Democrat Al Gore in the state. The winner in Florida would have enough Electoral College votes to become president. Though this is the most closely watched case to reach the Florida justices, they are used to controversy. Last spring, they drew heated criticism for rejecting legislation aimed at accelerating executions in Florida. And as part of his dissent to a fall 1999 ruling upholding the use of the electric chair, Justice Leander Shaw used his Web site to post three photos showing the bloody body of Allen Lee ``Tiny'' Davis, the last man the state electrocuted. Three of the justices faced the voters this month _ Barbara Pariente, R. Fred Lewis and Peggy Quince _ and Floridians voted overwhelmingly to keep them in their $150,000-a-year jobs. More than 80 percent of the nearly 5,800 attorneys surveyed by the Florida Bar Association in August recommended retaining the justices. Under Florida law, the justices are appointed by the governor. They must be retained in their jobs by the voters in the first general election after their appointment, and then serve for six years. None has ever been voted out of office. The justices are: * Charles T. Wells. In July he became chief justice, a two-year job that rotates by seniority. One of two Florida natives on the Supreme Court, Wells, 61, dissents more frequently than his colleagues. He was appointed to the court in 1994 by the state's late Democratic Gov. Lawton Chiles. * Lewis, a 52-year-old native of Beckley, W.Va., who says he keeps a jar of coal dust on his desk to remind him of his roots. Chiles named him to the bench in 1998. * Quince. The first black woman to serve on the court and its junior member, she was named by Chiles in December 1998. Quince, 52, is the daughter of a longshoreman and was born in Norfolk, Va. * Leander Shaw. He was appointed in 1983 by former Gov. Bob Graham, now a Democratic U.S. senator, making him the state's longest- serving justice. Shaw, 70, was an artillery officer in the Korean War and is from Salem, Va. * Major Harding. Appointed in 1991 by Chiles, he is the second-most senior justice on the high court. The Charlotte, N.C., native was chief justice until last June. He first became a judge in 1968. * Pariente. Appointed by Chiles in 1997, Pariente, 51, is a native New Yorker. She lives in Palm Beach County, where voters' complaints about confusing ballots helped prompt the battle over presidential votes in Florida. She was a trial lawyer for 18 years before being appointed an appeals court judge in 1993. * Harry Lee Anstead. The high court's other Florida native, Anstead, 63, was raised by his mother in a Jacksonville housing project. Anstead often asks the most questions during oral arguments. (AP, November 11, 2000) PRESIDENTIAL ELECTION: FL Sp Ct Justices Face Questions in Paper War -------------------------------------------------------------------- TALLAHASSEE, Fla. (AP) _ George W. Bush and Al Gore both contend the law is on their side as they appeal to the Florida Supreme Court, which could determine the next president. In dueling court filings Sunday, lawyers for Republican Bush argued that Florida's deadline for counting ballots is long passed, while attorneys for Democrat Gore argued that some counties deserve more time to complete hand tallies. The weekend paper war laid the legal groundwork for a hearing Monday in Florida's high court. The seven justices were being asked to settle several key questions in the unresolved presidential election: * When should manual recounts be done and how should they be done? * Should the results of manual recounts be included in the final Florida election tally? * Did a state election official act properly to impose and enforce a Nov. 14 deadline for reporting vote results? If the court says Secretary of State Katherine Harris was wrong, the counts could go on and Gore could pick up votes. If he loses in that tally, his lawyers could appeal to the U.S. Supreme Court. Some Gore supporters accuse Harris, a Republican who helped run Bush's Florida campaign, of partisan motives. Republicans countered that Harris was right to stick to the deadline set by state law. On Sunday, lawyers for Vice President Gore asked the court to set a generous standard for deciding what voters really meant when they punched ballots in the disputed presidential election. Lawyers for Bush asked the same court to call an end to the election recount and uphold the statutory deadline for counties to report their results. Meanwhile, manual ballot recounts continued in Palm Beach and Broward counties, with Gore picking up modest gains in unofficial results. A hand recount in Miami-Dade was scheduled to begin Monday and continue until Dec. 1. Gore's lawyers argued that previous state court rulings have established the rules for discerning the will of the voter in close elections. Lawyers for Bush asked the same court to call an end to the presidential election recount and uphold the statutory deadline for counties to report their results. The issue, which Gore's lawyers have not addressed at length before, became important because the Democrats worry that the strictest interpretation of how to approve or reject ballots will deny votes to Gore. Gore's filing cited the law that provides for manual recounts in close elections. It noted that if vote-checkers cannot