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              Wednesday, June 9, 1999, Vol. 1, No. 89


AMERICAN BANKNOTE: Misses Interest Payment On Senior Notes
AMERICAN HOME: Asks for Experts to Provide Scientific Advice
AMERICAN HOME: Plaintiffs Seek to Vacate MDL Transfer Order
BANKRUPTCY REFORM: Committee Eliminates Senate's Class Limits
CEPHALON INC.: Judge Approves Experimental Drug Settlement

CHEVRON CORP.: Suit Charges Role in Death of Nigerian Activists
COMPUTER GAMES: Retired Major Leaguers Balk at Video Images
DANIEL INDUSTRIES: Settles Complaint About Emerson Electric Deal
FIDELITY NATIONAL: Federal Suit Charges Misuse of Escrow Funds
INTEK GLOBAL: Securicor's Acquisition Proposal Draws Complaint

MATSUSHITA ELECTRIC: Shareholder Suit Over MCA Deal Dismissed
NATIVE AMERICANS: Interior Dept. Can't Account for Trust Funds
PRUDENTIAL INSURANCE: Pays $1 Billion for Churning Policies
SAVINGS BANK: Insurer Asks for Ruling to Avoid Distributing Cash
SECURITIES LITIGATION: Plaintiff Attys. Take Stock in Defendants

UNITED STATES: Court Says Congress Failed to Reserve CBM Deposit
USAID: Senior Agency Employees Complain of Age Discrimination
VOLUSIA COUNTY: Unionized Officers Object to Missing Holiday Pay
WALT DISNEY: Feather Fly in Battle Over Mighty Ducks' Bucks


AMERICAN BANKNOTE: Misses Interest Payment On Senior Notes
On May 28, 1999, American Banknote Corporation announced that
the semi-annual interest payment on its 10 3/8% senior notes due
2002 will be paid in full on June 1st. The company, however,
will not make the June 1st interest payment on its 11 1/4%
Senior subordinated notes due 2007. The indenture for these
notes allows for a 30-day grace period to make this interest

The company's advisor, The Blackstone Group, has initiated
discussions with holders of approximately 50% of the Senior
subordinated notes to address a possible restructuring. The
company states that there can be no assurance it will be
possible to reach such an agreement with the holder of these

Morris Weissman, Chairman and Chief Executive Officer of
American Banknote Corporation, commented, "We are taking steps
toward a restructuring that is intended to result in a de-
leveraging of the company and enhancement of its ability to
operate and grow in the future. We are hopeful that such a
financial restructuring can be reached rapidly by a mutually
beneficial agreement with the bondholders."

American Banknote Corporation is a leading global full-service
provider of secure transaction solutions in carefully selected
markets along three major product groups: Transaction Cards &
Systems, Printing Services & Document Management, and Security
Printing Solutions. A combined strategy of operating along
product lines and constant expansion of transaction activities
worldwide reflects the rapidly changing field of electronic

AMERICAN HOME: Asks for Experts to Provide Scientific Advice
American Home Products Corp. has asked the judge presiding over
the coordinated New Jersey diet drug cases to appoint a panel of
experts to advise the court and any future juries about the
scientific research that has been done on diet drugs since they
were withdrawn from the market 1997. The proposed science panel
would be modeled on the panel appointed by U.S. District Judge
Sam C. Pointer in the silicone gel breast implant MDL to advise
him about the scientific evidence relating to implant injuries.
Vadino et al. v. American Home Products Corp. et al. v. Century
Pharmaceuticals Inc. et al. , Nos. MID-L-1356-99MT, L-1356-99MT
and L-353-99MT (NJ Super. Ct., Middlesex Cty., motion filed
April 23, 1999).

American Home Products Corp., its defunct subsidiary A.H. Robins
Co. Inc. and its division, Wyeth-Ayerst Laboratories
(collectively the AHP defendants), are the lead defendants
because it or its related companies were involved in
manufacturing or promoting both of the recalled drugs,
fenfluramine and dexfenfluramine. Those three companies have
named more than two dozen manufacturers or distributors of
phentermine as third party defendants because fenfluramine was
popularly prescribed along with phentermine. Some research has
indicated that phentermine is not implicated in the alleged
injuries caused by fenfluramine, but the evidence is not

The AHP defendants requested that Middlesex County Superior
Court Judge Marina Corodemus appoint a science panel as part of
their response a trial plan submitted by the diet drug

The plaintiffs have asked that the class action (Vadino) be
combined with two personal injury suits and that the liability
issues in all three suits be tried to a judge rather than a
jury. A jury would sit as a trier of fact on the issue of
medical causation and, if the verdict warrants it, would assess
damages. In one personal injury case, Deblau v. American Home
Products Corp. et al., No. L-356-1356-99MT (NJ Super. Ct.,
Middlesex Cty.), plaintiff Ellen DeBlau alleges that after
taking Pondimin (Wyeth-Ayerst brand of fenfluramine) for six
months, she developed severe heart valve disease, resulting in
valve replacement surgery.

In the second case, McDonald v. American Home Products Corp.,
No. L-353-99MT (NJ Super. Ct., Middlesex Cty.), plaintiff
Beverly McDonald alleges that Redux (AHP's brand of
dexfenfluramine) caused her to develop mild to moderate heart
valve disease.

The plaintiffs in Vadino are seeking a medical monitoring fund
to pay for periodic testing to determine if they are developing
any disease attributable to their having taken diet drugs.

The AHP defendants argue that the plaintiffs trial plan is
fatally flawed because while the plaintiffs are waiving their
demand for a jury trial as to liability, the defendants have
demanded a jury trial on all issues. They have not waived that
right and they do not intend to waive it, AHP's motion said.

