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                C L A S S   A C T I O N   R E P O R T E R

                Friday, August 27, 1999, Vol. 1,  No. 145

                              Headlines

ALLSTATE INSURANCE: Sued For Urging Victims To Settle Without Attorneys
AUTO INSURANCE: Suits Challenge Insurers' Use Of Cheaper Auto Parts
CITGO PETROLEUM: Defending Suits Over Contamination Of Water Supplies
CITGO PETROLEUM: Sued In Louisiana Over Racism In Employment Practices
CITGO PETROLEUM: Sued In Texas For Neighbor’s Reduced Property Value

CITGO PETROLEUM: Suits Over Corpus Christi Explosion And Fire Pending
COCA-COLA: Account Managers Not Qualified For OT Pay, 10th Cir. Rules
CORNING INC.: Dow Corning Seeks Bankruptcy To Stay Breast Implant Suits
CORNING INC.: Indemnifies Quest Diagnostics Of Claims Over Billing
CORNING INC.: Will Defend Securities Suit Pending In New York

CORNING INC: May Settle For Suits In Arizona Over Hazardous Waste Sites
CYLINK CORP.: Will Defend Against Securities Suits Filed In California
FEN-PHEN: HMO Louisiana Seeks To Represent Health Insurers Against AHP
HOLOCAUST VICTIMS: Target Date For Slave Labor Settlement Won’t Be Met
JUSTICE DEPT.: Lawyers File Suit Over OT; Dept. Keeps 2 Sets Of Books

LATEX GLOVES: Common Benefit Fund Established in MDL
LOCAL PROPERTY: Lawyers Sue For Rights Of Local Property Owners
QUANTUM CORP: California Ct. Dismissed Securities And Derivative Suits
SABRATEK CORP.: Milberg To Expand Period Of Securities Suit In Illinois
SABRATEK CORP.: Wolf Popper Files Securities Suit In Illinois

TELXON CORP.: Contests Post-Intervention Claims Re Derivative Suit
TELXON CORP.: Contests Securities Fraud Suits In Ohio
TELXON CORP.: Rejects Purchase Offer; Decries Merit Of Fiduciary Suit
TELXON CORP.: Sued Over Contamination Re Wynnwood Facility In Texas
TOBACCO LITIGATION: Fed Judge Remands Suit Against Philip Morris

UNISTAR FINANCIAL: Kirby McInerney Commences Securities Suit In Texas
WALT DISNEY: Agrees To Settle For Suit Over Retirees’ Medical Insurance

                              *********

ALLSTATE INSURANCE: Sued For Urging Victims To Settle Without Attorneys
-----------------------------------------------------------------------
The Northbrook, Ill., insurer is Connecticut's largest auto insurance
carrier, and has engendered the wrath of plaintiffs' lawyers nationwide.
Since the mid-90s it has mailed fliers to unrepresented accident victims
with claims against Allstate-insured drivers, urging them to settle
without hiring lawyers.

Days after stepping down as president of the Connecticut Trial Lawyers
Association last summer, Robert I. Reardon Jr., of New London's Reardon
Law Firm, filed suit against Allstate on behalf of four named plaintiffs
and other recipients of Allstate's "Do I Need An Attorney" fliers. The
suit alleged bad-faith violations of Connecticut common law, the
Connecticut Unfair Insurance Practices Act and Connecticut's Unfair Trade
Practices Act, known respectively as CUIPA and CUTPA, and accused the
insurer of reckless behavior.

Allstate hit back with the state's largest firm, Day, Berry & Howard,
retaining litigation department head Thomas J. Groark Jr.

In a July 28 ruling on Groark's motion to dismiss, U.S. District Judge
Peter C. Dorsey ruled against the insurer's lawyers -- whose arguments
were founded in contract principles. He upheld the tort lawyers'
arguments, which were, appropriately enough, grounded in tort. No Supreme
Law

A key question before Dorsey was whether third parties not insured by a
particular insurer can sue the insurer under any theory of Connecticut
law. Dorsey finds that no appellate court pointed the way on these
matters, but sifts through the trial court cases offered by both sides to
sustain common law bad faith, CUTPA and CUIPA grounds for proceeding with
the lawsuit.

In Sandra L. White v. Allstate, Dorsey writes "this case raises unsettled
issues of Connecticut Law, which may be resolved by anticipating how the
Connecticut Supreme Court would rule." He then proceeds to do so, finding
uniformly for the plaintiffs.

They allege that Allstate's information campaign is misleading by implying
that not hiring an attorney may result in a quicker settlement, without
attorneys' fees. The literature does not disclose that Allstate, on
average, pays significantly less in settlements to accident victims, even
after attorneys' fees are deducted. (An Allstate training manual obtained
by The Connecticut Law Tribune discloses to adjusters that unrepresented
clients settle for an average of $3,464 in soft tissue fender-bender type
claims, while those with attorneys settle for an average of $7,450.)

Allstate's claim that it considers potential plaintiffs "customers"
fundamentally distorts the legal and economic relationship, says Reardon
in an interview. In the 27-page brief opposing Allstate's motion to
dismiss, Reardon and Scott D. Camassar assert that beginning in 1995,
Allstate began an aggressive campaign in which "all Allstate claims
adjusters were trained to systematically and aggressively pursue initial
contact with accident victims" to discourage them from retaining lawyers.

When the accident victims followed this advice, "Allstate immediately
undertook an immediate investigation of their claims, including obtaining
an unrestricted authorization to receive copies of the victims' medical
and other confidential records, photographing their injuries and vehicle
damages, taking written or tape recorded statements, and contacting
witnesses." Allstate's Arguments

In a Jan. 27 motion to dismiss for failure to state a legal claim,
Allstate argued two key points: First, that "Connecticut courts have
consistently held an insurer owes no duty of good faith against a third
party with claims against an insured, that CUIPA does not explicitly
authorize a right to such third-party claims, and that state courts have
refused to create one, absent a clear mandate from the Legislature."

Secondly, Allstate contended a recklessness claim seeking punitive damages
under CUTPA "fails because Allstate has no common law or statutory duty to
settle fairly with third-party claimants."

A lack of direct high court authority has caused both Allstate and the
plaintiffs to draw heavily on unreported Superior Court opinions and cases
from other states.

One important case in this legally desolate field is the 1977 decision
Grand Sheet Metal Products v. Protection Mutual of then-Superior Court
Judge T. Clark Hull. In this decision, the plaintiffs argued in their
brief, Hull " adopted California precedent as the foundation for our bad
faith jurisprudence, recognizing the tort in a first-party case."

