/raid1/www/Hosts/bankrupt/CAR_Public/010327.MBX               C L A S S   A C T I O N   R E P O R T E R

               Tuesday, March 27, 2001, Vol. 3, No. 60


A.G. FINANCIAL: News Re Defunct Satellite Dish Financer Lands at 11th Hr
AUTO FINANCING: Consumers in Interstate Case Takes Classwide Arbitration
BURLINGTON NORTHERN: Hagens Berman Files Suit over Hearing-Loss Claims
CHARLESTON: SC Voters Sue to Eliminate Civil Rights Violating Practices
CHRYSLER: Says It Needs More Time To Collect Documents in Lemon Case

CITIBANK N.A.: Ads' Failure To Disclose APY Triggers Liability
EASY MONEY: Challenges Of Lender's Rollover Scheme Survive Dismissal
FIRST ALLIANCE: Bankruptcy Estate Saved from Multimillion-Dollar Claims
FORD MOTOR: Will Get Another Shot with Jury in Suit over Ignition Flaw
HEARTLAND: Independent Directors Almost Quit, Jeopardizing All Funds

HOLOCAUST VICTIMS: Case to Be Heard April 2 In New York Court Of Appeals
IASIAWORKS, INC: Weiss & Yourman Sues Executives and Underwriters in NY
INMATES LITIGATION: NH Case Due to Expire; Ap. Ct. Remands to Dist. Ct.
INSURANCE COMPANIES: Policy Racial Bias Suits Filed
PARKING PLACARD: Sp Ct's Denial of Certioriari Leaves 3 Decisions Intact

PAYDAY LENDERS: Nearly 60 Companies Cashing Post-Dated Checks Sued in AR
PFIZER: Suit over Drug Test in Meningitis Epidemic Proceeds in Nigeria
RENT-WAY: PA Fed Judge Gives Money Management Firm Lead Plaintiff Status
ST. CLOUD: State University Professor Files Complaint over Anti-Semitism
THOROUGHBRED TECHNOLOGY: Landowners in Fiber-Optic Suit Get Profits Pact

TOBACCO LITIGATION: PM Says Too Many Individual Issues Involved for Cert
U OF CA: CA Ct Allows Students' ADA Case to Proceed As Class Action


A.G. FINANCIAL: News Re Defunct Satellite Dish Financer Lands at 11th Hr
came oh so close to confirming the Chapter 11 reorganization of
Utah-based A.G. Financial Service Center Inc. last year. Then, out of
nowhere it seemed, came a paralegal named Julie Greathouse, a longtime
employee of the debtor's parent, American General Finance Inc., who made
an allegation that stunned everyone in the case. She admitted to
destroying approximately 30 bankers boxes of the debtor's documents in
the fall of 1999, which was subsequent to the petition date. What's more,
she said she did so at the order of AGFI's General Counsel.

At this revelation, Judge Basil H. Lorch III (Bankr. S.D. Ind.)
immediately stayed the confirmation hearing and the FBI began
investigating. For unsecured creditors - many of them consumers who
financed purchases of satellite dishes through A.G. Financial - this
cliffhanger probably resulted in a better recovery. We say probably
because the plan, which was confirmed Feb. 14, is being appealed by a
former lawyer on the creditors' committee.

This is the story not just of how this case took a surprising turn, but
also a look at the issues raised when most of the creditors are
consumers, who may not have received notice of the bankruptcy and may not
have understood it if they did. This raises the question: How far can or
should a creditors' committee or court go to reach potential claimants
and how much money is an estate justified in spending in this effort?

But before we reach that issue, let's look at how one paralegal brought
this case to a standstill.

                    The Paralegal Testifies

Greathouse told the court she shredded the documents at the behest of
AGFI's General Counsel, Ron DiGiacomo. In fact, Greathouse said the
shredding took so long and was so tiring she eventually borrowed her
father's pickup truck and took the boxes to the family farm where her
father burned them.

As it turned out, DiGiacomo told Greathouse to shred the documents in
front of another AGFI attorney, Mary Deig. But Deig, who is now on
medical leave, said she passed the comment off as a joke. However,
Greathouse said that later that same evening, DiGiacomo confronted her
alone and asked whether she was shredding the documents in question. She
replied that they were not.

"He blew up," said James P. Moloy of Dann Pecar Newman & Kleiman in
Indianapolis, who represented the Official Unsecured Creditors'
Committee. "She said he was four inches from her face, shouting at her."

But why didn't Greathouse tell Deig about this upsetting turn of events?

"She and Mary are very close personal friends," Moloy said. "Julie's
testimony was that she kept her friend out of it. She knew it was wrong,
I guess, and didn't want to implicate Mary, so she took it on her own."

At the bankruptcy trial, Moloy subpoenaed three witnesses: Greathouse,
her 74-year-old father, and Deig.

"No other witnesses were called," Moloy said. "In other words, American
General did not call their general counsel, who, by the way, has left the
company, or any other witnesses. They just introduced depositions. From a
legal perspective, that creates an inference. If I've got the ability to
call witnesses to rebut witnesses and I don't do it, legally, the
testimony is not as credible."

Moloy also found it interesting that AGFI did not use their own lawyers
or the debtor's lawyers but hired "renowned white collar defense lawyer"
Larry Mackey, who prosecuted the Oklahoma City bombing case.

"There was a motion filed to allow him to do the cross," Moloy said. "We
didn't care. Some objected. The court allowed it. Julie was solid as an
oak. She has a bachelor's degree. She graduated in 1984. She has an
impeccable track record, great reviews. She's not a dingbat."

                Beware Of Disgruntled Employees

But why did Greathouse wait so long to tell her story? In fact, why did
she come forward at all?

"Julie lives on a farm with her father," Moloy said. "She loves horses. A
few months ago, a brand new horse track opened in the Evansville, Ind.,
area, [which is close to the company's offices.] Julie had worked 400
hours of overtime as of July 2000. The track was having a grand opening
and Julie and Mary decided they would like to go to this. They made plans
to take the afternoon off. Julie's boss was out of town so she left an
e-mail for her next-in-line superior saying, 'I've got 25 days of
vacation, sick days, overtime, [etc.]. FYI, I'm taking the afternoon to
go to the track.' No big deal.

"As luck would have it, Julie was on the front page of the paper the next
morning in color at this racetrack. She's got these winning tickets in
her hand. She's wearing a shirt with an American General monogram on it
that you can read. She gets to work. She's kind of a celebrity. There's a
little bit of jealousy, sniping and backbiting about whether she had
permission to go. She ends up getting called in and reprimanded over
this. Emotions build. They question her trust. They tell her she's got to
be a loyal employee. She blurts out: 'I've done things for this company
I'm not even proud of. How can you treat me like this?'

"They say, 'What are you talking about?' She spills this whole thing.
They throw her out, saying, 'From this point forward, you're on
administrative leave.' She clears out her desk and finds a lawyer. That
person calls us saying, 'I've got a hypothetical' - and the rest is

In his deposition, DiGiacomo denied telling Greathouse to burn the
documents, but Judge Lorch found that he had. However, Moloy said the
judge did not rule on whether DiGiacomo's words were spoken "as part of a
deliberate conspiracy or with criminal intent or whether it was a very,
very bad joke and a case of gross miscommunication."