The plaintiffs' proposed consolidation of the trials of
uninjured people with those of two people alleging serious
personal injuries would be highly prejudicial to the defendants
and would violate their Constitutional right of due process, AHP

Instead, the AHP defendants urged the court to adopt their two-
phase plan. In the first phase, a jury would decide the
scientific issues including the need, if any, for medical
monitoring for the Vadino class. The court would appoint an
unbiased scientific panel that would submit reports on the
scientific issues to assist the jury in understanding the
evidence. In the second phase, the jury would hear the liability
issues. The defendants also proposed that the medical monitoring
class suit be tried separately from the personal injury suits.

In the silicone breast implant MDL, the panel of experts
appointed by Judge Pointer ultimately concluded that the medical
and scientific evidence amassed so far does not support a causal
connection between silicone breast implants and systemic
diseases such as lupus or scleroderma. However, many of the
studies analyzed by the panel that indicated that there may be
some connection between the implants and various diseases were
dismissed as statistically insignificant because the number of
subjects were too small to extrapolate the results. Much of the
existing diet drug research has indicated an association between
the drugs and heart valve disease, but most of the studies have
been performed on relatively small numbers of diet drug users.

According to AHP, a scientific panel appointed to assist the
fact-finders in state court diet drug trials would help answer
such dispositive questions as:

-- To what extent, if any, do fenfluramine and dexfenfluramine
increase the prevalence of heart valve abnormalities and under
what circumstances?

-- What role did dosage, duration of use and combined use with
phentermine or other drugs play in causing any injuries?

-- What type and degree of abnormalities, if any, are associated
with the mitral, aortic, tricuspid and pulmonic heart valves?

-- What is the clinical significance, if any, of the
abnormalities (do they require medical intervention and if so
when and what kind)?

-- What is the scientific evidence on the latency of any alleged

-- What is the scientific evidence of the progression or
regression of any abnormalities alleged to be associated with
the use of diet drugs?

AHP's New Jersey counsel Anita Hotchkiss of Porzio, Bromberg &
Newman in Morristown, NJ, said that the court has scheduled a
hearing on May 28 to hear the motions on the plaintiffs' and
defendants' proposed trial plans. (Diet Drugs Litigation
Reporter; June 1999)

AMERICAN HOME: Plaintiffs Seek to Vacate MDL Transfer Order
In an unusual show of solidarity, a physician named as a
defendant in a diet drug lawsuit filed in an Alabama state court
and the plaintiffs in the case have asked the Judicial Panel on
Multidistrict Litigation to vacate a conditional transfer order
(CTO) sending the suit to the MDL court in Philadelphia. Curren
et al. v. American Home Products et al., No. 99-RRA-0246-S
(JPML, motion filed May 11, 1999).

The plaintiffs in two other cases (Deramus et al. v. American
Home Products et al. , No. ALN-99-TMP-585-E JPML, motion filed
May 4, 1999 and Brightwell v. A.H. Robins Co. Inc. et al. , JPML
1203, motion filed May 14, 1999 ) are also moving to vacate the
conditional transfers of their cases to the MDL court. In both
cases, the plaintiffs maintain that the damages they are asking
for will not amount to the $75,000 minimum required to establish
federal subject matter jurisdiction.

In April and May up to press time, the JPML had finalized the
transfer of a total of 98 new cases to the MDL. CTO 34 included
27 actions from 19 federal districts, CTO 35 transferred 38
cases from 23 districts and CTO 36 involved the transfer of 33
suits from 18 districts.

In Curren, Faith and Barry Curren filed a complaint in the
Alabama Circuit Court for Jefferson County alleging product
liability claims against several non-Alabama drug manufacturers
and distributors and against Dr. Doyle L. Moore III, who had
prescribed diet drugs to Lynn Curren.

Defendant Qualitest Pharmaceuticals Inc. filed a third party
complaint against Camall Co., a phentermine manufacturer, which
subsequently filed for bankruptcy. Qualitest then removed the
Currens' action to the Northern District of Alabama federal
court on the grounds that the bankruptcy action confers federal

The Currens filed a motion to remand but while that motion was
pending, the case was conditionally transferred to the MDL court
in the Eastern District of Pennsylvania.

Dr. Moore joined the Currens in a motion to vacate the transfer
order to allow the Northern District of Alabama time to decide
whether to remand the case to the state court.

The Currens and Dr. Moore argue that the JPML lacks subject
matter jurisdiction because the Currens did not sue Camall.
Camall was brought into the case only because some of the
defendants are seeking indemnification from the bankrupt
company, the petitioners said.

All of the Currens' asserted claims are predicated on state tort
law and should be adjudicated in a state court.

The Currens and Dr. Moore further argue that it will be
inconvenient for them to have to retain local counsel and travel
to Philadelphia to seek a remand there. Both parties want to try
the suit in a state court.

"The Currens and Dr. Moore should be allowed to 'fight that
battle' in the forum most convenient to them," the motion

The Deramus Motion

Darrie Deramus filed a class action lawsuit in the Alabama
Circuit Court for Calhoun County in February, 1999, in which she
seeks medical monitoring in the form of an echocardiogram for
herself and each member of a proposed class of Alabama residents
who took diet drugs but have not manifested any injury. She
estimated that the cost of the echocardiogram would not exceed
$3,000 per plaintiff.

Defendant American Home Products Corp. (AHP) removed the suit to
the Northern District of Alabama on the grounds that there is
complete diversity between the parties and that the amount-in-
controversy exceeds $75,000.

Even though Deramus attempt to waive any claim for punitive
damages and for compensatory damages in excess of $3,000 per
plaintiff, that waiver is ineffective because she cannot waive
away the rights of absent class members to collect damages.

Deramus has not filed an affidavit attesting that she will not
later seek to include punitive damages and without such an
affidavit, her assertion that she does not claim punitive
damages is "merely artful pleading" and a futile attempt to
avoid diversity jurisdiction, AHP argued.

Deramus filed a motion to remand but, like the Curren case, the
JPML conditionally transferred the case to the MDL court while
the motion was pending. In their motion to vacate, the
plaintiffs again assert that the only damages they seek are the
costs of the cardiac physical examination and that those costs
will not exceed the $75,000 threshold.