There, Hull cited the 1973 California case of Gruenberg v. Aetna for the
rule that an insurer's duty to act in good faith "is imminent in the
contract whether the company is attending to the claims of third persons
against the insured or the claims of the insured itself."

Recognizing that Connecticut had no law on point, Hull took the expansive
position of adopting the California policy, "in light of developing law
and sound public policy."

That citation, in a Jan. 28 brief, prompted a speedy additional brief from
Groark and Peter M. Holland the next day, in which Allstate made its point
with boldfaced type: The Hull case is a factually different matter,
because the plaintiffs are not insured under Allstate policies. "They are
third- party claimants. Grand Sheet Metal simply is not relevant here."
California's OK

Dorsey read the existing law to embrace Hull's approach, citing Gruenberg
v. Aetna as "the California case from which Connecticut drew its
jurisprudence."

Tracing the roots of the California precedent, Dorsey writes that the
California Supreme Court found the duty on the part of an insurer to act
in good faith is rooted in both tort and contract principles. Earlier
California cases considered this duty in light of third-party claims.
"Accordingly," Dorsey concludes, "plaintiffs need not allege the existence
of a contract to recover under the tort of bad faith."

The bare allegations of the plaintiffs are the type of wrong that
constitutes bad faith, Dorsey finds, without going to the merits of the
case. Intentionally misleading plaintiffs to avoid paying them
compensation to which they were entitled, and breaking affirmative
promises are the type of injuries that, if proven, could constitute bad
faith.

Finally, on the common law bad faith issue, Dorsey finds the plaintiffs'
injuries -- getting less money than they might otherwise -- were
sufficient to give them standing to sue.

Under Connecticut's Unfair Trade Practices Act, third parties are allowed
to bring a claim for CUIPA violations, Dorsey concludes, and CUTPA doesn't
require a consumer relationship. Thus, he reasons, the plaintiffs can
bring a CUTPA claim based on either the terms of the statute or Allstate's
alleged behavior, which creates a nexus between it and the plaintiffs.

While not specifically upholding a CUIPA cause of action for the
plaintiffs in this case, Dorsey said Allstate cannot accurately claim that
none exists in Connecticut. "It remains unclear whether the statute
creates a private cause of action."

In any event, CUTPA is available, he concludes, citing the 1993 case of
Tackling v. Shinerman, a New London Superior Court case. It found that a
real estate appraiser could be kept as a defendant in a lead paint
poisoning case, surviving a motion to dismiss, because there were genuine
issues of fact regarding a duty to a third-party home purchaser.

Dorsey makes quick work of Allstate's claim it owes no duty to the
claimants, because they are neither insured parties nor judgment
creditors. Because the plaintiffs have alleged both a common law and
statutory duty, Allstate's argument fails, Dorsey concludes. Coast to
Coast Cases

Reardon and Camassar are in touch with trial lawyers engaged in similar
litigation against Allstate across the country. "There are lawsuits
pending in Illinois, North Carolina, Colorado, New Mexico, Vermont and I
just got a ruling in one in Pennsylvania" says Reardon.

Trial lawyers in 1997 pressed a statute through the Connecticut
Legislature to make it illegal to send literature discouraging such
potential plaintiffs from hiring lawyers. They were unable to get
enforcement action from the state Insurance Department, but a September
1998 opinion by Attorney General Richard Blumenthal found that "an
objectively reasonable person would conclude that the flyer, read as a
whole, 'advises against the need for or discourages the retention of' an
attorney," and in fact violates the 1997 public act.

After Blumenthal's ruling, Insurance Commissioner George Reider issued a
cease and desist letter to Allstate, which has stopped the mailings in
Connecticut.

Lawyers in Allstate's Northbrook, Ill., office at that time said they
considered the letters to consist of factual and accurate information,
protected as free speech under the U.S. Constitution.

Groark, of Day, Berry, says, "The court elected not to dismiss the case at
this early stage. There's certainly no comment on the merits of the case
here. " (The Connecticut Law Tribune 8-9-1999)


AUTO INSURANCE: Suits Challenge Insurers' Use Of Cheaper Auto Parts
-------------------------------------------------------------------
The insurance industry's preference for cheaper auto-body parts is under
attack in courts from Arizona to Florida. State Farm is already at trial
defending its practice, while at least seven other insurers face lawsuits
filed this year.

Most of the lawsuits -- there are 14 in all -- were filed shortly after
the publication of a February Consumer Reports article criticizing the
parts. One, in Maryland, was filed Monday.

The lawsuits accuse Allstate, Geico, Nationwide, USAA, Progressive,
Metropolitan and Farmers Group of Insurance Companies of breach of
contract and fraud. So far, the State Farm lawsuit -- a class action filed
in Williamson County Circuit Court in Marion representing 5.5 million
current and former policyholders -- is the only case to go to trial.

Auto insurance customers contend the use of parts modeled on factory
originals but made without the benefit of factory specifications failed to
restore their cars to pre-loss conditions, as required in most policies.

But some say the lawsuits, if successful, will hurt consumers by reducing
the use of such aftermarket parts, causing prices and premiums to rise.
"All other things being equal -- and that's a big if -- it's a good thing
for consumers to have generic products on the market," said Brian Wolfman
of the consumer group Public Citizen. "The presence of generic products
brings down the cost of other products."

The State Farm trial continued in its second week with testimony from a
body shop owner who said aftermarket parts never match the quality
produced by factories run for Ford, Toyota and other automakers. "If it's
not the same in thickness, if it's not the same in weld, then it's not
safe, either," John Kirby of Mobile, Ala., said in videotaped testimony.

Previously, witnesses have testified that State Farm documents also call
into question the parts' quality. In one, State Farm lawyers suggested
eliminating the use of aftermarket sheet metal parts due to the increasing
cost of litigation.

Although State Farm has settled lawsuits over use of the parts in Cook
County, Ill., and California, State Farm has denied allegations that it
uses unsafe or inferior parts, saying its practice of using "quality
replacement parts" saves customers' money.

Steve Berman, a Seattle attorney handling lawsuits against Allstate,
Nationwide, Geico and USAA in Arizona, Illinois, Ohio and Washington
state, said those cases are almost identical to the State Farm claim.