                   Judge Sanctions The Debtor

The judge did find that, at a minimum, there was gross negligence in the
handling of the documents, which the U.S. Trustee also managed to prove
had actually been burned (see sidebar, page 11). As a sanction, the judge
ordered the debtor to produce all privileged documents to the creditors'
committee for inspection.

Did this change the course of the case? What do you think?

The lawyers immediately began reviewing documents and "making noises
about the interesting things they were finding," hoping to enhance the
amount offered in the plan. As we said earlier, the plan on the table
offered 5,500 creditors about 3,000 each.

With negotiations going nowhere, Judge Lorch sent the parties to Chicago
for non-binding mediation in front of Judge Erwin I. Katz (Bankr. N.D.
Ill.). The mediation produced a written document that, among other
things, raised the 3,000 to 5,500 per creditor. Judge Lorch approved the
settlement, the debtor took all the key elements and translated them into
plan amendments, and, despite some objections, the judge confirmed the
plan on Valentine's Day.

                Appeal Questions Notice To Consumers

You might think that was the end of the case. But it has been appealed -
and the issues being appealed are troubling. To understand it, you need
to know a little more about the 235,000 customers who financed their
satellite dishes through the debtor, but who didn't file claims.

"We sent out surveys to these people [at the beginning of the case],"
Moloy said. "A lot of responses were handwritten and they would boggle
your mind. They're at a third grade level. One wrote back and said
something like - 'Please, Jesus, help us' - and misspelled Jesus. It is
sad. These people were profiled and targeted for this program. Forty-nine
out of 50 states are represented, but they are heavily concentrated in
the southeastern part of the country: Mississippi, Alabama and Georgia.
The creditors' committee is represented, nominally, by five satellite
creditors. In reality, each of those people has a lawyer - your classic
plaintiff's lawyer - and that is who the committee is."

But here's the 235,000 question: How far can/should a creditors'
committee or court go to reach potential claimants and how much money is
an estate justified in spending in this effort? Most of the consumers in
this case live on rural routes or have post office boxes and have
probably never even seen USA Today, which is the paper in which the bar
date notice was posted.

"Between the judge, the committee and the U.S. Trustee, all three were
very concerned about adequate notice and due process - making sure
everyone had a full opportunity to participate," Moloy said. "The judge
approved a non-uniform proof of claim to hit people over the head: 'We're
talking about American General, satellite dishes and credit cards.' Two
notices were sent out at 80,000 per notice."

A bankruptcy court and its attorneys may not be able to do much more to
reach claimants, but plaintiffs' attorneys certainly can and they often
do. In the beginning, a number of these "firebrand" attorneys appeared
prepared to do just that. Some even wanted to contact clients by visiting
area churches. But AGFI apparently neutralized such efforts.

"Everybody that was originally on the creditors' committee was paid to
settle their case," said J. Paul Whitehurst of Whitehurst & Whitehurst in
Tuscaloosa, Ala., who is appealing the case.

Here's how it ultimately shook out. There are six classes of creditors in
the confirmed plan, each of which is indistinguishable in terms of facts
and claims. Class 1 includes the 27 people who got the 168 million
judgment in state court. Under the plan, they each have already received
1 million each.

Classes 2 through 6 consist of another 200 satellite creditors. These
groups are each to receive between 13,000 and 30,000. Class 8 consists of
the almost 5,500 customers the committee represented.

"We had one group from Mobile [Ala.] that was trying to file a class
claim on behalf of all the customers," Whitehurst said. "They [AGFI] paid
them 300,000 to drop the class claim - that was just attorneys' fees. The
clients didn't get anything. The court approved it."

Some people might consider such money a payoff, but Whitehurst is not
critical of the law firm's decision. "Law is a business," he said. "If
you go in the hole, you're not helping anybody."

So if Whitehurst is sympathetic to this decision, what exactly is he
appealing? Two things.

First, Whitehurst is appealing the broad release in favor of the debtor's
parent, AGFI, which would not fund the plan without the injunction.

"One of the main conditions of the plan is that it will release any kind
of claim these people have against American General, the debtor's
parent," Whitehurst said. "That's one of the conditions American General
put on. My argument was that it was illegal for the bankruptcy court to
issue that injunction."

Questions remain about how broad this release is. Whitehurst has one
client who sued the debtor about a week before the filing. When the
bankruptcy case was filed, Judge Lorch issued an order stopping the
lawsuit until the case was decided.

"Now, we've got to figure out what to do with that lawsuit," Whitehurst
said. "We have a hearing scheduled for March 19 before Judge Lorch. What
he decides to do will determine what the injunction means."

While the confirmed plan says that future claimants won't be able to sue
the parent, they will be able to sue Associates Capital Bank, which
purchased most of the debtor's assets, thanks to the creditors'
committee, which specifically negotiated that right.

Whitehurst has also filed an appeal on behalf of six clients (three who
did not file claims and two that did) as well as his own law firm.

"I had asked the court back in August or September to let me have access
to the mailing list with all 235,000 customers for the purpose of
contacting as many as I could - to try to let us represent them,"
Whitehurst said. "The court had sealed that list. In the final
settlement, American General had the condition that I couldn't get access
to the mailing list. I think the judge kind of struggled with this, but,
in the end, I think he felt the people who were most likely to have been
ripped off were the ones who filed the claims. If he could get them
something and get the case [confirmed], let somebody else worry about the
law school exam issues."

Are these just law school exam issues? Maybe. Because even Whitehurst
admits that if "justice" is done, the creditors could win the battle at
the expense of the war. Here's why.

"It's very difficult to get courts to treat fraud claims as a class
action because one of the issues is typicality. In other words, does the
same issue occur in every case?" Whitehurt said. "In a fraud case a lot
depends on what the salesperson didn't tell the person. Courts have a lot
of difficulty creating [ class actions] in these cases."

Whitehurst said plaintiff's lawyers typically advertise, get 100 or 1,000
clients, file one big lawsuit and get things settled for those clients -
which is essentially what happened here. This doesn't help the group as a
class unless so many lawsuits are filed that the defendant has to consent
to a class action lawsuit. Obviously, that didn't happen here.

"The only alternative would be for the bankruptcy case to be used as a
vehicle to collect, not just on the 5,500 who filed, but for all the
customers," Whitehurst said. "Let's say this plan got thrown out the
window. The next step would be to appoint a trustee to come forth with
another plan. The whole theory of the plan on the table was the debtor
had the right to sue its parent on behalf of all these customers, which
is kind of a crock since they're the ones that ripped the customers off.
It's not inconceivable that the right to sue the parent could be handled
by another entity - say the trustee, although that's not likely, or a
litigation trust."

This might work for those who haven't filed claims, but those now covered
by the plan would do worse because, with more claimants and further
administrative expenses, the pot would be smaller.

"If I win the appeal, the court has to decide what we do next,"
Whitehurst said. "American General is funding the plan. They're hoping if
I win the appeal, they can argue, what does it matter now? The most
likely scenario would be the whole bankruptcy case falls apart and gets
dismissed and everybody goes back to square one."

Doesn't sound too promising. Of course, maybe what the claimants really
need most is not a payment but a court order saying they no longer have
to pay these debts.