The Brightwell Motion

Anita Brightwell and Diane Turner filed a class action complaint
in the Arkansas Chancery Court for Benton County seeking medical
screenings for all Arkansas residents who took the diet drugs
but do not allege any current injuries. Like Deramus, the
plaintiffs in this case argue that the damages they are seeking
will not exceed $75,000 and therefore the federal courts do not
have jurisdiction.

AHP removed the case to the Western District of Arkansas and
Brightwell moved to remand, but the JPML conditionally
transferred the action before the remand motion could be

Curren is represented by Michael C. Bradley of Pittman, Hooks,
Dutton & Hollis in Birmingham, AL, and by Laura H. Peck of
Starnes & Atchison, also in Birmingham. Representing Deramus is
Thomas J. Knight of Hubbard & Knight in Anniston, AL. Bobby Lee
Odom and Russell B. Winburn of Odom & Elliott in Fayetteville,
AR, represent Brightwell and Turner. (Diet Drugs Litigation
Reporter; June 1999)

BANKRUPTCY REFORM: Committee Eliminates Senate's Class Limits
Bankruptcy reform in 1999 moved closer to reality on May 11 when
an amended version of S. 625 was reported out of committee by
Sen. Orrin Hatch, R-Utah, chair of the Senate Judiciary
Committee. The following day, the House version of the
Bankruptcy Reform Act of 1999, H.R. 625, which passed that body
on May 5, was reported to the Senate. The Senate is not expected
to consider either bill until after the Memorial Day recess.

Although both bills cleared their respective Judiciary
Committees during the last week of April, the House bill was
quickly moved for floor consideration while the Senate bill was
held back for consideration of further modification and the
preparation of a report. Now, with the House on record strongly
in favor of its measure, the Senate will take up a bill that is
less creditor friendly than either the House bill or the
original version of the Senate bill as introduced by Sen.
Charles E. Grassley, R-Iowa. And, if the Democrats on the
Judiciary Committee have their way, it will be an even more
balanced bill when the Senate debate is concluded.

Of the eight Democrats on the Judiciary Committee, four voted
against reporting the bill out of committee and all but Sen.
Joseph Biden, D-Del., contributed to a 47-page section of the
committee's report detailing their views that were not
incorporated into the bill.

The work of crafting S. 625 into a bankruptcy bill that would
receive bipartisan support continued after the Judiciary
Committee approved sending the bill to the floor. Among the more
notable changes for consumer bankruptcy practitioners was the
preservation of a debtor's ability to bring class action suits
in cases of reaffirmation abuse and the elimination of various
reporting requirements placed on debtors' attorneys.

As reported out of committee, S. 625 provided that debtors
injured by creditors who willfully failed to comply with the
reaffirmation requirements of Section 524 could receive
compensation equal to the greater of their actual damages or
1,000. However, they could not bring their complaints against
the creditors in the form of a class action. In other words, S.
625 would have prevented litigation such as was brought against
Sears. This change, which was part of Section 422 in the bill,
was deleted. (Consumer Bankruptcy News; June 3, 1999)

CEPHALON INC.: Judge Approves Experimental Drug Settlement
Cephalon Inc. has agreed to pay $17 million to settle a spate of
class-action shareholder suits filed in 1996 that said top
corporate officers hid the truth about the prospects of an
experimental drug to treat Lou Gehrig's disease. Senior U.S.
District Judge Clifford Scott Green yesterday granted
preliminary approval of the settlement, clearing the way for
notices of it to be published in the Wall Street Journal and
mailed to potential class members.

Under the settlement, Cephalon's insurers will pay $7.5 million
and the remaining $9.5 million will come from sales of Cephalon
stock. The settlement required Cephalon to give the plaintiffs'
attorneys enough stock to raise the full $9.5 million.

The plaintiffs' lawyers who worked on the case for the past
three years will be entitled to petition for a fee of up to $5.1
million, or 30 percent of the fund, according to court papers.
The co-lead plaintiffs' counsel are Sherrie R. Savett and Carole
A. Broderick of Berger & Montague; Mark C. Rifkin of Rifkin &
Associates; and Marian P. Rosner of Wolf Popper Ross Wolf &
Jones in New York. Cephalon was represented by John G. Harkins,
Eleanor Morris Illoway and David G. Creagan of Harkins

If the settlement wins Judge Green's approval at a fairness
hearing on July 29, it will mark the end of three years of court
battles the West Chester, Pa.-based biopharmaceutical company
has fought over its development of Myotrophin, an experimental
drug, it had touted as a possible treatment for Lou Gehrig's
disease or "amyotrophic lateral sclerosis," a fatal,
degenerative disorder of the central nervous system. Developed
in a joint venture with Chiron Corp, Myotrophin is a synthetic
form of a natural hormone that the two companies said could
cause the nervous system to sprout new nerves and to strengthen
nerve-muscle connections.

The investing public heard good news about Myotrophin in June
1995 when Cephalon announced the results of Phase III clinical
studies at eight medical centers. The New York Times reported
that the drug slowed the advance of ALS by 25 percent. The
company's press conference and the statements it made including
that Myotrophin was well tolerated by patients in the Phase III
study led to a dramatic rise in the price of Cephalon stock. It
nearly doubled in price, rising from $10.75 to $18.375 in a
single day with 6 million shares traded.

When the stock hit $30, the company made a new public offering
of 3.9 million shares and raised $84 million. As the suit
describes it, Cephalon "effectively recovered the entire $84.2
million in losses since the company was created in 1987. "Good
news and positive statements continued through the end of 1995.
But in January 1996, the FDA raised concerns about Myotrophin
and it was reported that regulators were disturbed by data that
showed that in European tests, patients taking the drug had died
at about twice the rate of patients taking a placebo. Industry
analysts expressed criticism of the company's testing methods,
which allegedly skewed results by removing any patient who
deteriorated beyond a certain point. Patients removed from the
test group who later died were not included in the group's
overall mortality rate.