The Arizona lawsuit accuses Allstate and Geico of violating that state's
insurance code, federal racketeering laws and consumer fraud laws by
forcing shops to use aftermarket parts and failing to disclose their use
to consumers. The lawsuit, filed in January, is awaiting class-action
certification. (Newshound 8-25-1999)


CITGO PETROLEUM: Defending Suits Over Contamination Of Water Supplies
---------------------------------------------------------------------
CITGO is among defendants to lawsuits in California and North Carolina
alleging contamination of water supplies by methyl tertiary butyl ether
("MTBE"), a component of gasoline. The action in California was filed in
November 1998 by the South Tahoe Public Utility District and CITGO was
added as a defendant in February 1999. The North Carolina case, filed in
January 1999, is a putative class action on behalf of owners of water
wells and other drinking water supplies in the state. Both actions allege
that MTBE poses public health risks. Both actions seek damages as well as
remediation of the alleged contamination. These matters are in early
stages and there has been no discovery conducted against CITGO. CITGO has
denied all of the allegations and is pursuing its defenses.

Various lawsuits and claims arising in the ordinary course of business are
pending against the Company. The Company records accruals for potential
losses when, in management's opinion, such losses are probable and
reasonably estimable. If known lawsuits and claims were to be determined
in a manner adverse to the Company, and in amounts greater than the
Company's accruals, then such determinations could have a material adverse
effect on the Company's results of operations in a given reporting period.
However, in management's opinion the ultimate resolution of these lawsuits
and claims will not exceed, by a material amount, the amount of the
accruals and the insurance coverage available to the Company. This opinion
is based upon management's and counsel's current assessment of these
lawsuits and claims. The most significant lawsuits and claims are
discussed below.


CITGO PETROLEUM: Sued In Louisiana Over Racism In Employment Practices
----------------------------------------------------------------------
Litigation is pending in federal court in Lake Charles, Louisiana, against
CITGO by a number of current and former Lake Charles refinery employees
and applicants asserting claims of racial discrimination in connection
with CITGO's employment practices. Trials in this case are set to begin in
the fall of 1999.


CITGO PETROLEUM: Sued In Texas For Neighbor’s Reduced Property Value
--------------------------------------------------------------------
A class action lawsuit is pending in Corpus Christi, Texas state court
against CITGO and other operators and owners of nearby industrial
facilities which claims damages for reduced value of residential
properties located in the vicinity of the industrial facilities as a
result of air, soil and groundwater contamination. Trial is scheduled for
January 2000. CITGO has contracted to purchase approximately 267
properties that were included in the lawsuit and are in a neighborhood
adjacent to CITGO's Corpus Christi refinery and settle the property damage
claims relating to these properties. CITGO has offers open to purchase the
remaining eight properties in the neighborhood. Related to this purchase,
$15.7 million was expensed in 1997. Two related personal injury and
wrongful death lawsuits were filed against the same defendants in 1996,
one of which is scheduled for trial in 2000; a trial date for the other
case has not been set.


CITGO PETROLEUM: Suits Over Corpus Christi Explosion And Fire Pending
---------------------------------------------------------------------
In May 1997, an explosion and fire occurred at CITGO's Corpus Christi
refinery. No serious personal injuries were reported. CITGO received
approximately 7,500 individual claims for personal injury and property
damage related to the above noted incident. Approximately 1,300 of these
claims have been resolved for amounts which individually and collectively
were not material. There are presently seventeen lawsuits filed on behalf
of approximately 9,000 individuals arising out of this incident pending
against CITGO in federal and state courts in Corpus Christi alleging
property damages, personal injury and punitive damages. A trial of one of
the federal court lawsuits in October 1998 involving ten bellwether
plaintiffs, out of approximately 400 plaintiffs, resulted in a verdict for
CITGO. The remaining plaintiffs in this case have agreed to settle for an
immaterial amount.


COCA-COLA: Account Managers Not Qualified For OT Pay, 10th Cir. Rules
--------------------------------------------------------------------
Account Managers Are Denied Compensation for Overtime: Because they fell
within the Department of Labor's definition of "outside salesmen," a group
of account managers were found not to qualify for overtime compensation
under the Fair Labor Standards Act.

The plaintiffs worked an average of between 55 to 72 hours per week as
advanced sales representatives and account managers. Although delivery
drivers and merchandisers were paid overtime, the plaintiffs were not.
They brought suit under the FLSA. The employer argued that the FLSA's
overtime compensation requirements were not applicable to the plaintiffs,
because of the statutory exemptions governing outside salesmen and because
of the exemption governing positions consisting of a combination of two or
more exempt jobs.

Under Department of Labor regulations, an "outside salesman" is an
employee regularly engaged away from the employer's place of business. In
addition, the employee's other duties must not exceed 20 percent of the
work week, but work "incidental to and in conjunction with [the]
employee's own outside sales or solicitations, including incidental
deliveries and collections, shall not be regarded as nonexempt work." The
issue was whether the 20 percent to 65 percent of the plaintiffs' time
spent "merchandising" was "incidental to and in conjunction with" their
sales responsibilities, and thus exempt from overtime requirements. The
district court found this time was not exempt, and the employer appealed.

The Tenth Circuit reversed. The court found that the term work "incidental
to and in conjunction with" includes "any other work performed by the
employee in furthering his own sales efforts." One of the key factors to
be considered is whether the employee's efforts lead to the consummation
of a sale. The court reasoned that if an employee consummates a sale "but
also performs a variety of other tasks intended to promote the company's
products but not directly involving sales, those tasks may still be
considered 'incidental to and in conjunction with' those sales. On the
other hand, if the employee in question does not actually consummate the
sale at the location in question, then his other activities, even if
closely related to sales, are not 'incidental to and in conjunction with'
those sales under the regulations. The court agreed with the plaintiffs
that, as the Department of Labor regulations are written and as the
defendant interpreted them, "the company may be allowed to avoid paying
overtime in certain instances by assigning merchandising tasks to account
managers rather than to merchandisers. Although such an assignment may be
inequitable and subject to challenge on other grounds, the evidence in
this case does not establish a violation of the FLSA under the current
Department of Labor regulations." Ackerman v. Coca-Cola Enterprises Inc.,
No. 97-1079 (June 10). (The Corporate Counsellor, July 1999)


CORNING INC.: Dow Corning Seeks Bankruptcy To Stay Breast Implant Suits
-----------------------------------------------------------------------
Corning Inc. and The Dow Chemical Company each own 50% of the common stock
of Dow Corning Corporation. On May 15, 1995, Dow Corning sought protection
under the reorganization provisions of Chapter 11 of the United States
Bankruptcy Code. The bankruptcy proceeding is pending in the United States
Bankruptcy Court for the Eastern District of Michigan, Northern Division
(Bay City, Michigan). The effect of the bankruptcy is to stay the
prosecution against Dow Corning of approximately 19,000 breast-implant
product liability lawsuits, including 45 class actions. On December 2,
1996, Dow Corning filed its first Plan of Reorganization in the bankruptcy
case.