Said Moloy: "With respect to the filers, we have sent out letters
periodically. Every time we have gotten close to the issue of saying,
'Stop paying these accounts,' we have been threatened with tortitous
inference. The company asked for injunctive relief against the creditors'

Whitehurst said most of the affected consumers don't understand that they
could just stop paying this debt. "They get [collection] calls at 8
o'clock or 9 o'clock at night and they're afraid to stop paying," he
said. What are they afraid of? Whitehurst said they're afraid non-payment
is going to hurt their credit rating or prevent them from getting a
mortgage or a loan or an apartment.

Moloy is sympathetic to the nonfilers. "Everyone still has some doubts
about whether everybody did get an opportunity to get their claim on
file," he said, "but, after awhile, I don't know what you can do."
(Consumer Bankruptcy News, March 20, 2001)

AUTO FINANCING: Consumers in Interstate Case Takes Classwide Arbitration
A consumer engaged in arbitration may proceed on a classwide basis if the
court follows the procedural guidelines of holding a certification
hearing, considering factors relevant to class certification and taking
into account the special nature of arbitration proceedings. (Beemus v.
Interstate National Dealer Services Inc., No. GD98-9583 (Allegheny C.P.

Fred and Cathi Beemus purchased a used car from Mackay-Swift Inc. In
addition, the Beemuses purchased a service contract covering the vehicle.
The consumers paid 1,420 for the service agreement from Interstate
National Dealer Services Inc. that was issued through Travelers Indemnity
Co. The dealership paid Interstate 770 for the service contract and
retained 650 along with the 18-percent finance charge. The Beemuses sued
Interstate in the Court of Common Pleas of Allegheny County, Pa., under
Pennsylvania's Motor Vehicle Sales Finance Act claiming Interstate and
others engaged in a fraudulent scheme to overcharge car buyers through
illegal sales methods.

Interstate filed a petition to compel arbitration under the arbitration
clause in the agreement. The court agreed, ordering arbitration, but
issued a stay until all the outstanding arbitration issues could be

Initially, the Beemuses argued the arbitration clause was illegal and
unenforceable because it prevented judicial review of their arbitration
award. In addition, they claimed arbitration was improper because the
arbitrator could not provide injunctive relief. The Beemuses, however,
withdrew these arguments and requested arbitration on a classwide basis.
Interstate argued classwide arbitration was improper because the Federal
Arbitration Act controlled the construction of arbitration agreements
involving interstate commerce and federal substantive law governed

                      Class Action Principles

The Court of Common Pleas based its decision in part on the principles
announced in Dickler v. Shearson Lehman Hutton Inc., 596 A.2d 860 (Pa.
Super. Ct. 1991). In Dickler, the court held a class action seeking
injunctive relief could, if properly certified, proceed through
arbitration on a classwide basis.

Dickler relied on the U.S. Supreme Court's ruling in Southland Corp. v.
Keating, 465 U.S. 1 (1984). The Pennsylvania Superior Court found the
Supreme Court mandated a nationwide standard of enforcement, but did not
require all arbitration agreements involving interstate commerce to
follow federal law. The court observed the Supreme Court did not rule on
the propriety of the state court superimposing class action on the
arbitration contract.


Here, the court ruled it would allow the arbitration to proceed on a
classwide basis. It stated the court would determine class certification
based on the procedural guidelines set forth in Dickler. The court ruled
that if the matter survived certification it would decide the issues
related to notice and retain jurisdiction over discovery matters and
pleadings. In addition, once the matter was ready for trial the court
would appoint arbitrators and retain jurisdiction over final approval of
any class settlement and enforcement, along with other issues appropriate
for resolution by the court. The court continued the stay compelling
arbitration until the class certification issues are resolved.

James W. Kraus and Anne C. Fitzpatrick of Doepken, Keevican & Weiss in
Pittsburgh represented Travelers, David E. Stern of Wolf, Block, Schorr,
& Solis-Cohen in Blue Bell, Pa., represented Primius Automotive Financial
Services. Arthur Bloom of Margolis Edelstein in Pittsburgh represented
Mackay-Swift. Willard R. Burns of Houston Harbaugh in Pittsburgh
represented Interstate. Michael P. Malakoff, Erin M. Brady, of Malakoff
Doyle & Finberg, P.C. in Pittsburgh, and Virginia Shenkan, of Virginia
Shenkan Law Center, P.C. in New Castle, Pa., represented Fred and Cathi
Beemus. (Consumer Bankruptcy News, March 20, 2001)

BURLINGTON NORTHERN: Hagens Berman Files Suit over Hearing-Loss Claims
Accuse Railroad of Collaborating With Law Firm to Reduce Claim Amounts.

A class action suit filed March 26 in U.S. District court claims that
Burlington Northern Santa Fe Railway Company (NYSE:BNI) secretly
conspired with lawyers representing railroad workers in hearing-loss

According to the suit, Burlington Northern entered into a secret deal
that facilitated easy settlements for awards drastically smaller than
those of similar claims in actual court cases. In exchange, Burlington
Northern received the lawyers' cooperation and an agreement not to take
the claims of present and future clients to court.

The workers, represented by Steve Berman of the Seattle-based law firm
Hagens Berman, and Sim Osborn, also of Seattle, allege in the suit that
Burlington Northern collaborated with Portland, Oregon-based law firm
Bricker Zakovics Querin Thompson & Ritchey PC (BZQ) in more than 4,000
settlements. The suit claims hearing-loss settlement amounts were decided
by a secret, predetermined "matrix," saving Burlington Northern hundreds
of millions of dollars in claims while illegally curbing employees'

"This suit states these claims were handled two to three hundred at a
time during weekend meetings, and that no meaningful consideration was
given to any of the cases," said Steve Berman, managing partner of Hagens
Berman. "We allege that this action was grossly unjust to the workers
and, we believe, patently illegal."

If certified as a class action, the suit would represent more than 4,000
railway workers who used BZQ to handle hearing-loss claims.

The complaint alleges that named-plaintiff Norman Harding, a thirty-year
employee, suffered a profound hearing loss and was induced to settle his
claim for $65,000. He was never advised that juries were awarding sums of
between $ 200,000 to $1 million for similar claims. In addition, the suit
states that Harding's lawyers never told him his settlement amount was
derived from the matrix.

Harding's disease is progressive and has advanced to the point that he is
unable to use a telephone or to attend family gatherings.

According to the suit, the hearing-loss matrix was based on a scale
ranging from "profound hearing loss" to "minimal loss." This matrix was
used to determine the amount of money that an employee would receive
based on the severity of the hearing loss. The suit states that these
amounts were up to ten times less than awards given to similar
hearing-loss claims that went to trial.

The suit also alleges that BZQ and Burlington Northern acted jointly to
conceal the scheme from the law firm's clients, failing to inform them of
the settlement schedule and that the amounts offered were far below
similar claims decided in court. BZQ also neglected to inform
hearing-loss plaintiffs that their claims would not go to court,
according to the suit.

The complaint alleges that when one employee could not get BZQ to commit
to try his case, he hired a different lawyer and won $150,000 in a jury
trial, an amount five times what he would have received under the matrix.
To conceal the conspiracy, BZQ and Burlington Northern refused to release
clients' files, even when those clients were not bound by confidentiality
agreements, the suit states.