determine the winner on a particular ballot, the local elections board should ``determine the voter's intent.'' The problem comes when those election boards decide how to do that, with some opting for stricter standards than others, Gore's lawyers said. ``Unfortunately, among the other unusual events of the last two weeks, there has been a concerted effort to induce canvassing boards to apply a more narrow ... standard,'' they wrote. They want virtually any marked ballot to count, whether the card is punched through or not. The issue only becomes essential if the Florida court allows hand counts to continue. Bush wants the court to end ballot recounts in large, Democratic-leaning Broward, Miami-Dade and Palm Beach counties. If original results from those counties stand, Bush wins Florida and with it the presidential election. Gore hopes the recounts will turn up enough votes to erase the Texas governor's 930-vote lead. The Republican candidate argued that election officials in the three South Florida counties could have conducted recounts requested by Democrats and still met the seven-day deadline. ``It would be highly inequitable to keep the state and the nation on hold to finish a manual recount when the responsible officials failed expeditiously even to begin the process,'' Bush's lawyers wrote. They noted that a fourth county where Democrats called for a recount - smaller Volusia County (Daytona Beach) - did complete its work by the Nov. 14 deadline, seven days after the election. ``There is not a scintilla of evidence that any of the three counties at issue here were unable to meet the Tuesday deadline,'' the Bush lawyers wrote. The case arose from lawsuits that Palm Beach and Broward counties filed last week seeking court guidance on whether and how to conduct hand recounts. Meanwhile, a judge in heavily Republican Seminole County scheduled a hearing Monday on a lawsuit filed by a Democratic activist. It claims that the GOP was given improper access to county election offices to help fix paperwork errors on 4,700 absentee ballots. And in Atlanta, a federal appeals court was considering Bush's constitutional challenge to hand recounts of manual ballot recounts. (AP, November 20, 2000) PRESIDENTIAL ELECTION: Republican Lawmakers Homing in on Federal Statute ------------------------------------------------------------------------ TALLAHASSEE -- Republican state lawmakers are homing in on an obscure, never used federal statute that, they contend, could offer them a decisive hand in choosing Florida's precious 25 electors if the normal voting process somehow leaves the outcome unclear. Ordinarily, presidential electors are chosen through the popular vote and are expected to cast their ballots for the winning candidate. But Republican leaders, who control both houses of the state Legislature, say they are examining a federal law that they believe gives them the power to seat electors if the outcome of the popular vote in Florida remains unclear. The development was first reported last Friday by the Pensacola News Journal and the Wall Street Journal. "The specter is raised," said Tom Feeney, a state representative from Oviedo expected to be elected as speaker of the State House on Tuesday. "If the courts don't allow the executive branch to do their duty, then at some point we would have to review our constitutional responsibilities." "At this point we're watching and waiting," Feeney added. Electors must be seated by Dec. 12. Republicans and Democrats interviewed Saturday said they hoped the matter would be resolved long before then. But if that did not happen, Republican lawmakers said Saturday that they could invoke the federal statute. They were far from certain exactly how to apply the law, and they said they were looking at retaining election law experts to help them wade through the statute. In fact, only one thing seemed certain Saturday: The Republicans were sorely disappointed that the Florida Supreme Court last Friday enjoined the secretary of state, Katherine Harris, from certifying her state's vote -- an act that could have put Florida's 25 electoral votes in the Bush camp, pending the outcome of other lawsuits. Johnny Byrd, a Republican state representative from Plant City, added, "If the secretary of state is still under an injunction at noon on Tuesday, at that point it's just a question of when to pull the trigger." The trigger he is referring to is the Republicans' interpretation of Title 3, Section 2 of the U.S. code. "Whenever any state has held an election for the purpose of choosing electors and has failed to make a choice on the day prescribed by law," the law reads, "the electors may be appointed on a subsequent day in such a manner as the Legislature of such state may direct." The law has never been used, and by all accounts it is most likely to invite a bitter political tussle. "To end an election with the Legislature taking over for the will of the people, that would be politically very risky," Lois Frankel, a Democratic state representative from West Palm Beach, said Saturday. Indeed, she added, she was doubtful of the prospect. "I can't even imagine why they would want to go there," Frankel said. "It almost leaves me speechless." The state Republicans' latest announcement was seen by some, though, as political posturing designed to speed