On the bad news, the stock lost 40 percent of its value in one
day, according to the investors' suits. Attorney Broderick said
yesterday that Myotrophin is a "dead" drug for purposes of
treating ALS, but that Cephalon may still be planning to test it
for other uses. But Broderick said Cephalon may have a very
lucrative drug on the horizon since it has garnered the license
to market Provigil, a possible treatment for narcolepsy, in the
United States.

In September 1997, with the shareholder suits pending, the
Securities and Exchange Commission filed an insider trading suit
that said seven Cephalon insiders had purchased stock in 1995
just prior to the good news about Myotrophin. The suit said Dr.
Dale J. Lange, a Columbia University neurologist who had access
to the preliminary test results for the drug, purchased 3,000
shares of the stock. Dr. Philip Portoghese, a Minnesota doctor
on Cephalon's scientific advisory board, also allegedly gave the
information to his two sons, Stuart and Stephen, who purchased a
total of 815 shares within 90 minutes of having a conference
call with their dad. A Cephalon scientist, Timothy Garner of
Lancaster, Pa., purchased 100 shares of the stock soon after
learning of the upcoming public announcement despite never
having purchased securities before, the suit said. And finally,
Frank and Mark Lepore, two New Jersey men who were hired to
produce charts, graphs and slides for Cephalon's presentation of
the Myotrophin clinical trials, purchased a total of 600 shares
of Cephalon stock and 75 call options, the suit alleged.

At the time the suit was filed, the SEC said the Lepores and
Garner had already agreed to settle the case by disgorging all
profits without admitting or denying the charges. Frank Lepore
paid $51,474 and Mark Lepore paid $30,168 figures that represent
double their profits to include a civil penalty while Garner
paid just $4,656 to give up his profits plus interest. (The
Legal Intelligencer; June 8, 1999)

CHEVRON CORP.: Suit Charges Role in Death of Nigerian Activists
Human rights groups plan to file a suit against Chevron Corp.
alleging that the oil company played a role in the deaths of two
protesters during a demonstration in Nigeria last year. Lawyers
for the activists said the class action would be filed at the
U.S. District Court in San Francisco, the city where the oil
company is based.

The case centers around a demonstration at the Chevron-operated
Parabe oil rig offshore the southern Niger Delta, a region that
accounts for much of the 2 million barrels/day of oil that
Nigeria produces. Two people died when soldiers and police
confronted some 100 demonstrators who had occupied the rig in
May 1998 to protest against oil company environmental practices.
Chevron has denied the allegations. (Energy Alert; June 1, 1999)

COMPUTER GAMES: Retired Major Leaguers Balk at Video Images
With a click of a mouse, the former Braves infielder Darrel
Chaney can bat against the $105 million arm of Kevin Brown or
the great Cy Young. But unlike current players, who are paid
through their union when computer-game designers use their names
and images, retired players like Chaney do not get a dime. And
unlike Babe Ruth, Joe DiMaggio and Ted Williams, many former
players do not have high-paid lawyers or estates to demand money
from game designers.

Chaney, a .217 career hitter who had more strikeouts than hits,
played 10 seasons for the Cincinnati Reds and Atlanta Braves
before retiring in 1979. He is leading a group of former major
leaguers suing 10 computer-game makers to try to get deals
similar to those of current players -- from 8.5 percent to 9
percent of a game's net sales.

Chaney, who is the chairman of the Major League Baseball Alumni
Association committee that is pursuing the lawsuit, said the
payments would be a big help to many retired players.

"There are some guys that are old and don't have much of a
pension," said Chaney, who now works for a corporate-relocation
service in Atlanta. "They have no voice for them out there."

A similar complaint is pending in Los Angeles against Warner
Communications' "Hardball 5" and the company that distributed
it. The suit was filed two years ago by a group that includes
Don Newcombe and several members of the 1955 Brooklyn Dodgers.

The former pitcher Phil Niekro, outfielder Mike Lum and catcher
Johnny Bench are the other plaintiffs in Chaney's suit. The
players want to designate the lawsuit as a class-action, meaning
thousands of former players could sign on. Lawyers say they have
talked to nearly 1,700 players interested in the lawsuit.

Pete Rose, the sport's career-hit leader, batted .370 for the
Reds in the 1975 World Series, while Chaney was without a hit in
two at-bats. But Chaney says they both are entitled to the same
compensation from any company that wants to include the Big Red
Machine in a computer game. "My World Series winning check was
the same as Pete Rose's, not a penny's difference," he said.

The game makers, who oppose class-action status, argue the suit
amounts to little more than a cash grab by players trying to
profit from statistics. Timothy Leyh, a Seattle lawyer for
Sierra Online, said that the company used only the players'
names and statistics, "historical facts that appear in any
number of commercially available textbooks." Leyh added: "It's
an interesting case, but I think it's got more fluff than
substance. The plaintiffs have made huge demands, which we think
are way out of line."

Lawyers for the game makers say many of the companies cannot
afford the players' demands. Rex Heinke, who represents Warner
in the California suit, argues that the players' identities are
incidental to game sales.

The players say even long-forgotten bench warmers are important
to the accuracy of the game. (The New York Times; June 8, 1999)

DANIEL INDUSTRIES: Settles Complaint About Emerson Electric Deal
Emerson Electric Co., the world's No. 1 maker of electric
motors, and Daniel Industries Inc., which it is buying, agreed
Monday to settle a suit filed by a Daniel shareholder who said
stock owners weren't given adequate details about the $460
million transaction.

St. Louis-based Emerson said May 13 it would buy Houston-based
Daniel, which makes flow-control instruments for the oil and gas
industry, for $21.25 per share. Daniel shareholder Charles
Miller filed suit seeking class-action status in Delaware and
accusing Daniel of concealing information about possible
alternative offers for the company.