BZQ specializes in representing injured railroad workers and is listed by
several railroad workers' unions as "designated council," meaning that
the union approves the firm as counsel for injured railroad workers who
are union members.

According to the suit, Burlington Northern knew as early as 1966 that
hearing loss from excessive noise was an occupational hazard for railway
workers, but failed to acknowledge the issue. The suit charges that
Burlington Northern did not address the hearing-loss issue for fear of
prompting employee claims. Later, when Burlington Northern became
concerned that it faced hundreds of millions of dollars in exposure
because of hearing-loss claims, it coordinated the matrix scheme as way
to reduce liability, the lawsuit claims.

The suit seeks compensatory damages for the plaintiffs as well as
attorneys' fees.

Steve Berman is managing partner of Hagens Berman in Seattle. Recently
cited as one of the nation's top 100 attorneys by The National Law
Journal, Berman is a nationally recognized expert in class action
litigation. Berman represented Washington State, 12 other states and
Puerto Rico in lawsuits against the tobacco industry that resulted in the
largest settlement in the history of litigation. Berman also served as
counsel in several other high-profile cases including the Washington
Public Power Supply litigation, which resulted in a settlement exceeding
$850 million. Other cases include litigation involving the Exxon Valdez
oil spill; Louisiana Pacific Siding; The Boeing Company; Morrison
Knudsen; Piper Jaffray; Nordstrom; Boston Chicken; and Noah's Bagels.
More information is available at www.hagens-berman.com.

Simeon Osborn is the managing partner in the law firm of Osborn & Smith
which specializes in personal injury, aircraft litigation and civil
litigation. Osborn has more than 17 years of experience in litigation and
has developed a reputation for success. Osborn successfully represented
several clients in a recent Longview, Washington railway accident as well
as actions against the Port of Seattle in a recent shooting in the SeaTac
Airport parking garage. Osborn was selected for inclusion in the biannual
Best Lawyers in America list, given the highest rating by his peers in
the Martindale-Hubbell survey, included in the Washington Law & Politics'
Super Lawyers list and listed in the Bar Registry of Preeminent Lawyers.
Osborn has argued cases to the Washington State Supreme Court and the
Washington State Court of Appeals and serves on the Western Trial
Lawyers' Board of Governors. Osborn received his law degree from
University of Puget Sound in 1984.

Contact: Hagens Berman LLP, Seattle Steve Berman, 206/623-7292 or Osborn
& Smith Sim Osborn, 206/386-5505 or Firmani & Associates Inc. (Media
Contact) Mark Firmani, 206/443-9357 mark@firmani.com

CHARLESTON: SC Voters Sue to Eliminate Civil Rights Violating Practices
A group of South Carolina voters is suing Charleston County to eliminate
election practices that allegedly violate their civil rights. Moultrie v.
Charleston County, No. 2:01cv562 (D.S.C. Feb. 28, 2001). According to
lead plaintiffs' counsel Laughlin McDonald, director of the ACLU's Voting
Rights Project in Atlanta, Charleston County is the last in the state
with a sizable minority population that elects its legislators "at-large"
rather than by district. Also representing the plaintiffs are Charleston
solo practitioner Armand G. Derfner and Cheryl Whipper Hamilton of North
Charleston, S.C.'s Whipper Law Firm. (The National Law Journal, March 19,

CHRYSLER: Says It Needs More Time To Collect Documents in Lemon Case
Chrysler says it needs more time to collect documents in a lawsuit over
claims that the car maker resold problem cars it bought back from some

Last month, Wake Superior Court Judge Narley Cashwell said the company
failed to comply with a previous order to give documents to a Raleigh
couple making lemon-law claims in court.

In the lawsuit, Peter and France Pleskach contended they weren't told
that their minivan had been bought back by Chrysler because of electrical

Company officials say the only reason the Pleskaches' lawyers are pushing
for documents relating to 45,000 "buyback" vehicles is to generate legal
fees Chrysler would have to pay if the couple wins.

The car maker also said the Pleskaches' lawyers want to generate more
lawsuits by contending it is consumer fraud to resell problem cars. The
resale of cars that have been bought back is legal and regulated.

"As lawyers, we're supposed to seek just and fair compensation in the
legal system. It shouldn't be used by plaintiffs' lawyers to strike it
rich," said Chrysler lawyer David Busacca.

Chrysler's criticism is directed at Raleigh lawyer Doug Abrams, his law
partner, Howard Twiggs, and Cary lawyer Cliff Kirkhart, who represent the

Abrams and Kirkhart has filed a national class-action lawsuit against
Chrysler and its dealers for allegedly reselling lemons without
disclosing their status to customers. The lawsuit defined lemons as
vehicles that have been fixed four times for the same problem or been in
a shop for 20 days.

Chrysler sued Kirkhart for allegedly soliciting clients based on records
that Chrysler already has turned over in the Pleskach case. A judge
ordered Kirkhart to stop all such activity and that order is on appeal.

Abrams said jurors need to see the national scope of Chrysler's failure
to tell consumers about the lemons and that it deserves hefty punitive

North Carolina law caps punitive awards at $250,000, an amount that's
being challenged in the appeals court. (The Associated Press State &
Local Wire, March 26, 2001)

CITIBANK N.A.: Ads' Failure To Disclose APY Triggers Liability
An advertisement offering a bonus in exchange for opening an account must
clearly and conspicuously list the annual percentage yield to comply with
the Truth in Savings Act. Including the APY in the customer's monthly
statements does not remedy the initial TISA violation. (Hale v. Citibank,
N.A., No. 00 CIV. 2387 (JSR) (S.D.N.Y. 2/2/01).)

Citibank N.A. placed advertisements in the New York Times and its various
offices. The ads offered any customer who opened an "AutoSave" account
before May 31, 1999, a 25 bonus if the customer made at least two
transfers of 50 before Aug. 31, 1999. Andrea Hale responded to the
advertisements, opened her account and received her bonus. She
subsequently sued Citibank under the TISA, contending the advertisements
and promotional materials, which prompted her to open the savings
account, lacked the APY of the AutoSave accounts. Hale moved for summary
judgment as to liability and for class certification.


The TISA provides, "a person injured by a violation of the statute or of
the regulations promulgated thereunder may sue for actual or statutory
damages." The implementing regulation, 12 CFR 230.8(d), provides, "if a
bonus is stated in an advertisement, the advertisement shall state the
following information ... clearly and conspicuously: (1) The 'annual
percentage yield,' using that term."

Citibank conceded its ads lacked the APY but argued that Hale failed to
show the missing APY would have affected her decision to open the savings
account. Writing for the U.S. District Court, Southern District of New
York, Judge Rakoff explained that neither the statute nor regulation
require a showing of reliance as a condition of liability. The failure to
include the APY in the ad was sufficient to trigger liability under the
TISA, the court held.

                      Class representative

Citibank also challenged Hale's ability to serve as the named-plaintiff
in her class action. Citibank alleged a potential conflict of interest
between Hale's duties to prospective class members and her husband's
contingent financial interest in the matter for his referral of the case
to Heller, Horowitz & Feit P.C.