up a political compromise. The fact that the Legislature is considering intervening may accelerate the process of reaching a comprehensive compromise, said John Shubin, an election lawyer from Miami. (St. Petersburg Times, November 19, 2000) PRESIDENTIAL ELECTION: Florida Supreme Ct Pepper Lawyers with Questions ----------------------------------------------------------------------- TALLAHASSEE, Fla. (AP) -- With the presidency in the balance, Florida's Supreme Court peppered lawyers with questions Monday on the legality of manual recounts under way in selected Democratic-leaning counties. ``We have a longstanding policy ... that says the real interests here are the voters,'' declared Chief Justice Charles T. Wells, who asked repeatedly how long the state had to certify a winner and still have its voice heard when the Electoral College meets to pick a president. The candidate who gains those 25 electoral votes - either George W. Bush or Al Gore - stands to become the nation's 43rd chief executive. The proceedings were carried live on the major television networks, providing Americans with a brief lesson in constitutional and election law. There was no indication when the justices might rule. Democrats said Dec. 12 was the answer to Wells' oft-asked question, six days before the Electoral College meets. But Joe Klock, representing Florida Secretary of State Katherine Harris, said she was bound by a state law that required her to certify a winner by seven days after the Nov. 7 election. At the same time, asked by Justice Harry Lee Anstead whether the seven-day limit was absolute, Klock conceded, ``Of course it's not absolute.'' In legal skirmishing that stretched to two and one-half hours, lawyers and the justices ranged over a variety of issues in Florida's contested election. The hearing played out while recounts were under way in Miami-Dade, Broward and Palm Beach Counties, all Democratic jurisdictions where Gore hopes to overtake the 930-vote lead Bush holds in the contested election. The arguments touched on the possibility of a statewide recount, on the standards in use in the recounts, on the acknowledged contradictions in Florida state law and on the conflict between Florida statute and federal law. There was argument, as well, over voter intent - an issue of paramount importance, given the number of questionable ballots in the recount counties. ``The court is certainly aware of the historic nature of this session,'' said Wells as the afternoon session began, ``and is aware that this is a matter of utmost and vital importance to our nation our state and our world.'' Two former secretaries of state, Warren Christopher and James A. Baker III, sat listening intently in their capacity as representatives of the two White House rivals. ``God save these United States, the great state of Florida and this honorable court,'' intoned the high court's marshal, Wilson Barnes, as the justices - five men and two women - entered the chamber. Democrats asked the court to endorse the recounts and to place them under a uniform standard. Bush's lawyer, joined by Klock, argued they should be stopped. Harris had been ready to declare Bush the winner of Florida - and likely the presidency - on the basis of Election Day votes certified last Tuesday, subject to amendment only by overseas absentee ballots counted last Friday. Her edict was halted by the high court late last week, pending Monday's arguments and any subsequent ruling on the subject. There was no timetable for a ruling by the state Supreme Court. The justices played an active role from the outset on Monday, none more so than Wells, a 61-year-old Democrat who presided. Over and over, he asked at what point the state's 25 electoral votes would be in jeopardy. His questions at one point sketched a scenario in which recounts would continue, perhaps into December. ``Tell me when Florida's electoral vote would be in jeopardy,'' Wells said to Bush lawyer Michael Carvin, a question he had earlier asked of Paul Hancock, lawyer for the state's Democratic attorney general. ``Clearly it's in jeopardy now,'' said Carvin, but then Wells prodded him to support that contention. Later, Wells seemed to suggest that Harris should be permitted to certify a winner so Democrats could then have time to challenge her appointment of the state's electors - and still leave time to resolve the dispute before the Electoral College meets. ``Why isn't it correct that we are jeopardizing with each passing day, Florida's'' vote in the Electoral College, he said, ``if we don't allow the certification'' of a winner. David Boies rebutted that Republicans would jump on any certification as evidence that the election was settled and ``over with.'' In case of an adverse ruling, he also urged the justices to make sure that Harris didn't appoint electors pending a challenge by Gore. The justices showed their impatience with carefully prepared lawyerly arguments. In the opening moments of the arguments, Wells asked Hancock to skip the general rhetoric and get to the legal points in contention. A few moments later, after Hancock said it was physically impossible to certify all election results within the seven days mandated in one section of state law, Justice Barbara Pariente interrupted to ask what evidence there was to support that contention. ``I don't know