The companies said Daniel will amend statements provided to the
Securities and Exchange Commission about the acquisition as part
of the settlement, which is subject to approval by a judge. (St.
Louis Post-Dispatch; June 8, 1999)

FIDELITY NATIONAL: Federal Suit Charges Misuse of Escrow Funds
Fidelity National Financial Inc., which was hit last month with
a class-action lawsuit filed by the state of California, is
facing a similar federal suit. Both actions allege that the
Irvine title insurer overcharged home buyers for services and
illegally kept interest earned on escrow funds.

The federal suit was filed Thursday by the San Francisco law
firm Lieff, Cabraser, Heimann & Bernstein on behalf of Betty P.
Lopez-Jurado, a Fidelity customer in San Francisco who said she
lost interest on escrow funds, and others like her.

An attorney for Fidelity denied any wrongdoing and said the
company hopes to settle the state's lawsuit soon. Fidelity was
sued May 19 by state Controller Kathleen Connell. (Los Angeles
Times; June 8, 1999)

INTEK GLOBAL: Securicor's Acquisition Proposal Draws Complaint
Robert J. Shiver, chairman and chief executive officer of Intek
Global Corporation (NASDAQ:IGLC), announced the filing of a
class action complaint against the Company, Securicor plc and
the Board of Directors of Intek Global, seeking injunctive and
other relief relating to a proposal by Securicor Communications
Limited. Intek Global had announced Securicor's proposal, which
provides for a business combination transaction pursuant to
which Intek Global would become a wholly owned subsidiary and
Intek Global stockholders would receive $ 2.75 in cash per share
for Intek Global stock.

Intek Global develops, manufactures, distributes and licenses
wireless communications technology, products and services for
the global wireless communications marketplace. Securicor plc is
a major U.K.-based international organization with core
businesses in security services, parcel and freight
distribution, and fixed and mobile telecommunications. Its
telecommunications interests include approximately 40 percent
ownership in Cellnet, a U.K. cellular operator which currently
has in excess of 2 million subscribers. Securicor's shares are
traded on the London Stock Exchange (Symbol: "Securicor")

MATSUSHITA ELECTRIC: Shareholder Suit Over MCA Deal Dismissed
A Federal appeals court dismissed a shareholder class-action
suit yesterday against the Matsushita Electric Industrial
Company. The case involved the $6.6 billion purchase of MCA Inc.
in 1990 by Matsushita, which made a side deal with Lew
Wasserman, then the chairman of MCA. Mr. Wasserman got a tax-
free arrangement in which he received preferred stock with an
8.25 percent dividend for his MCA shares; other shareholders
received cash payments, which were subject to tax.

In 1990 a class-action suit was filed in United States District
Court in Los Angeles contending that the arrangement made Mr.
Wasserman's shares more valuable than those of the other

The court dismissed the case, and the shareholders took the suit
to the United States Court of Appeals for the Ninth Circuit.
While the Federal case was pending, Matsushita settled a related
action in Delaware Chancery Court.

The appeals court refused to recognize the dismissal even though
the United States Supreme Court held that the Delaware judgment
was binding. But yesterday the appeals court reversed its
position and dismissed the case.

Matsushita was represented by Simpson Thacher & Bartlett;
Kaufman & Kirby represented the plaintiffs. (The New York Times;
June 8, 1999)

NATIVE AMERICANS: Interior Dept. Can't Account for Trust Funds
The Wall Street Journal (June 7) reported US District Judge
Royce Lamberth, "sweeping aside the Federal government's claims
that the common law of trusts doesn't apply to a banking system
it keeps on behalf of about 300,000 Indians, ordered that a
trial on Indian allegations of abuse and mismanagement begin on
Thursday." The class-action case "could cost the Treasury
hundreds of millions of dollars in loss claims from Indians
going back to the 1880s."

Lamberth "noted in an opinion that after five years, the
Interior Department is still unable to provide five main Indian
plaintiffs in the case with an accounting of their money." The
records for the five are intermingled with thousands of other
records. A special master appointed by the judge reported Monday
that the records are sometimes kept in a "haphazard manner."
(The Bulletin's Frontrunner; June 8, 1999)

PRUDENTIAL INSURANCE: Pays $1 Billion for Churning Policies
Prudential Insurance Co. of America has paid about $ 1 billion
to 250,000 policyholders in a class-action lawsuit that claimed
the company's agents misled customers, a Prudential spokesman
said. Prudential has contacted 649,000 claimants with details of
the settlement.

Prudential in 1997 settled allegations its agents persuaded
customers to buy life insurance policies using questionable
methods. Claimants charged Prudential agents engaged in a number
of questionable sales practices, including "churning," in which
agents persuade policyholders to buy new coverage using existing
policies to pay for the purchase. (The Detroit News; June 8,

According to the New York Times, about 20 percent of the
claimants qualified for the highest level of relief, a full
refund with interest, or a paid-up policy. The bulk, 64 percent,
are to get partial refunds or adjustments to their policy.
Nearly 81,000 claimants, or more than 12 percent, were told they
probably will not get anything because they failed to prove that
they were misled or that they were victims of the types of abuse
the settlement was intended to remedy, Prudential said. The
remainder, about 3 percent, bought policies during years not
covered by the settlement or products not covered in the deal.

The settlement was approved in March 1997 by a Federal judge in
Newark, where Prudential is based. The payout could be among the
largest ever in class-action litigation.

In addition to the class-action compensation, Prudential has
paid about $70 million in penalties to the 50 states and
Washington, D.C. (The New York Times; June 8, 1999)

SAVINGS BANK: Insurer Asks for Ruling to Avoid Distributing Cash
The Boston Globe reports that Savings Bank Life Insurance Co. is
asking state regulators to issue a ruling that could mean the
company won't have to distribute millions of dollars to its
policyholders. Woburn-based SBLI is requesting the ruling from
Insurance Commissioner Linda Ruthardt, even while it's entangled
in a lawsuit with policyholders who argue the company should
distribute $60 million to them because it is excess cash.