The court found Hale's husband, Harley Schnall, referred the TISA case
and at least seven others involving the act and the Truth in Lending Act
to the Heller firm. Apparently, Schnall and the Heller firm have an
agreement that when the cases are resolved in the plaintiffs' favor,
Schnall will be compensated for his contribution to the cases. The court
found Schnall directs the Heller law firm attorneys to the relevant
financing statute and regulations and reviews associated pleadings and
briefs prepared by the firm.

Finding the arrangements between Schnall and the Heller firm "will
inevitably cause Hale to confuse her fiduciary duty to the prospective
class with her interest in protection and advancing her husband's
contingent financial relationship with the Heller firm," the District
Court agreed with Citibank that Hale did not satisfy Rule 23's adequacy
of representation requirement.


Hale sought statutory damages for the TISA violation. The act allows a
plaintiff to obtain statutory damages of not more than 1,000 when she
cannot prove actual damages.

The court noted that the absence of actual damages could still be
relevant to determining the amount of statutory damages. It said
Citibank's allegation that Hall acted from "ulterior motives" in opening
her account as well as the fact Citibank did include the APY in Hale's
monthly statements might affect the amount of statutory damages awarded.
(Consumer Financial Services Law Report, March 19, 2001)

EASY MONEY: Challenges Of Lender's Rollover Scheme Survive Dismissal
In a class action alleging a payday lender required borrowers to enter
into split transactions to increase the amount of its processing fees, a
federal court refused to dismiss claims that the alleged rollover scheme
violated state and federal law. (Bellizan, et al. v. Easy Money of
Louisiana Inc., et al., No. Civ. A 00-2949

(E.D. La. 2/12/01).)

Sheila Bellizan and others obtained payday loans from Easy Money of
Louisiana Inc. Easy Money assessed a number of fees in processing the
loan applications. Bellizan filed a class action against Easy Money,
alleging its lending practices violated the Louisiana Deferred
Presentment and Small Loan Law, the Racketeer Influenced and Corrupt
Organization Act and the Louisiana Consumer Credit Law by requiring
borrowers to enter into split transaction arrangements in order to
increase the total amount of fees it could charge. The lender moved to

                         State Law Claims

The borrowers claimed the lender refused to lend them more than 201 so
that they would come back several days later to borrow any remaining
amount needed. The lender would then charge the borrowers fees a second
time. The U.S. District Court, Eastern District of Louisiana noted the
La. Rev. Stat. Ann. 9:3578.6(A)(4) provides: "A [small loan] licensee
shall not ... [d]ivide a deferred presentment transaction or small loan
into multiple agreements for the purpose of obtaining a higher fee or
charge." The court found the borrowers' allegations were sufficient to
sustain a claim under the state statutes.

                        RICO Allegations

The lender argued the borrowers' Section 1962(b) RICO Act claim should be
dismissed because the borrowers failed to allege the enterprise was
acquired as a result of unlawful lending activities. As Judge Helen
Berrigan explained, Section 1962(b) requires the borrowers "alleged
injury be caused by the alleged RICO defendants' acquiring or maintaining
an interest or control in the alleged enterprise." The District Court
found the borrowers did not adequately allege how the lender's acquiring
or maintaining their interest in the alleged enterprise caused their

The District Court denied the lender's motion to dismiss the state law
claims. Regarding the RICO claims, the court dismissed the Section
1962(a) and ( b) claims, but denied the lender's motion to dismiss the
Section (d) claim. (Consumer Financial Services Law Report, March 19,

FIRST ALLIANCE: Bankruptcy Estate Saved from Multimillion-Dollar Claims
a critical ruling regarding multimillion-dollar claims against the estate
of Irvine, Calif.-based First Alliance Mortgage Company, Judge Lynn
Riddle (Bankr. C.D. Cal.) ruled that class action proofs of claim filed
on behalf of certain borrowers would be disallowed.

Among other reasons, Judge Riddle said she based her decision on the
failure of the class-action claimants to satisfy the standards applicable
to class certification as well as the unfairness to those borrowers who
had filed timely proofs of claim. She declined to exercise her discretion
to apply FRBP 7023 (incorporating FRCP 23 - the class action rules) given
repeated notices borrowers had received from First Alliance in addition
to other provided borrower safeguards.

Judge Riddle's ruling eliminates hundreds of millions of dollars in
claims from First Alliance's bankruptcy estate.

William Lobel, Jeffrey Reisner, and Evan Borges from the Newport Beach,
Calif. office of Irell & Manella LLP represented First Alliance Mortgage
Co. (BCD News and Comment, March 21, 2001)

FORD MOTOR: Will Get Another Shot with Jury in Suit over Ignition Flaw
The final chapter in the jury trial phase of a class action suit against
Ford will be wrapped up by Thanksgiving. That was the vow of Alameda
County Superior Court Judge Michael Ballachey last Thursday during a
brief hearing in Berkeley in Howard v. Ford, 763785-2.

Ford Motor Co. is fighting allegations that an ignition flaw caused
widespread problems in millions of Ford models since 1995. The two-phase
suit has already led to a historic bench recall, and Ballachey has ruled
that Ford violated the state unfair competition law and the Consumer
Legal Remedies Act.

The first jury hung in 1999 after 10 days of deliberations on damages.
During last Thursday's hearing, Ballachey dealt blows to both Ford and
plaintiffs' attorneys. He also made it clear he wants things to move
quickly: Attorneys were told they will probably make opening statements
on Sept. 17. Ballachey denied plaintiff attorney Jeffrey Fazio's attempt
to have the judge award each class-action member $1,000 in statutory
damages under the Consumer Legal Remedies Act - which could have totaled
a $3.5 billion bill for Ford. The judge also denied Fazio's Arntz motion,
which would have taken away the automaker's chance to dispute liability,
leaving jurors to decide damages alone.

Earlier, Fazio said his position was that "a jury can't second-guess a
trial judge." But the judge said the Ford case was not "bifurcated,"
since the bench trial and the jury trial were done concurrently. "I
didn't think we adjudicated any of the issues," Ballachey said, referring
to liability issues he expects to be considered by the jury. After the
damages-phase jury deadlocked 8-4 in favor of the plaintiffs, Ballachey
issued a stern statement ordering Ford to recall all the defective
vehicles and pay restitution to class members - who may number nearly 3.5
million - who had already replaced the faulty switches.

Ford, represented by attorney Richard Warmer, local counsel from
O'Melveny & Myers, lost its bid to protect automaker executive Jac Nasser
from testifying. The plaintiffs want Nasser to testify because they claim
the executive made statements to the media following the bench recall
that Ford vehicles were safe. Ford unsuccessfully argued that Nasser had
no personal knowledge that would have been helpful during the trial.
Ballachey shot down that argument, pointing out that Nasser "does not
have to have a press conference." Ford attorneys indicated after the
hearing that they were just happy there was going to be a jury trial.