that there's any evidence in the record,'' he replied. ``I think it's intuitive.'' Hancock urged the court to use ``the full reach of its authority to establish procedures.'' The goal, he said, should be to come up with an election that is ``fair, that is perceived as fair to the world and in fact is fair, that it counts the vote of all people who attempted to exercise that vote.'' Justice Major Harding asked whether there was any current law to guide the court's decision on allowing recounts and setting standards for them _ or whether the justices would have to come up with ``some inspiration'' and put it down on paper. ``There is some information in the record, but to be completely candid with the court I believe there is going to have to be a lot of judgment applied by the court as well,'' said David Boies, a well-known courtroom lawyer added recently to Gore's legal team. Isn't that the Legislature's job? Harding asked. ``I don't think that's what they have done,'' Boies replied. Pariente asked whether selective recounts were unfair to voters who live in counties where the ballots were tabulated only once _ a point that Bush has made in his legal filings. ``Any candidate could have requested a recount,'' Boies said, noting that no county rejected a recount petition. Boies said Gore would accept a statewide recount ``We believe the court has the power to order that,'' he said. ``Aren't we just adding another layer if we request a statewide recount?'' asked Justice Peggy Quince. Boies said yes, but added the most populous counties are already recounting their ballots. (AP, November 20, 2000) SOTHEBY’S, CHRISTIE’S: Lawyers to Get $27 Mil for Antitrust Settlement ---------------------------------------------------------------------- Lawyers representing individuals who claim Sotheby's Holdings Inc [BID] and Christie's International PLC colluded on commissions and defrauded them are expected to get about $27 million in fees, the Wall Street Journal reported in its electronic edition on Monday. The fees are expected to be paid after the class-action lawsuit was settled for $512 million. Sotheby's Holding Inc and its former president and chief executive, Diana Brooks, pleaded guilty on October 5 to a multimillion-dollar price-fixing scheme with rival Christie's. Citing individuals familiar with the case, the paper said fees for the firm, Boies, Schiller & Flexner, represent about five percent of a proposed settlement which includes $412 million in cash and $100 million in discount coupons that sellers can apply to future transactions with the two auction houses. Fees typically range from 10 percent to as much as 30 percent of a settlement, the paper said. Boies, Schiller & Flexner submitted a fee structure in which the firm would receive 25 percent of any amount above roughly $405 million that it won for the plaintiffs, the paper reported. With the proposed settlement valued at $512 million, that means the firm would receive 25 percent of $107 million, or $26.75 million, the paper said. The fees, like the settlement, still require final approval from U.S. District Judge Lewis Kaplan, who has set a hearing for February 2, according to the paper. (Reuters, Nov 20, 2000) * Clinton to Issue New Rules On Medical Data Privacy ---------------------------------------------------- The Clinton administration will soon issue sweeping new rules to protect the privacy of medical records. But under pressure from the health care industry, officials say, they are backing off a proposal to give patients a broad new right to sue and recover damages for the improper disclosure of confidential information. Chris Jennings, the health policy coordinator at the White House, said President Clinton would issue the final rules, with the force of law, in the next few weeks. The administration is "going full steam ahead, with a full commitment" to the goal of protecting privacy, Mr. Jennings said. As President Jimmy Carter did 20 years ago, Mr. Clinton is leaving office with a burst of regulatory activity that he hopes will leave an imprint on the nation long after his term ends. Last Monday, the government issued rules intended to protect millions of workers against repetitive stress injuries. The privacy rules, the first comprehensive federal standards to protect the confidentiality of medical data, will affect virtually everyone who receives or provides health care in the United States. The rules come at a time when insurers and health care providers are making greater use of computers to store and exchange medical information on patients. The new Congress could alter the rules, but will have great difficulty mustering a consensus for any alternative. Legislation to set federal privacy standards died this year because of profound disagreements between consumer advocates and the health care industry. A 1996 law required the secretary of health and human services to set the standards for medical privacy, but gave her little guidance on what the rules should say. Under the new rules, consumers will for the first time have a federal right to inspect and copy information in their medical records. They will also have the right to request correction of information that they consider inaccurate or incomplete. The standards will limit the use and disclosure of data by insurance companies, health