On January 10, 1997, the Tort Claimants Committee and the Commercial
Creditors Committee filed a joint motion to modify Dow Corning's
exclusivity with respect to filing a plan of reorganization, requesting
the right to file their own competing plan. The motion was denied by the
Bankruptcy Court in May 1997. Dow Corning filed a First Amended Plan of
Reorganization on August 25, 1997 and a Second Amended Plan of
Reorganization on February 17, The Tort Claimants Committee and other
creditor representatives opposed these Plans. As a result of extended
negotiations, Dow Corning and the Tort Claimants Committee reached certain
compromises and on November 8, 1998 jointly filed a revised Plan of
Reorganization. After hearings held in early 1999, the Federal Bankruptcy
Court ruled that the Amended Joint Plan of Reorganization filed on
February 4, 1999 (the "Joint Plan") and related disclosure materials were
adequate. These materials were mailed to claimants, who had until May 14,
1999 to return their votes on the Joint Plan.

There was strong support for the Joint Plan, with more than 94% of those
voting in favor. Dissenting classes include the U.S. Government, the
Commercial Creditors and certain miscellaneous product claimants. Various
parties filed objections. A hearing to confirm the Joint Plan began on
June 28, 1999 and ended on July 30, 1999. On July 13th the Bankruptcy
Court ruled in Dow Corning's favor on the interest rate issue raised by
the Commercial Creditors Committee, and determined that interest accruing
on Dow Corning's commercial debt after the petition date should be
calculated at the federal judgment rate of interest. The Commercial
Creditors have announced their intention to appeal this ruling. At the
conclusion of the confirmation hearings, the Bankruptcy Court ordered
various post-hearing briefs be submitted by August 20th and August 30th.
Although the Tort Claimants Committee has supported the Joint Plan, the
timing and eventual outcome of these proceedings remain uncertain.

Under the terms of the Joint Plan, Dow Corning would be required to
establish a Settlement Trust and a Litigation Facility to provide means
for tort claimants to settle or litigate their claims. Dow Corning would
have the obligation to fund the Trust and the Facility, over a period of
up to 16 years, in an amount up to approximately $3.2 billion (nominal
value), subject to the limitations, terms and in conditions stated in the
Joint Plan. Dow Corning proposes to provide the required funding over the
16 year period through a combination of cash, proceeds from insurance, and
cash flow from operations. Each of Corning and Dow Chemical have agreed to
provide a credit facility to Dow Corning of up to $150 million ($300
million in the aggregate), subject to the terms and conditions stated in
the Joint Plan. The Joint Plan also provides for Dow Corning to make full
payment, through cash and the issuance of senior notes, to its commercial
creditors.

In related developments, a Panel of Scientific Experts appointed by Judge
Sam C. Pointer Jr., a United States District Judge in the Northern
District of Alabama who has been serving since 1992 as the coordinating
federal judge for all breast implant matters, was asked to address certain
questions pertinent to the disease causation issues in the cases against
various defendants, including Dow Corning or its shareholders. The Panel
held hearings in 1998 and issued its report on November 30, 1998. The
report is generally favorable to the implant manufacturers concerning
connective tissue disease and immunologic dysfunction issues. A recent
report by the Institute of Medicine and other studies have reached similar
conclusions.

                        Breast Implant Litigation

In the period from 1991 through June 1999, Corning and Dow Chemical, the
shareholders of Dow Corning Corporation, were named in a number of state
and federal tort lawsuits alleging injuries arising from Dow Corning's
implant products. The claims against the shareholders allege a variety of
direct or indirect theories of liability. From 1991 through June 1999,
Corning has been named in approximately 11,470 state and federal tort
lawsuits, some of which were filed as class actions or on behalf of
multiple claimants. In 1992, the federal breast implant cases were
coordinated for pretrial purposes in the United States District Court,
Northern District of Alabama (Judge Sam C. Pointer, Jr.).

In 1993, Corning obtained an interlocutory order of summary judgment,
which was made final in April 1995, thereby dismissing Corning from over
4,000 federal court cases. On March 12, 1996, the U.S. Court of Appeals
for the Eleventh Circuit dismissed the plaintiffs' appeal from that
judgment. The District Court entered orders in May and June 1997 and
thereafter directing that Corning be dismissed from each case pending in
or later transferred to the Northern District of Alabama after Dow Corning
filed for bankruptcy protection.

In state court litigation, Corning was awarded summary judgment in
California, Connecticut, Illinois, Indiana, Michigan, Mississippi, New
Jersey, New York, Pennsylvania, Tennessee, and Dallas, Harris and Travis
Counties in Texas, thereby dismissing approximately 7,000 state cases. On
July 30, 1997, the judgment in California became final when the Supreme
Court of California dismissed further review as improvidently granted as
to Corning.

In Louisiana, Corning was awarded summary judgment dismissing all claims
by plaintiffs and a cross-claim by Dow Chemical on February 21, 1997. On
February 11, 1998, this judgment was vacated as premature by the
intermediate appeals court in Louisiana. Corning has filed notices
transferring the Louisiana cases to the United States District Court for
the Eastern District of Michigan, Southern District (the "Michigan Federal
Court") to which substantially all breast implant cases were transferred
in 1997.

In the Michigan Federal Court, Corning is named as a defendant in
approximately 60 pending cases (including some cases with multiple
claimants), in addition to the transferred Louisiana cases, but Corning is
not named as a defendant in the Master Complaint, which contains claims
against Dow Chemical only. Corning has moved for summary judgment in the
Michigan Federal Court to dismiss these remaining cases by plaintiffs as
well as the third party complaint and all cross-claims by Dow Chemical.
Plaintiffs have taken no position on such motion. The Michigan Federal
Court heard Corning's motion for summary judgment on February 27, 1998,
but has not yet ruled. Based upon the information developed to date and
recognizing that the outcome of complex litigation is uncertain,
management believes that the risk of a materially adverse result in the
implant litigation against Corning is remote.


CORNING INC.: Indemnifies Quest Diagnostics Of Claims Over Billing
------------------------------------------------------------------
On December 31, 1996, Corning completed the spin-off of its health care
services businesses by the distribution to its shareholders of the Common
Stock of Quest Diagnostics Incorporated ("Quest Diagnostics") and Covance
Inc. ("Covance"). In connection with these distributions, Quest
Diagnostics assumed financial responsibility for the liabilities related
to the contract research business.