Jason Adkins, an attorney representing 350,000 to 400,000
policyholders in a class-action suit against the company, said
Savings Bank "would like to take the matter out of the hands of
the court." Adkins said policyholders are arguing in the suit
filed last year in Suffolk Superior Court that the company has
too much money socked away from premiums paid in and from
returns on its investments.

Thomas Maffei, the attorney representing Savings Bank, said the
company believes it needs the money - and it wants Ruthardt to
rule that way. Insurance Division spokesman Chris Goetcheus said
the commissioner was "taking the matter under review." (The
Boston Globe; June 8, 1999)

SECURITIES LITIGATION: Plaintiff Attys. Take Stock in Defendants
William Lerach and his brethren in the plaintiffs securities bar
have long complained about the way public companies are run.
They go so far as to charge that financial fraud and chicanery
is rampant on Wall Street and in Silicon Valley. That's why it's
a little bit funny that these lawyers are heavily invested in
the very firms they have sued.

Increasingly, instead of taking cash for their fees, class
action lawyers are accepting stock as payment. The practice is
becoming more popular as targeted companies look for
alternatives to simply paying out cash to settle stock fraud
suits, and as plaintiffs attorneys try to shed the controversy
of appearing to get more out of cases than their clients. More
and more, securities frauds suits are settled with a combination
of cash and stock, with plaintiffs attorneys receiving the same
ratio of cash and stock for their fees as do class members.

For instance, if U.S. District Judge Charles Breyer signs off on
the $142 million cash and stock settlement recently proposed in
the class action against database software maker Informix Corp,
the plaintiffs firms led by Milberg Weiss Bershad Hynes & Lerach
stand to come away with some $23 million in stock.

In Newark, N.J., meanwhile, New York's Kirby, McInerney & Squire
and the other plaintiffs firms working the massive fraud suit
against real estate giant Cendant Corp. have proposed an all-
stock settlement of about $340 million. The lawyers are set to
take $34 million worth of stock for their fees if a judge
approves that settlement.

"We are putting our fees where are mouths are," lead plaintiffs
attorney Roger Kirby said in a court filing.

The stock deals aren't limited to giant class actions either. In
March, Milberg settled a case with San Diego-based Altris
Software for $2.5 million in insurance money and $1.7 million in
stock. The plaintiffs attorney take on that will be roughly 25
percent, or about $625,000 in cash and $425,000 in stock.

The reason more of these deals are getting done, at least as far
as one plaintiffs attorney is concerned, is coupon settlements.
Coupon settlements, which mostly occur in product defect cases,
are constantly coming under fire from a wide variety of critics,
including judges, because the plaintiffs end with virtually
useless "coupons" that give discounts on future product
purchases while their lawyers end up with oodles of cash.

Dozens of such cases have gotten attention, with one of the more
notorious being the 1997 San Francisco Superior Court computer
monitor action in which each class member got a $13 discount on
a computer purchase as part of the settlement. The attorneys
walked away with $6.1 million in cash.

"As a pattern developed with these kinds of settlements,
everyone wanted to throw up," New York plaintiffs attorney
Howard Sirota said of the plaintiff bar's image. "The coupon
cases were at rock bottom."

So with critics blasting away and judges increasingly skeptical,
plaintiffs attorneys started taking what their clients got. If
the class receives half its settlement in cash and half in
stock, then the attorneys take the same ratio.

It's an arrangement that most ethics experts find palatable.
"The class can rest comfortably knowing the lawyers aren't being
treated any differently," said Columbia law professor Samuel
Isacharoff. Isacharoff, an attorneys fee expert, made some waves
last year when he criticized fee agreements contained in the
global tobacco settlement. Isacharoff said he sees no conflict,
either, in the plaintiffs attorneys taking stock in companies
that they have sued. If anything, Isacharoff said, it probably
motivates the lawyers to cut the best deal possible for the

At the same time, the arrangement also appeals to cash-strapped
defendants who are looking to get out from under a class action
without going into bankruptcy. They'll max out their director
and officer insurance policies, which generally pay out $1
million to $2 million, and then try to float some more stock to
settle the litigation.

In _In re Informix Corp. Securities Litigation_, 97-1289, the
company faced tremendous exposure -- one attorney believes as
much as $1 billion -- because it acknowledged in 1997 that it
had overstated income by nearly $250 million and had to restate
earnings reports for a 31/2 year period.

A straight cash settlement of the dozens of cases brought
against the company would have forced it into bankruptcy -- a
prospect that neither side wanted. The $91 million offered in
stock allows the company to live -- and perhaps prosper --
another day, and gives alleged victims something more than a

Still, the arrangement has its critics. "You're diluting the
interests of current shareholders to compensate the class," said
Stanford law professor Joseph Grundfest, former head of the
Securities and Exchange Commission.

The new stock issued to settle such suits usually comes with a
fail-safe proviso that normal stock holders don't get. Last
year, for instance, Lieff, Cabraser, Heimann & Bernstein helped
settle cases against California Micro Devices for $6 million in
cash and $7 million in stock. The class members in _In re
California Micro Devices_, 94-2817, and the lawyers receiving
the stock, were promised that each California Micro share will
be worth at least $11.50. If the stock doesn't reach that price
during the next three years, then Cal Micro will have to pay the
difference between the average high of its stock and $11.50.

Cal Micro has not traded higher than $9 a share since the
settlement. It closed at $2 Friday, and it appears likely that
the company will have to fork over more cash than it hoped.
Should that happen, it would almost certainly drive the stock
price down even farther.

But attorneys on both sides of the aisle point out that, either
way, the companies have to pay. "Cash or stock, it has the same
effect on the income statement," said Wilson Sonsini Goodrich &
Rosati partner Boris Feldman. "Either way the company has to
book it as a hit."

Defense attorneys such as Feldman say that settling with stock
helps their clients, and that the concerns about dilution are
overblown. In the case of Cendant, for example, the settlement
would require the company to issue 19 million new shares, or
about 2 percent of all its stock.