maintenance organizations and other health care providers, including doctors, nurses, hospitals, nursing homes, pharmacies and medical laboratories. In proposing the rules for public comment in November 1999, President Clinton lamented the fact that his regulatory authority was limited: he could not directly regulate the conduct of the many people with whom doctors and hospitals share information on patients. "To fill this gap in our legislative authority," the government said, it will hold health care providers responsible for the activities of their "business associates," including lawyers, auditors, accountants, consultants, billing companies and other contractors. Health care providers would have to rewrite contracts with these business partners to guarantee that information on patients is kept confidential. Business partners would have to promise to follow the federal privacy standards, just as doctors and hospitals do. The 1996 law did not give patients a new right to sue for violations of their privacy. "The statute does not provide for a private right of action for individuals," the administration said in a preamble to the proposed rules last year. But federal officials tried to overcome the limits of the law. In the proposed rules, they said that patients must be named as the "intended third-party beneficiaries" of contracts between health care providers and their business partners. This would have given patients a powerful new tool to enforce their rights. Patients could have sued in state court for violation of the contract if their medical records were improperly disclosed. But federal officials said they had recently decided to back away from this proposal after receiving a torrent of criticism from the health care industry, which complained that the administration had exceeded its legal authority. The American Association of Health Plans, a trade group for H.M.O.'s, said its members and their business partners would have faced "significant new legal liability" if the federal government had authorized patients to sue for violations of their privacy rights. The Health Insurance Association of America said the Clinton proposal could have led to "excessive litigation, including class action lawsuits, that would drive up health care costs." Employers said that health insurers would drag them into such litigation, and that the risk of new lawsuits would discourage companies from providing health benefits to employees. Jackie M. Huchenski, a health lawyer in New York City, said: "The rule on business partners is very controversial. It imposes new obligations on health care providers and health plans, making them responsible for someone else's mistakes." Paul G. Sherwood, senior vice president of Halifax Regional Medical Center, a 206-bed hospital in Roanoke Rapids, N.C., said it was unrealistic to hold him responsible for what his business partners might do. "I have very little control over my contractors," Mr. Sherwood said. "The proposed rule appeared to be inviting a plethora of litigation." Doctors, hospitals and their business partners will still have to comply with the rules, officials said, but patients will not get any new right to sue. Even without an explicit new right to sue, Ms. Huchenski said, patients may be able to recover damages by filing suit under certain existing state laws that protect consumers or regulate health care. (The New York Times, November 20, 2000) * Journal Says Are Restatements Are a Principal Cause of Lawsuits ----------------------------------------------------------------- Earnings restatements leave the door wide open for shareholder lawsuits arguing that somebody must have known that the company's stock was valued higher then it should be, plaintiff law firm Cohen, Milstein, Hausfield & Toll LLC Partner Andrew Friedman said. "If a company's stock is fraudulently inflated, investors don't have a clue until it is too late. Stocks can sometimes be risky investments, but it is a different matter altogether when stock price doesn't reflect information that is later disclosed," Friedman said. To avoid becoming a target of legislation, the first step is to try and avoid falling into the trap of making short-term decisions at the expense of long-term strategies, although this is perhaps easier said than done. The trick is to make sure that senior management, as well as the IR department, toe the line on managing earnings expectations, corporate law firm Heller, Ehrman, White & McAuliffe LLP Attorney Darryl Snider said. "Companies are so worried about the reaction from the Street when they miss earnings estimates that they place too much emphasis on the short term, which can lead to pressure to engage in aggressive accounting practices. Companies have to be circumspect about what they communicate to analysts and investors," he said. One defense is to avoid saying anything whatsoever. Since companies are only legally obliged to file certain documents with the SEC, there is no reason why companies should communicate anything else to investors. If companies choose to talk, however, a disclosure policy is a must, according to Fried, Frank, Harris, Shriver & Jacobson Partner David Morris. "Be very careful about what press releases say and what you tell analysts. Managing expectations means walking a fine line. Once you start you