Corning agreed to indemnify Quest Diagnostics against all monetary
penalties, fines or settlements for any governmental claims arising out of
alleged violations of applicable federal fraud and health care statutes
and relating to billing practices of Quest Diagnostics and its
predecessors that were pending at December 31, 1996. Corning also agreed
to indemnify Quest Diagnostics for 50% of the aggregate of all judgment or
settlement payments made by Quest Diagnostics that are in excess of $42.0
million in respect of claims by private parties (i.e., nongovernmental
parties such as private insurers) that relate to indemnified or previously
settled governmental claims and that allege over billings by Quest
Diagnostics, or any existing subsidiaries of Quest Diagnostics, for
services provided prior to December 31, 1996; provided, however, such
indemnification is not to exceed $25.0 million in the aggregate and that
all amounts indemnified by Corning for the benefit of Quest Diagnostics
are to be calculated on a net after-tax basis. Such share of judgments or
settlement payments does not cover (i) any governmental claims that arise
after December 31, 1996 pursuant to service of subpoena or other notice of
such investigation after December 31, 1996, (ii) any nongovernmental
claims unrelated to the indemnified governmental claims or investigations,
(iii) any nongovernmental claims not settled prior to December 31, 2001,
(iv) any consequential or incidental damages relating to the billing
claims, including losses of revenues and profits as a consequence of
exclusion for participation in federal or state health care programs or
(v) the fees and expenses of litigation.


CORNING INC.: Will Defend Securities Suit Pending In New York
-------------------------------------------------------------
A federal securities class action lawsuit was filed in 1992 against
Corning and certain individual defendants by a class of purchasers of
Corning stock who allege misrepresentations and omissions of material
facts relative to the silicone gel breast implant business conducted by
Dow Corning. The class consists of those purchasers of Corning stock in
the period from June 14, 1989 to January 13, 1992 who allegedly purchased
at inflated prices due to the non-disclosure or concealment of material
information and were damaged when the stock price declined in January 1992
after the Food and Drug Administration (FDA) requested a moratorium on Dow
Corning's sale of silicone gel implants. No amount of damages is specified
in the complaint. This action is pending in the United States District
Court for the Southern District of New York.

The court in 1997 dismissed the individual defendants from the case, but
concluded the complaint contained sufficient pleading against Corning
concerning the alleged withholding of material information about Dow
Corning's potential liabilities.

In December 1998, Corning filed a motion for summary judgment requesting
that all claims against it be dismissed. Plaintiffs claimed the need to
take depositions before responding to the motion for summary judgment.

The Court has permitted limited additional discovery of certain Dow
Corning, Corning and Dow Chemical officers and directors before Corning's
motion is entertained. At a July 1, 1999 hearing, the Court said it would
review certain documents before ruling on plaintiffs' motion to compel
their disclosure. The discovery process is continuing and the Court has
set no schedule to address the pending summary judgment motion. Corning
intends to continue to defend this action vigorously. Based upon the
information developed to date and recognizing that the outcome of
litigation is uncertain, management believes that the possibility of a
materially adverse verdict is remote.


CORNING INC: May Settle For Suits In Arizona Over Hazardous Waste Sites
-----------------------------------------------------------------------
Corning has been named by the Environmental Protection Agency under the
Superfund Act, or by state governments under similar state laws, as a
potentially responsible party at 10 active hazardous waste sites. Under
the Superfund Act, all parties who may have contributed any waste to a
hazardous waste site, identified by such Agency, are jointly and severally
liable for the cost of cleanup unless the Agency agrees otherwise. Corning
has accrued approximately $24.5 million for its estimated liability for
environmental cleanup and litigation at June 30, 1999. Based upon the
information developed to date, management believes that the accrued
reserve is a reasonable estimate of the Company's estimated liability and
that the risk of an additional loss in an amount materially higher than
that accrued is remote.

The largest single component of the estimated liability for environmental
litigation relates to property damage and personal injury cases pending in
state court in Phoenix, Arizona. In the first part of 1999, the court
granted summary judgment in favor of the Corning defendants in the
personal injury cases. An appeal of that ruling to the intermediate state
court is possible. As of June 30, 1999, settlement discussions were
underway to effect a settlement of all claims against Corning and one of
its subsidiaries. Management expects that a settlement will be concluded
in the second half of 1999, and believes that the risk of a loss exceeding
the estimated liability for these matters is remote.


CYLINK CORP.: Will Defend Against Securities Suits Filed In California
----------------------------------------------------------------------
On September 14, 1998, Cylink announced that its earnings for the third
quarter of 1998 would be below consensus estimates. On November 5, 1998,
Cylink announced that, with the assistance of its independent accountants,
it was reviewing its revenue recognition practices, and Cylink announced
that its first and second quarter earnings of 1998 would have to be
restated and that it would have operating losses for each of the three
quarters for the period ended September 27, 1998. During the review,
certain facts became known indicating errors had been made in the
application of revenue recognition policies which also impacted the fourth
quarter of 1997, and as a result, 1997 full-year results have been
restated along with first and second quarter 1998 results. Cylink has
filed amended Forms 10-Q for the first and second quarters of 1998 and an
amended Form 10-K for 1997.

Between November 6 and November 25, 1998, several securities class action
complaints were filed against Cylink and certain of its current and former
directors and officers in federal courts in California. These complaints
allege, among other things, that Cylink's previously issued financial
statements were materially false and misleading and that the defendants
knew or should have known that these financial statements caused Cylink's
common stock price to rise artificially. The actions variously allege
violations of Section 10(b) of the Securities Exchange Act of 1934, as
amended, and SEC Rule 10b-5 promulgated thereunder, and Section 20 of the
Exchange Act.

Cylink believes it has meritorious defenses to these actions and intends
to defend itself vigorously. However, it is not feasible to predict or
determine the final outcome of these proceedings, and if the outcome were
to be unfavorable, Cylink's business, financial condition, cash flows and
results of operations could be materially adversely affected.


FEN-PHEN: HMO Louisiana Seeks To Represent Health Insurers Against AHP
----------------------------------------------------------------------
In the first known suit of its kind involving diet drugs, a health
maintenance organization has filed suit against American Home Products
Corp. seeking to recover the costs of treating users of diet drugs for
heart and lung diseases that have been associated with the drugs. This
suit is similar to the lawsuits that various states brought against the
tobacco manufacturers to recover Medicaid costs for treating
smoking-related diseases. HMO Louisiana Inc. v. American Home Products
Corp. et al., No. 6:99-cv1086 (WD LA, June 18, 1999).