Now, both sides said, they will begin prepping for the trial, preparing
their in limine motions and pre-screening jurors. "This case will not
take nine months," Ballachey said, referring to the last trial. "The 70
hours (of video evidence) may have been the reason we had a mistrial in
my opinion." (The Recorder, March 26, 2001)

HEARTLAND: Independent Directors Almost Quit, Jeopardizing All Funds
Heartland Group Inc.'s independent directors were on the verge of
resigning last month -- a move that would have forced all seven of the
group's funds into receivership and not just its three troubled municipal
funds, according to Securities and Exchange Commission documents and

Heartland asked the SEC in February to allow it to suspend redemptions
from its High-Yield Municipal Bond Fund, Short-Duration High-Yield
Municipal Fund, and Taxable Short-Duration Municipal Fund, according to
the documents that were filed in a federal court. But the SEC refused
because Heartland did not meet the criteria, sources said. To obtain such
a suspension a fund company has to show it cannot sell or determine a
fair value for its assets, they said. The SEC hardly ever approves such
requests, sources said.

Soon afterward, Heartland Group informed the SEC that its independent
directors -- four of six directors on the board -- were about to resign
because they could face personal liability for redemptions from the three
troubled funds. Heartland is registered in Maryland and under that
state's law, if a company's liabilities exceed its assets, the company's
directors are personally liable for the shortfall, sources said. In this
case, the roughly 20 class action suits filed against Heartland presented
potential undetermined liabilities and the lack of an audit and the
securities law requirement to redeem shares as requested by shareholders
on a daily basis created uncertainty about the value the funds' assets.
As a result there was great uncertainty whether each funds' liabilities
would exceed its assets.

The directors' resignations would have forced all of Heartland's funds
into receivership because the directors serve Heartland Group, which is
registered, as well as each fund set up by Heartland under its

The SEC documents also said that Heartland began doing its fair-value
determination of the securities in the three troubled funds last October
after it decided to "disregard" the fair-value pricing done by an
independent pricing service "because it found that service's prices to be
unreliable." (The Bond Buyer, March 26, 2001)

HOLOCAUST VICTIMS: Case to Be Heard April 2 In New York Court Of Appeals
A New York court of appeals is to consider the decision by US Judge
Shirley Kram to decline to dismiss a class action lawsuit filed by
Nazi-era slave and forced laborers, a lawyer for the plaintiffs said.

"The Second Circuit has said that they would consider it on April second.
I think they're going to move very fast, I hope in a matter of days,"
said Deborah Sturman.

Kram's decision stands in the way of payment of billions of dollars in
compensation from Germany for the plaintiffs. That arrangement had been
reached under an accord that grants immunity to German firms from further

Kram said she was unwilling to close the lawsuit out of concern that
claims by forced laborers or by former clients of Austrian banks -- which
passed under the control of Nazi Germany during World War II -- would not
be given full consideration under the compensation accord.

The World Jewish Congress (WJC), lawyers for the former slave and forced
laborers, as well as the US State Department have urged urgent
compensation payments to the aged plaintiffs. (Agence France Presse,
March 26, 2001)

IASIAWORKS, INC: Weiss & Yourman Sues Executives and Underwriters in NY
A class action lawsuit against Iasiaworks, Inc. (NASDAQ:IAWK), its senior
executives and the underwriters of its public offering was commenced in
the United States District Court for the Southern District of New York,
seeking to recover damages on behalf of investors who purchased
Iasiaworks securities. If you purchased Iasiaworks securities between
August 3, 2000 and November 27, 2000 (the "Class Period"), your rights
may be affected.

The action, number 01 CV 2484, is pending in the United States District
Court for the Southern District of New York against defendants
Iasiaworks, Inc., Joann F. Patrick-Ezell, Jonathan F. Beizer, Farrokh K.
Billimoria, Daniel A. Carroll, Robert Lee, Peter T. Morris, William R.
Stensrud, William P. Tai, Goldman Sachs & Co., Morgan Stanley & Co.,
Inc., and Salomon Smith Barney, Inc. The Honorable Alvin K. Hellerstein
is the Judge presiding over the case.

The complaint charges defendants with violations of the Securities Act of
1933. The complaint alleges that defendants issued a series of materially
false and misleading statements which artificially inflated the price of
Iasiaworks securities during the Class Period.

Contact: Weiss & Yourman, New York Mark D. Smilow James E. Tullman David
C. Katz 888/593-4771 or 212/682-3025

INMATES LITIGATION: NH Case Due to Expire; Ap. Ct. Remands to Dist. Ct.
The original judge died, the Prisoner Litigation Act of 1995 was passed,
and a court's jurisdiction over a decree that resulted from an inmate
class action suit more than a quarter of a century ago was due to expire.
So although court oversight seemed pointless and New Hampshire state
officials won their bid to terminate the decree, an appeals court said
the lower court had taken a misstep by not first granting inmates the
right to document ongoing violations.


In 1975, inmates at the New Hampshire State Prison in Concord filed a
class action suit against state officials in federal district court that
resulted in a consent decree. That consent decree was amended in 1990.

In 1993, a suit was filed alleging contempt of that decree. Pursuant to
the PLRA, prison officials successfully moved to terminate the decree.

The decree resulted from a lengthy decision in which the court made
specific findings that prison conditions violated inmates' Eighth
Amendment rights. It issued a 16-part order specifying required relief.
The order was implemented in a consent decree approved by the court Aug.
10, 1978, which was later amended by a second consent decree approved May
22, 1990.

Judge Devine, who had inherited the case from Judge Bownes, approved the
second decree that said the district court would "retain jurisdiction ...
for the purpose of assuring compliance" until July 1, 1993.

Two weeks prior to the expiration of the district court's jurisdiction,
the inmates filed a civil contempt motion alleging that prison officials
had failed to comply with the decree. The district court determined the
necessary level of compliance to avoid a finding of contempt and held an
evidentiary hearing in December 1995, but no order was issued. Upon Judge
Devine's death in February 1999, the case was reassigned to Judge
Barbadoro, with the motion for contempt still pending.

Mindful that the PLRA had "significantly changed the rules governing
consent decrees addressing prison conditions," Barbadoro ordered the
plaintiffs to "explain why the consent decree should not be terminated
and the pending motion for contempt be deemed moot."

The district court then terminated the decree in a June 15, 1999 order,
holding that "the findings called for were never made," and that
"plaintiffs have failed to demonstrate that a basis currently exists for
finding that the decree is narrowly drawn and the least intrusive means
to correct any alleged violations of the inmates' federal rights."

The inmates appealed.


The principal issue on appeal was when, if ever, the district court had
to give inmates who alleged "current and ongoing" violations of their
federal rights, the opportunity to supplement the existing record.

The Court of Appeals held that: (1) although an evidentiary hearing is
not required by statute before terminating a consent decree, failure to
provide one may be an abuse of discretion depending upon the
circumstances, and (2) the court abused its discretion in not giving
inmates the opportunity to demonstrate current and ongoing violations of
constitutional rights that would prevent termination of the consent

It said inmates should have the opportunity to demonstrate current and
ongoing violations of constitutional rights that would prevent
termination of the consent decree. Whether this determination is
facilitated by proffered showings and briefings, or whether a
full-fledged evidentiary hearing is required before further action, is a
matter for the discretion of the district court.

The district court's decision was vacated and the matter was remanded for
further action consistent with the appeals court's opinion. Laaman et al.
v. New Hampshire State Prison et al., No. 00-1052 (1st Cir. 01/17/01.)
(Corrections Professional, March 23, 2001)

INSURANCE COMPANIES: Policy Racial Bias Suits Filed
TWO SETS OF class action suits alleging fraud through the systematic sale
of inferior life insurance policies to black customers by a number of
insurance companies are being filed in federal court.