have a duty to keep updating analysts. Companies need disclosure consistency policies if they say anything at all," he advised. If a case does not get dismissed out of hand by the courts, it is probably better to settle even though it looks like a tacit acknowledgement of wrongdoing. The Private Secur- ities Litigation Reform Act does give companies a fighting chance of winning, but it could amount to a Pyrrhic victory, Morris said. "Most cases don't get tried because they settle out of court. But it's not for the full amount on the plaintiff firm's initial press release. If companies have to pay that much they would be wiped out by these lawsuits," he said. Wrong Place, Wrong Time In the meantime, though, the combination of market conditions and unrealistic investor expectations are likely to perpetuate the number of shareholder class action lawsuits. These lawsuits tend to insulate investors from losses and therefore promote a riskier investment strategy than would otherwise be warranted, Snider said "It's like heads I win and tails I have a partial win. While there are undoubtedly a few cases where actual fraud occurred, the courts have not developed a very effective filter in separating out the meritorious cases from the situations where the losses resulted from normal market volatility, unexpected changes in market conditions or a company's prospects," he said. There is certainly money in them hills for plaintiff lawyers, too. Of an average award of $12 million, plaintiff lawyers can expect to be awarded around a quarter of that amount at the judge's discretion, Friedman said. (Investor Relations Business, November 20, 2000) U OF WASHINGTON: Judge Gives Green Light for Female Faculty’s Suit ------------------------------------------------------------------ A King County Superior Court judge certified a class action lawsuit filed by a group of female University of Washington faculty members against the university. The lawsuit, brought by female professors in the dental and medical schools, alleges that the university knowingly discriminated against female faculty by paying them less and providing them fewer advancement opportunities than their male counterparts. The judge's order extends the suit, originally filed in April, to include the estimated 2,500 former and current faculty members who worked for the 138-year-old University from August 18, 1994 until the present. The suit claims that the university knowingly permitted its policies and actions to allow for substantial salary disparities of as much as 18 percent between equally qualified female and male faculty members. It also claims that the university provided female faculty members with fewer opportunities for advancement and tenure. The suit seeks an end to the alleged discriminatory practices, and monetary compensation for those affected. According to Steve Berman, attorney for the plaintiffs, the suit seeks to correct documented inequities that have existed at Washington state's largest university for years. "We have abundant information, including studies commissioned by the university's own president, Richard McCormick, that paint a very clear picture: women faculty members are paid and promoted less favorably than their male counterparts," Berman said. "The unusual part of this case is that the university's own studies prove this disparity but the administration refuses to remedy the inequity," he added. In court documents, the plaintiffs claim that UW officials at the highest level have known gender disparity exists at their school and have attempted to minimize or mask its significance. "Aside from the vast disparity in pay, we believe that the evidence will show that the university provided fewer grants and resources to female faculty members, which further hinders their opportunity for advancement," Berman added. According to Berman, the number of tenured female faculty is another stark example of inequity at the university. "The numbers say it all: only 24.8 percent of all tenure-track faculty are women, while 60 percent of the lower-paid non-tenure-track faculty members are women," he added. King County Superior Court Judge Glenda Hall signed the order certifying the class after hearing arguments from both sides. Attorneys for the class will contact all class members with information about the suit in January. Class members will have the option to participate in the class action or opt out of the suit. With the judge's certification, the suit now represents all past, present and future female faculty members (tenure and non-tenure track) employed by the University of Washington after August 18, 1994, including medical school faculty and those faculty employed at the Bothell and Tacoma campuses. Excluded from the class are all clinical, affiliate, visiting, temporary and extension faculty who are not primarily compensated by the University but who hold faculty titles, and medical residents, teaching assistants, research assistants and librarians. Also excluded are all female faculty members who have settled and released the University from claims covered by this case for the period August 18, 1994 to the present. Contact: Hagens Berman Steve Berman, 206/623-7292 or Mark Firmani, 206/443-9357 (MEDIA ONLY) mark@firmani.com ********* 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 * * *