The Cendant settlement proposal comes with another noteworthy
twist. Plaintiffs attorneys have proposed not only to take their
fees out in stock, but in stock from the unclaimed class fund.

Sirota complains that this proposal will discourage lawyers from
putting on a serious effort to notify all qualified class

But lead plaintiffs attorney Kirby points out that any money not
claimed by qualified class members would only revert back to
Cendant. U.S. District Judge William Walls of Newark has taken
the proposed Cendant settlement under submission. (The Recorder;
June 8, 1999)

UNITED STATES: Court Says Congress Failed to Reserve CBM Deposit
The Supreme Court ruled yesterday that Western landowners own
and may sell vast storehouses of methane gas in coal beds under
their property. By reversing the 10th U.S. Circuit Court of
Appeals, the court lifted a cloud over title to hundreds of
billions of dollars in coal-bed methane gas (CBM) deposits.

"Congress does not appear to have given consideration to the
possibility that CBM gas would one day be a profitable energy
source developed on a large scale," Justice Anthony M. Kennedy
wrote in a 7-1 decision for gas and oil companies in a class-
action case pitting the Amoco Production Co. against the
Southern Ute Indian tribe and the federal government.

The immediate issue involved $200 million worth of methane in La
Plata County, Colo., and affects what the Gas Research Institute
estimates is a 250 trillion-cubic-foot storehouse of CBM in New
Mexico, Wyoming, Montana, Colorado and Utah worth between $375
billion and $500 billion.

"It is a very important decision. It cost a lot of landowners
and lessees a great deal of anxiety. Once the court ruled, it
was going to affect somebody a lot," said district lawyer L. Poe
Leggette of Fulbright & Jaworski, who represents Wyoming gas
interests in the case. His clients, two dozen gas producers and
150 landowners, control interests in much of Wyoming's 70
trillion cubic feet of coal-bed methane, which he valued at $50
billion to $100 billion.

Justice Kennedy said 1909 and 1910 laws reserving coal rights
for the government did not include CBM, which was then viewed
solely as a dangerous explosive nuisance known as "firedamp." He
rejected the Interior Department's January decision to support
the tribe's claim to gas in coal deposits under the reservation.

Along with Justice Kennedy, those in the majority were Chief
Justice William H. Rehnquist, Justices John Paul Stevens, Sandra
Day O'Connor, Antonin Scalia, David H. Souter and Clarence

Justice Ruth Bader Ginsburg dissented, saying vagueness in the
old laws should be resolved for the government. "Ambiguities in
land grants are construed in favor of the sovereign," she wrote.

Justice Stephen G. Breyer did not participate, apparently
because his wife owns stock in BP Amoco.

Justice Kennedy pointed out that several bills seeking to
reserve gas rights to the government, along with coal rights,
failed to pass. He also said Congress passed laws 20 years
earlier setting safety standards for handling mine gas, and so
was aware of it, if not of its potential as an asset instead of
a liability.

In another decision, the court rejected claims for overtime pay
by 14,122 current and former federal law enforcement officers
who sought four years of overtime pay in addition to two years
of pay won in a settlement.

USAID: Senior Agency Employees Complain of Age Discrimination
A group of former senior-level federal employees who worked for
the U.S. Agency for International Development will be allowed to
show, after a district court ruling, that they were targeted in
a reduction in force because of their age.

In their class action suit, the plaintiffs, who are all over 40,
claim that top management at the USAID, including its
administrator, J. Brian Atwood, conducted an RIF with the motive
to scale back the number of older foreign service employees and
to bring in new, younger employees to eventually take their

The USAID had moved for summary judgement, but a district court
in Washington, D.C., found that the plaintiffs submitted
evidence from which a jury could "reasonably" find that the RIF
disadvantaged older workers in favor of younger employees.

In September 1996, the USAID terminated 91 employees as the
culmination of an RIF effort. The plaintiffs, 37 of the
terminated employees, filed suit in district court.

With one exception, the RIF affected only employees over 40. The
USAID asserted that the RIF took place because of budget cuts
expected in 1996 and 1997. The agency needed to reduce the
number of direct hire employees by at least 320. Foreign service
officers at the senior levels were targeted not because they
were older, but because the agency had a high concentration of

In one part of their claim, the plaintiffs attempted to show
that the RIF had a "disparate impact" on older workers. Under
the disparate impact theory, an employer can be liable for
discrimination if it has a policy or practice that adversely
affects a particular group of people. But the court ruled that
older workers are exempted, citing a decision from the U.S.
Supreme Court.

In Hazen Paper Co. v. Biggins, the high court held that when an
employer acts on the basis of a factor empirically correlated
with age, such as pension status or seniority, the employer is
not guilty of discrimination.

In further support for its decision, the district court noted
that other courts have ruled against disparate impact claims
alleged under the Age Discrimination in Employment Act after
finding that they are not supported by statutory language or by
policy considerations.

Nonetheless, the court still found reason to believe that the
plaintiffs were targeted in the RIF. They presented several
comments from Atwood that reflected his intention to replace
older employees.

Specifically, Atwood told The Washington Post that he planned to
"move out" 50 senior foreign service officers to fill their slot
with "younger people." Also, Atwood testified before Congress
that the USAID needed "young blood."

The plaintiffs also submitted the testimony of Dennis Chandler,
a former USAID foreign service officer who had reached the
position of deputy assistant administrator for the Near East -
the most senior career position in the bureau. Chandler was
among 50 senior foreign service officials terminated in 1993
when the agency decided not to grant him a "limited career

Chandler stated that Atwood called him in for a one-on-one
conversation at the time of the dismissals. During the
conversation, Atwood allegedly said the USAID would "have to
make room for young people."

The plaintiffs also pointed to the statements of key USAID
officials as an indication of their "obsession" with the desire
to attract younger employees for the International Development
Intern Program.

The USAID denied Chandler's allegations. The agency also argued
that Atwood's testimony to Congress and the comments about the
IDI program did not relate to the RIF decision itself.