One set of clients, including the ones in Drakeford v. Monumental Life
Insurance Co., No. 2:01cv268 (E.D. La.), are represented by a group of 20
plaintiffs firms led by Herman, Middleton, Case & Kitchens of New

According to lead counsel Steven Jay Lane, a Herman Middleton partner,
some life insurance companies have had an alleged long-term practice of
selling what are termed "industrial," "debit" or "substandard" policies
to African-Americans.

These policies allegedly either had higher premiums for the same
services, lacked the accumulation of cash value, or provided for lower
dividends. Another group of eight law firms are led by Milberg Weiss
Bershad Hynes & Lerach.

The cases have recently been consolidated under a multi-district
litigation order to the federal court in New Orleans. Among the companies
involved are Unitrend, Georgia Life and Met Life. American General has
already settled. (The National Law Journal, March 19, 2001)

PARKING PLACARD: Sp Ct's Denial of Certioriari Leaves 3 Decisions Intact
The U.S. Supreme Court's denial of certiorari in three parking placard
cases left these decisions intact.

In Dare v. State of California, 191 F.3d 1167, 16 NDLR 91 (9th Cir.
1999), two individuals filed a class action asserting that the state's
fee for parking placards violated Title II of the ADA. The court said
that providing the placards was a required measure for providing access,
and that charging a fee for them constituted an impermissible surcharge.

In Neinast v. State of Texas, 217 F.3d 375, 18 NDLR 148 (5th Cir. 2000),
the appeals court found that the federal Tax Injunction Act, which bars
District Courts from interfering with states' assessment of taxes when
there is an adequate state-law remedy, did not bar a federal court ADA
challenge to parking placard fees. But it also held that the suit was
barred by the 11th Amendment.

Brown v. North Carolina Department of Motor Vehicles, 166 F.3d 698, 14
NDLR 180 (4th Cir. 1999), was the first federal appeals court to weigh in
on the parking placard issue, upholding the imposition of a fee as
"rationally based and perfectly constitutional." (Disability Compliance
Bulletin, March 23, 2001)

PAYDAY LENDERS: Nearly 60 Companies Cashing Post-Dated Checks Sued in AR
Nearly 60 companies that cash post-dated checks, in a service dubbed
"payday lending" or "deferred presentment," have been sued in Arkansas
federal court over the fees they charge. Ballard v. First American Cash
Advance, No. 5:01 cv 5048 (W.D. Ark. March 2, 2001). The plaintiffs claim
that Arkansas constitutional protections against usury trump a state law
that designates these charges "fees" rather than "interest." Lead
plaintiffs' attorney is David G. Nixon of Fayetteville, Ark.'s The Nixon
Law Firm. A related case, Ballard v. AA Check Cashiers Inc., No. 01-1207,
is pending before the U.S. Court of Appeals for the 8th Circuit; state
court cases are pending in Kentucky, Florida, Illinois and Alabama. (The
National Law Journal, March 19, 2001)

PFIZER: Suit over Drug Test in Meningitis Epidemic Proceeds in Nigeria
A high court in Kano, northern Nigeria, has said it will allow some
families of children who died or were maimed by meningitis in 1996 to sue
the US drugs company Pfizer, court papers showed. The court, in a ruling
made last Friday, gave leave to three Nigerian families to sue Pfizer in
a class action over tests it carried out of a new drug, Trovan or
Trovafloxacin, during a meningitis epidemic here.

Also named in the suit filed earlier this month are the federal
government, the health minister and the attorney general of the
federation for allowing the tests to take place.

Pfizer says the drug was not harmful to the children, 11 of whom died,
and insists that it was beneficial to most of those who took it. Hundreds
died in the epidemic for lack of any available treatment. Pfizer's
alleged drug tests during the 1996 meningitis epidemic in Kano was made
public late last year in a report carried by The Washington Post

The high court adjourned the hearing to April 5. (Agence France Presse,
March 26, 2001)

RENT-WAY: PA Fed Judge Gives Money Management Firm Lead Plaintiff Status
A Pennsylvania federal judge has given a New York money management firm -
- which lost $10 million of its client's money but none of its own --
lead plaintiff status in a securities fraud class action.

Cramer Rosenthal McLynn LLP, a group of White Plains investment pros with
more than $3 billion under management, caters to wealthy families seeking
to increase their capital worth. The reverse happened when
Pennsylvania-based Rent-Way Inc. restated its financial picture last
year, causing the company's stock to drop from a high of more than $23
per share to less than $5. Plaintiff lawyers say investors lost hundreds
of million of dollars.

Angered and worried about its reputation with its clients, Cramer
Rosenthal hired San Francisco's Gold Bennett Cera & Sidener to bring a
case against the company and its executives. Earlier this month, U.S.
District Court Judge Sean McLaughlin granted Gold Bennett's motion for
lead plaintiff status. "We have never contended that our client has any
risk on the underlying investment," said Gold Bennett partner Solomon
Cera. "They do not." But, Cera said, "on the books of Rent-Way, they were
an investor," because the stock was held in Cramer Rosenthal's name.

To win the coveted appointment, Cramer Rosenthal bested the Florida State
Board of Administration, represented by Philadelphia's Barrack, Rodos &
Bacine. "In this case ... we find that Cramer's financial interest is so
aligned with its clients financial interest that the two are synonymous,"
McLaughlin wrote.

The judge also ruled that Cramer Rosenthal not only had the largest
losses -- $10.1 million to $6 million for FSBA -- but could fulfill the
role of lead plaintiff in a class action for the purposes of res
judicata. "That was critical," Cera said. "Otherwise you would be
litigating a case that might not end it."

Rent-Way, which rents home entertainment equipment, computers and
furniture, announced Oct. 30 that it had launched an investigation into
accounting irregularities, suspended its corporate controller and
relieved its president and chief operating officer of his duties pending
the outcome of the investigation.

The results of the investigation have not been announced.

Cera, whose small firm litigates in an arena stocked with giants, called
the ruling important. "In my view, it eliminates a lot of the political
pandering that went in to building the relationship between firms and
institutional investors," he said. "Particularly with these pension
funds." Those public pension funds Cera refers to have become the coveted
clients since the Private Securities Litigation Reform Act of 1995 went
into effect, favoring larger institutional clients who can control the
litigation as lead plaintiffs. Many are administered by elected
officials. Not everyone agreed with McLaughlin's logic. "Just thinking
out loud here," said Wilson Sonsini Goodrich & Rosati partner Leo
Cunningham, "but if Cramer Rosenthal had invested my money for me, I
might have a claim against them, and their interest is in no way similar
to their clients." Cera said the issue was never raised in court. "They
were misled just like Joe Blow on Main Street." (The Recorder, March 26,

ST. CLOUD: State University Professor Files Complaint over Anti-Semitism
A former St. Cloud State University professor filed a federal complaint,
accusing the university of tolerating anti-Semitic behavior, according to
The Chronicle of Higher Education. Arie Zmora, who filed the report, said
several other professors are considering signing on for a class-action
complaint against the school.