The suit was filed in U.S. District Court for the Western District of
Louisiana in Lafayette by plaintiffs attorney Wendell Gauthier of
Gauthier, Downing, LaBarre, Beiser & Dean in Metairie, LA, who was a key
player in the $206 billion settlement that was reached between the tobacco
industry and 46 states in 1998.

HMO Louisiana is seeking to represent all health insurers throughout the
United States that have paid for treatment of diet drug users who have
developed primary pulmonary hypertension, which is always fatal unless the
patient receives a lung transplant, or heart valve disease, which can
range from mild to severe and can require valve replacement or a heart
transplant. In addition, health insurers have paid for many thousands of
people who have obtained echocardiograms to determine whether taking diet
drugs damaged their heart valves.

Diet drug users have also claimed that the recalled drugs fenfluramine and
dexfenfluramine have caused neurological damage, heart attacks, strokes
and suicide.

Attorney James R. Dugan II, in Gauthier's firm, said this is the first
suit of its kind to target diet drug manufacturers. If it is successful,
he said, damages would amount to several billions of dollars. "The bulk of
those damages would be to recover the costs of diagnostic testing," he
said.

Named as defendants in the suit are fenfluramine manufacturer American
Home Products Corp., the chief defendant along with its related companies
in virtually all of the more than 3,600 individual and class action suits
filed in state and federal courts around the country, and dexfenfluramine
distributor Interneuron Pharmaceuticals Inc., which is in the middle of
trying to settle all of the claims against it for $100 million to avoid
bankruptcy.

The suit names 19 additional fenfluramine or dexfenfluramine manufacturers
and distributors and it reserves the right to name as many as 100 John Doe
companies and individuals in the future.

The complaint alleges that the defendants knew that their products could
cause serious physical injuries requiring significant expenditures of
insurance money and medical resources, but that they failed to disclose
those risks to the government, physicians or the public.

"Defendants' conduct was despicable and so contemptible that it would be
looked down upon and despised by ordinary decent people and carried on
with a conscious disregard for the safety of the public and the HMO's
insureds and members, entitling the representative plaintiff to exemplary
damages," the complaint contends.

The complaint states causes of action for strict liability, strict
products liability, failure to adequately warn, negligence, redhibition (a
Louisiana theory of liability presum ing that a buyer would not have
purchased the product if he had known of its defects), fraudulent
misrepresentation and breach of implied and/or express warranties.

Interneuron's national counsel, Barbara Wrubel of Skadden Arps Slate
Meagher & Flom in New York, said she did not think the complaint would
have any effect on Interneuron's proposed settlement because the diet drug
MDL court has ordered an indefinite, nationwide stay of all litigation
against the company to prevent the expenditure of any additional insurance
money on defense costs.

"Judge (Louis C.) Bechtle issued the stay and he has said that claimants
can file new litigation naming Interneuron but then it's automatically
stayed pending the resolution of the settlement," she said. Class
Definition

The complaint defines the proposed plaintiff class as "all health
insurance companies, third party administrators, health maintenance
organizations, self-funded plans, third party payors, and any other health
benefit provider, excluding governmental entities, which paid or provided
or will pay or provide health benefits to insureds or members, as a result
of one or more of their members or insureds being prescribed and supplied
with, and having taken and ingested the diet drugs fenfluramine,
phentermine and dexfenfluramine, individually or in combination."

HMO Louisiana Inc. alleges that the proposed class satisfies all of the
class action requirements of Rule 23 of the Federal Rules of Civil
Procedure including numerosity, commonality, typicality, adequacy of
representation, predominance of common facts and legal issues and
superiority of a class action over an individual action.

In addition to Gauthier and Dugan, HMO Louisiana Inc. is represented by
John C. Loupe in Baton Rouge, LA, and Charles A. O'Brien, house counsel
for Blue Cross/Blue Shield of Louisiana. (Health Law Litigation Reporter
August 1999)


HOLOCAUST VICTIMS: Target Date For Slave Labor Settlement Won’t Be Met
----------------------------------------------------------------------
The German Government and leading corporations here have been obliged to
abandon a Sept. 1 target date for a multibillion-dollar settlement with
slave laborers and others forced to work by the Nazis.

The date, the 60th anniversary of Hitler's invasion of Poland and the
start of World War II, had considerable symbolic resonance because many of
the forced laborers were Polish. But officials gathering in Bonn for talks
said the negotiations remained mired in difficulties that would not be
resolved by the end of the month.

"We are still some way from arriving at a figure in terms of the size of
the payment, and the Sept. 1 date has become unrealistic," said Wolfgang
Gibowski, a spokesman for the planned fund to which many of Germany's
largest corporations have said they will contribute.

Announcing the creation of the fund last February, Chancellor Gerhard
Schroder said payments should start "very quickly, if possible before
Sept. 1, 1999," because of the advanced age of many of the people
concerned. The average age of the surviving victims is believed to be
about 80.

But a dispute has hardened over the number of people who qualify as
"forced laborers," and so over the amount of money that should be paid.
While the companies argue that the people concerned probably number
500,000 to 800,000, lawyers for the victims have put forward figures as
high as 2.3 million.

Officials said the wide difference stemmed from the fact that the
companies which include DaimlerChrysler, Deutsche Bank, Siemens and
Volkswagen -- contend that only those put to work by private industry
should be covered, while lawyers have suggested that agricultural laborers
and state employees should also be compensated.

As a result, initial German proposals that the fund should total about
$1.7 billion have been met with claims for as much as $11 billion,
officials said. Otto Lambsdorff, the chief German negotiator, said today
that the latter figure was "far removed from any realistic possibility"
and that any compromise figure would be closer to the original offer.

Mr. Lambsdorff was joined in Bonn by Stuart Eizenstat, the Deputy United
States Treasury Secretary, officials from the 16 companies ready to
contribute to the fund, representatives of several Central and Eastern
European governments and of the Jewish Claims Conference, and American and
German class-action lawyers.

"The sticking point really is the numbers," said Alissa Kaplan, a
spokeswoman for the Jewish Claims Conference. "Although the talks have
been going on since February, the sides are some way apart."

Since the end of World War II, the German Government has paid out about
$80 billion in war reparations and aid, most of it to Jews who survived
concentration camps or fled. But forced laborers -- generally non-Jews
deported to Germany from Central and Eastern European countries -- often
have not been compensated.

Nor has a far smaller category of slave laborers, now estimated to number
100,000 to 200,000, who were put to work in concentration camps. Many of
these, but by no means all, were Jews.