But the court found that Atwood's statements to Chandler, "if
true, reflect an intent to replace older USAID employees with
much younger workers." The court also found that Atwood's
comments may have had a "trickle down" impact on the agency's

The "evidence, when considered as a whole, could lead a
reasonable jury to conclude that USAID top management, including
defendant Atwood, had a concern about the older age of much of
its foreign service staff, as well as an interest in replacing
these workers with new, younger employees," the court said.
(Federal Human Resources Week; May 31, 1999)

VOLUSIA COUNTY: Unionized Officers Object to Missing Holiday Pay
Corrections officers at Volusia County Branch Jail and Volusia
County Correctional Institution in Florida intend to file a
second class-action lawsuit over working conditions. A total of
70 officers said the county owes them about 2,500 each for
shortchanging their holiday pay for more than three years.

Nearly 90 percent of Volusia County corrections officers voted
to join the International Brotherhood of Teamsters Local-385
three days before the announcement. (Corrections Professional;
June 4, 1999)

WALT DISNEY: Feather Fly in Battle Over Mighty Ducks' Bucks
To most people, the Mighty Ducks conjures up images of a
commercially successful trilogy of Disney movies about a rag-tag
bunch of hockey-playing kids that spawned a real-life NHL hockey
club owned by the mouse-eared studio. But, according to a story
in The Recorder, the feel-good films and their genuine ice-
skating progeny have also spawned a frosty lawsuit that's come
to be known in entertainment law circles as "the mighty bucks."

And that's precisely what screenwriter Steven Brill -- along
with a number of his Hollywood colleagues -- is hoping to get
out of it. Brill, who wrote the original _Mighty Ducks_ film and
two sequels, has aimed a legal hockey puck right at Disney's
padded pocketbook. At the moment, depositions are being taken in
Brill's Los Angeles federal suit, which claims Disney profited
immensely from his labors without sharing any of the profits.

In particular, Brill alleges that the studio owes him 5 percent
of revenues from the NHL Ducks' merchandise sales, box office
receipts and TV broadcasting rights, which all adds up to one
heckuva hat trick. Disney, for example, has already reaped an
estimated $1 billion in team-related profits. And according to
Brill's complaint, _Brill v. Walt Disney Pictures_, 98-10083,
Mighty Ducks key chains, T-shirts and other trinkets have
consistently out- sold the combined merchandise offered by all
other NHL teams.

Question is, can Brill break some new legal ice in behalf of
screenwriters, who have long claimed they've been routinely
cheated out of profits from movie-related theme parks and other
cash-generating endeavors derived from their big-screen scripts?
"In the Disney world, life imitates art. And Steven Brill
created the art," says Pierce O'Donnell, a partner at L.A.'s
O'Donnell & Shaeffer who represents the screenwriter. Others
around town think the lawyer and his client are onto something.
"I think Brill's going to win something, and I think it's going
to be something big," predicts Jay Cooper, an entertainment
partner at Manatt, Phelps & Phillips.

Though it was filed in federal court in December, the Ducks case
has attracted renewed attention of late because of parallels to
ex-Disney executive Jeffrey Katzenberg's ongoing case against
the studio. Katzenberg, of course, is seeking more than $500
million worth of unpaid bonuses and other profits he claims to
have helped generate before leaving Disney in 1996. Cooper and
others see the Mighty Ducks case as an offshoot of the
Katzenberg dispute in that both represent claims against Disney
for downstream profits. Katzenberg, it's worth mentioning, is
also seeking a share of merchandising and other profits from
films he had a hand in producing -- including _The Mighty

Unlike Katzenberg, however, Brill's case is governed by the
basic Writers Guild contract, which provides that screenwriters
are entitled to 5 percent of the "absolute gross that the studio
receives from exploiting unique objects and things." Which means
the outcome of Brill's suit could well hinge on the definition
of a "thing."

In Hollywood, of course, the money's always the thing, which
nobody knows better than Disney. In his autobiography, _Work in
Progress_, Disney chief Michael Eisner acknowledged that the
studio decided to name its NHL team the Mighty Ducks because
doing so "gave us instant national awareness and an opportunity
to cross-promote with our _Mighty Ducks_ movie franchise." And
at a press conference held to announce the formation of the
team, Eisner surrounded himself with actors from the movie and
led everyone in a "team quack," which came straight out of the

The Brill case will be decided by U.S. District Judge Edward
Rafeedie, who has presided over a recent spate of key studio
cases, among them the battle between Sony and MGM over the
rights to the James Bond film franchise. O'Donnell represented
MGM in that case.

Brill originally sued Disney over the Ducks in 1995 in state
court. Disney removed the case to federal court where, in April,
the studio lost a motion to dismiss. Meanwhile, the case has
captured the interest of other lawyers who represent
screenwriters. There's even been talk of a possible merchandise-
related class action against the studios.

Disney, is keeping its bill shut, as are its outside counsel at
Mitchell, Silberberg & Knupp. The firm has formed a team of its
own to handle the case: entertainment department head William
Cole and litigator Daniel Petrocelli, who scored plenty of goals
while representing Fred Goldman and his family in their civil
suit against O.J. Simpson. It is a curious and potentially
effective combo -- the respected but Clark Kent-ish Cole
alongside the bombastic (some might say slick) Petrocelli. The
legal ego factor is equally matched on Brill's side. O'Donnell
has captured more than his share of media attention since his
successful net-profits case against Paramount over Art
Buchwald's stake in _Coming to America_.

Still, when it comes to Disney-related litigation, mum is almost
always the word. Several top-flight L.A. entertainment lawyers
who represent Disney on other matters firmly declined comment on
the Mighty Ducks matchup. After being reminded that Disney was a
defendant in the case, one attorney took the usual no-comment
response a step further: "Oh my god, we didn't even have this
conversation." (The Recorder; June 8, 1999)


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
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Group, Inc., Washington, DC. Peter A. Chapman, Editor. Kent L.
Mannis, Project Editor.

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

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