Since the allegations, the university has changed the wording of its
diversity statement. The new statement specifically mentions that there
is no place on the campus for racism, homophobia, anti-Semitism, ageism
or sexual harassment. (HR On Campus, March 22, 2001)

THOROUGHBRED TECHNOLOGY: Landowners in Fiber-Optic Suit Get Profits Pact
Landowners in a class action against a telecommunications company that
lays fiber-optic cables on railroad rights of way have settled the suit
with an unusual form of compensation: The landowners will get some cash
up front and also a 10% to 15% cut of future profits from the company's
earnings on the cable.

The suit covers about 2,500 miles along nine railroad corridors in 16
Eastern, Southern and Midwestern states, including Ohio, Georgia,
Illinois and Virginia. It will compensate about 20,000 landowners in cash
at $ 6,000 a mile, for a total of about $ 15 million. Uhl v. Thoroughbred
Technology and Telecommunications Inc., No. 1IP00-1232-C B/S. (S.D.

With the addition of the future profits, the settlement could be worth
more than $ 100 million, according to Washington, D.C., plaintiff's
lawyer Nels Ackerson.

"I think it is the fairest way to settle this kind of dispute because it
does allow the landowners to benefit from the highest and best use of the
land," said Mr. Ackerson of D.C.'s Ackerson Group.

                        Defining Easements

The suit was brought after Norfolk Southern Railway Co.'s subsidiary,
Thoroughbred Technology and Telecommunications Inc. (known as "T-Cubed"),
announced plans to install fiber-optic cables alongside rail lines.

The plaintiffs argued that the railroad company has a right-of-way
through easements and licenses, but that it is limited to use for
railroad purposes only. In that case, T-Cubed did not have the right to
install cable without compensating the landowners.

T-Cubed denies the plaintiffs' allegations and maintains that the
decision to settle was a business one, made to avoid the cost and risk of

The additional compensation is based on T-Cube's plans to build the
fiber- optic lines with 12 conduits full of fiber-optic cable along the
railroad tracks. Those conduits are estimated to be marketed at about $
30,000 per mile, per conduit.

The plaintiffs will get 10% of the lease price of the fourth through the
seventh conduits built, and 15% of the lease price of any conduits beyond

The settlement provides for a minimum valuation of the conduits at $
30,000 per mile if the profits do not exceed that.

Based on the minimum, if all 12 conduits are built, the per-mile
compensation will be about $ 40,000, said Mr. Ackerson.

The landowners will form a corporation that will hold and develop the
non-cash compensation. Such compensation includes the profits on the
conduits. It also includes strands of fiber and the option to purchase
one of the 12 conduits.

"By consolidating their interests, they can benefit much more
significantly in the business use of their land," Mr. Ackerson said.

A spokeswoman for Norfolk Southern declined to put a total value on the
settlement but confirmed Mr. Ackerson's estimates.

"The real value remains to be seen," said Susan Bland. "It is $ 40,500 a
mile if all conditions are met."

Like their clients' profits, the plaintiffs' lawyers' total fees are tied
to the future profitability of the fiber-optic lines. Mr. Ackerson's
group will receive 25% of the cash settlement, about $ 5 million on top
of T-Cubed's compensation to the landowners. In addition, the lawyers
will get 25% of the future profits of the class.

                         Slew of Settlements

This is the first known settlement of a dispute over fiber-optic cable
installations on active railroad lines, said Mr. Ackerson, who has
organized his practice around suits against railroads and fiber-optic
cable companies on behalf of landowners. He has about 30 more pending.

This case, which received preliminary approval last fall and will
complete class notification by next month, is one of a slew that Mr.
Ackerson's group of networked law firms have settled recently.

On Feb. 26, he and co-counsel settled suits with AT&T Corp. in Ohio,
Connecticut and Maine covering 60 miles of corridor lines at $ 45,000 per
mile. In re AT&T Fiber Optic Cable Installation Litigation, No.
IP99-C-9313-H/G (S.D. Ind.).

And on Feb. 16, Indiana landowners settled a case with Penn Central
Railroad covering more than 700 miles of abandoned railroad
right-of-ways. That suit is also based on a $ 5,280-per-mile calculation
and other compensation, such as the granting of a quiet title, valued at
$ 2,500 per class member. Firestone v. American Premier Underwriters and
U.S. Railroad Vest Corp., No. 06C01-9912-CP-379 (Cir. Ct., Boone County,

Mr. Ackerson estimated that there are more than 10,000 landowners in the
Penn Central suit, and he put the total value of compensation at between
$ 3 million and $ 10 million, depending on the number of claims. (The
National Law Journal, March 19, 2001)

TOBACCO LITIGATION: PM Says Too Many Individual Issues Involved for Cert
West Virginia judge's order to proceed with a class-action,
medical-monitoring case brought by smokers who do not claim any physical
injury from smoking is contrary to the overwhelming weight of the law.
Philip Morris hopes the court will reconsider its ruling as the case

In a nine-page order, the court denied a request by Philip Morris and
other tobacco companies to decertify the class, and the court itself had
previously raised concerns that such a class might not be workable. The
court raised those concerns in January, when it declared a mistrial soon
after the start of the plaintiffs' testimony in the case. The court said
the issue of addiction could destroy the "cohesiveness" of the class - a
legal requirement for maintaining a class action.

"Other courts have repeatedly recognized the individual nature of
smokers' claims," said William S. Ohlemeyer, Philip Morris vice president
and associate general counsel. "We believe this issue will become even
more evident as this case proceeds, and we hope the court will have an
opportunity to reconsider today's ruling."

U OF CA: CA Ct Allows Students' ADA Case to Proceed As Class Action
For plaintiffs' lawyers, gaining class action status in an ADA case can
be difficult due to the generally applicable requirement that claims be
evaluated on an intensely individualized basis. As a decision from a
federal District Court in California shows, however, it is a difficulty
that can be overcome. The U.S. District Court, Northern District of
California granted class certification in a case that charges University
of California officials with failing to provide adequate accommodations
for students with hearing impairments.

The lawsuit underlying the court's decision in Siddiqi v. Regents of the
University of California, No. C 99-0790 SI (N.D. Calif. 9/6/00), alleges
that the University of California at Berkeley and the University of
California at Davis discriminate against students and prospective
students with disabilities in a variety of ways. The university violated
the ADA and Rehabilitation Act by failing to provide timely
accommodations and by retaliating against students for exercising their
federal rights.

Lawyers at San Francisco's Schneider, McCorman & Wallace, representing
the plaintiffs, asked the court to certify two classes: one relating to
students at UC Berkeley, and the other relating to students at UC Davis.
The university opposed class certification, arguing that the plaintiffs
failed to meet applicable requirements relating to commonality,
typicality, representation and numerosity.

Meeting the commonality requirement - that is, showing that there were
questions of law or fact that are common to the class - presented a
potential problem for the plaintiffs because the ADA calls for
fact-specific, individualized determinations. But the court rejected the
university's argument that the need to conduct individualized assessments
defeated class certification. The university did not dispute that the
individuals in the proposed class were qualified to receive
accommodations, the court said, and they sought class certification only
with respect to equitable relief.

The remaining requirements relating to class certification were satisfied
as well, the court said.

The plaintiffs' motion to bifurcate the trial into two phases, one
addressing the classes and the other addressing the named plaintiffs, was
also granted. (Disability Compliance Bulletin, March 23, 2001)


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

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

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

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