Mr. Gibowski said another important unresolved issue was that of the
assurances sought by German companies that, once the fund is established,
they will be immune from any further legal claims. "Legal closure is
critical," he said, "and should be the subject of an executive agreement
between the German and American Governments."

In an increasingly global economy, and at a time when many major German
corporations have either made or are contemplating big investments in the
United States, this legal issue has become critical. But although progress
has been made toward an accord, the issue remains outstanding.

So, too, do the questions of who would administer the fund in the event
that an agreement was reached, and whether the fund should include
payments for those Jews whose money or other assets were "Aryanized" --
forcibly transferred to non-Jewish Germans -- during Hitler's rule and
have not yet been compensated.

Some officials gathering for the three days of talks in Bonn suggested
that the difficulties were such that an accord might still be several
months away. But with each month that passes, more of the victims die.
"Everyone is aware that these are the final years," Ms. Kaplan said.
(The New York Times 8-25-1999)


JUSTICE DEPT.: Lawyers File Suit Over OT; Dept. Keeps 2 Sets Of Books
---------------------------------------------------------------------Workers
for a large and well-known employer in the nation's capital have accused
their bosses of juggling the books to cheat them out of overtime pay in
violation of the law and then lying about to it to conceal the illegality.
Sounds like a case for the Justice Department, except that in this
instance, the employer is the Justice Department, the agency charged with
enforcing the law.

A federal judge said the court would ask more than 12,400 current and
former Justice Department lawyers whether they wanted to join a
class-action lawsuit filed last year by nearly 200 lawyers against the
agency. The lawsuit seeks $ 500 million for what the lawyers say are
millions of hours of overtime that the department owes them.

Surprisingly candid internal Justice Department documents have been
provided to the plaintiffs by the agency. They show that department
officials knew they were in violation, but kept, in effect, two sets of
books. One set, on which paychecks were based, required lawyers to state
that they worked 40 hours a week, no matter how much time they actually
put in.

Department officials also kept a second set of records -- detailed,
computerized time sheets that clocked overtime hours. The records were
used to measure their lawyers' effort, to ask Congress for bigger budgets
and to bill legal fees to losing adversaries.

The documents show that the Justice Department ranked the 94 U.S.
attorneys' offices according to how many overtime hours were worked in
each office each month. The results were distributed to supervisors who
exhorted prosecutors, in some cases by name, to log more overtime hours so
the office would advance in the rankings.

The documents also show that Justice Department officials have known for
many years that lawyers worked more hours than the official 40 a week and
realized that a 1945 law, the federal Employees Pay Act, required the
Justice Department and other executive branch agencies to pay all
employees overtime or to give them compensatory time off.

The Justice Department is represented in the case by lawyers from the
civil division who have been granted a waiver from their superiors to
defend the agency even though they have a financial stake in the outcome.
(Sun-Sentinel (Fort Lauderdale, FL) 8-25-1999)


LATEX GLOVES: Common Benefit Fund Established in MDL
----------------------------------------------------
Pursuant to Order No. 48 issued by U.S. District Judge Edmund V. Ludwig,
plaintiffs in all latex glove actions filed in federal court that are or
have been part of the multidistrict litigation proceeding (including those
plaintiffs whose cases have been remanded to state court) will have 5% of
any pretrial settlement and 3% of any post-trial verdict, settlement or
judgment deducted from their recovery and placed in an escrow account to
compensate the MDL Plaintiffs' Steering Committee (PSC) for professional
services. In re Latex Gloves Products Liability Litigation, MDL 1148 (ED
PA, July 8, 1999).

The purpose of the escrow fund is to obtain equitable sharing of incurred
litigation expenses and compensation for professional services provided by
the latex gloves MDL PSC that serves the common benefit of all latex
gloves plaintiffs, Judge Ludwig wrote in the order.

The order also applies to actions in which a plaintiff's attorney has
signed a depository agreement or has accessed or used the document
depository established by the MDL court in the Eastern District of
Pennsylvania. The 5% and 3% assessments are to be deducted by the
defendant from the gross amount recovered.

Order No. 48 is substantially similar to a 6% assessment order issued by
U.S. District Judge Sam C. Pointer Jr. in the breast implant MDL. That
assessment order recently sustained a challenge by women who had their
cases remanded to New York state court and subsequently settled with
breast implant manufacturers. The U.S. Supreme Court denied the women's
petition seeking relief from the assessment ( Ingle et al. v. Dow Corning
Corp. et al., No. 98-1386 U.S., May 3, 1999 ).

Unlike its breast implant counterpart, the latex gloves assessment order
does not provide an alternative plan in the event that the defendants fail
to withhold the assessment from the amount paid to plaintiffs and their
counsel. If a breast implant defendant fails to properly withhold the
assessment, the plaintiff and her counsel become jointly responsible for
paying the assessment. This latter provision has led to a class action
lawsuit filed by former clients of breast implant plaintiff attorney John
O'Quinn, who the women claim improperly deducted their share of the 6%
assessment from their settlement disbursements. The women seek damages
totaling approximately $650 million for this and other alleged breaches of
contract and fiduciary duty. (Medical Devices Litigation Reporter
8-5-1999)


LOCAL PROPERTY: Lawyers Sue For Rights Of Local Property Owners
---------------------------------------------------------------
Simple property case sparks 25 class actions against RRs, telecoms.
It all began, says attorney Nels Ackerson, back in 1979 with a series of
phone calls from relatives and old neighbors in his hometown of Eagletown,
Ind. They wanted to know if they could farm the abandoned railroad
right-of-way that cut across their property.

Those seemingly simple phone conversations ultimately led to a new calling
in the legal world for Mr. Ackerson, and to the establishment of a
coalition of four law firms with a combined $ 10 million (and growing)
investment in litigation against some of America's biggest corporations.

Mr. Ackerson's firm, the Washington, D.C.-based Ackerson Group, and the
coalition of lawyers from around the country have filed seven class
actions nationally and 18 statewide class actions, naming as defendants
telecommunication giants AT&T, MCI WorldCom, Sprint and Quest; railroad
companies CSX and Conrail; and the U.S. government, among others. The
lawyers are planning to file at least 20 more state and national class
actions.

The suits differ as to defendants and circumstances, but they share the
same basic claim -- that the rights of local property owners have been
violated for decades as railroads, via easements, and others have used and
profited from the land the plaintiffs own.

"Our objective has been to secure a place at the table for the persons
whose land has been taken and used and whose rights have been totally
ignored," says Mr. Ackerson, 55, a Harvard Law School graduate.

Although railroads have run their tracks across farmers' fields and
through property owners' backyards for almost as long as railroads have
existed, the plaintiffs say that in most cases, the railroads don't own
the land, but only have easements allowing their use. The landowners'
claim against the railroads is for selling the property owners' land or
land rights to third parties such as telecommunications companies,
developers or the U.S. government. Their claims against the
telecommunications companies are for compensation for the fiber- optic
cables those firms buried beside the railroad lines. Their claims against
the U.S. government are for creating biking and hiking trails on abandoned
railroad lines without compensating the property owners.

                            A unique solution

But in addition to winning a handsome recovery, the four principal
attorneys Mr. Ackerson, Henry Price, Roger Johnson and John Massopust --
also hope to create and patent a unique solution to the disputes. They
have proposed that the local landowners form a cooperative, dubbed a
"corridor entity," that would allow them to control the land jointly,
including setting and collecting user fees.

So far, five of the class actions have been certified, and the plaintiffs'
attorneys say that they are encouraged by their prospects. In May, they
reached a partial settlement with AT&T in one case for $ 45,000 per mile
along 80 miles of railroad lines in Indiana. In a second Indiana case, in
January, a judge sanctioned Penn Central and a second defendant $ 600,000
for filing duplicative motions and lying to the court.

Because the history of laws governing railroad easements is complicated
and because this area of litigation raises novel issues, experts are
reluctant to speculate on the viability of the cases and the impact they
may have on the telecommunications industry.

However, Robby Robinson, an economist at the Center for Applied Research
in Denver who specializes in land valuation and easement work, is familiar
with the cases and says that he is impressed with the undertaking. "It's
exceedingly timely," says Mr. Robinson, who is considering assisting the
plaintiffs. "It's really the last gasp of a 19th century outlook that all
technologies should enjoy free public access."

                             The accident

The first class action that Mr. Ackerson filed, the case in which Penn
Central was sanctioned, stems from that phone call he received back in
1979. Filed in 1992, the suit might never have been brought if it weren't
for an accident.

After investigating the property rights for his family and former
neighbors, Mr. Ackerson, who at the time was practicing law in
Noblesville, Ind., notified Penn Central that the property owners intended
to farm the land. But the railroad claimed ownership and provided proof to
Mr. Ackerson in the form of an 1860 map with the legend blocked out.
However, Penn Central also accidentally mailed the company's entire file,
which contained a copy of the map with the legend uncovered. It clearly
stated, according to Mr. Ackerson, that the railroad possessed an easement
on the land, valid only when the railroad was in use. Mr. Ackerson copied
the document, returned the file and advised his neighbors to disregard the
railroad's claims.

He put the matter behind him and moved on. In 1982, he joined Sidley &
Austin and opened the firm's Egypt office. In 1991, he left big-firm life
to start his own firm in Washington, D.C., with the intention of focusing
on complex dispute resolution. Through the years, however, old neighbors
and others complained to Mr. Ackerson about alleged railroad abuses. Farm
associations and agricultural co-ops also referred cases.

In 1992, property owners notified Mr. Ackerson that Penn Central had sold
a portion of an abandoned railroad line adjacent to them to a third party.
Mr. Ackerson recognized the railroad line as the one whose map he had
copied long ago. He took the case, figuring that with the map already in
his files, the case would be simple. In January, he believes, this effort
reached a milestone. It came in the form of sanctions.

Judge Dennis D. Carroll, of Hamilton County, Ind., in finding Penn
Central's and a second defendant's behavior to be a "conscious and
pervasive course of misrepresentations and misconduct," sanctioned the two
defendants $ 600,000, plus prejudgment interest on any damages that the
plaintiffs may recover later in the case. Trial is scheduled for November.
Firestone v. Penn Central Corp. and U.S. Railroad Vest Inc., No.
29D03-9210-CP-500.

Penn Central's attorney, Matthew J. Siembieda, of Blank Rome Comisky &
McCauley L.L.P., in Philadelphia, notes that the sanctions order is on
appeal and disputes the judge's findings. He says that the land title
issues are complicated and that title doesn't revert to the original
property owner.

He is vague on the details of Mr. Ackerson's story about the map, but he
denies that there was any scheme to hide information or delay the
proceedings. "We won at the trial court level. They took the appeals. I
don't think that's a pattern to delay."

                             The AT&T case

In the AT&T case that settled, Superior Court Judge Steven Nation, also of
Hamilton County, concluded that the plaintiffs had offered evidence
showing that "AT&T knew that its right to occupy the right of way land was
'precarious' and 'far from sound.' " Hinshaw v. AT&T, No.
29D01-9705-CP-000308.

But in settling, AT&T denied any wrongdoing or legal liability. And an
AT&T attorney involved in the case, who spoke on condition of anonymity,
says that the settlement is not indicative of things to come. He
distinguishes the case from others pending against AT&T because the
settlement included only abandoned railroad lines. As to the 9,000 miles
of fiber-optic lines that AT&T has laid on active track, he says, "It's
our position that the railroad owns the property in fee simple. Or if they
own something less than fee simple, they had a right to license us to be
in those corridors."

But Mr. Ackerson counters that there is a substantial body of case law on
the issue in his favor: "There are dozens of decisions in many
jurisdictions, including state supreme courts, that support our position."

Michael Berger, a land use attorney at Santa Monica, Calif.'s Berger &
Norton, says that because the easements are individual, it is tricky
sometimes to determine the railroad's rights: "They were written before
fax and copy machines, and the wording was not always consistent, even
from the same agent."

Mr. Ackerson says that his research so far has shown that the railroads
have ownership of only about one-third of the lines. If Mr. Ackerson's
position prevails, the telecommunications companies may have made a costly
mistake.

According to their Web sites, MCI WorldCom has 45,000 miles of fiber-optic
cable, Quest has 18,815 miles and Sprint has 30,000. In the cases of Quest
and Sprint, much of the cable runs along railroad lines.

An additional cost of the litigation to the companies could be the impact
on Wall Street, suggests Mr. Ackerson. While the litigation and damages
would be an unpleasant thorn in the side of the telecommunications
companies, economist Mr. Robinson says that it would not be crippling to
the industry: "It's probably not that consequential, given the profits and
gains made by the companies. It's simply a fairer portion of profits."

An MCI WorldCom representative declined to comment on the litigation
pending or on the effect of the AT&T settlement. Neither Sprint nor Quest
returned phone calls.

As part of the AT&T settlement, the plaintiffs have created their
so-called corridor entity to enable them to better control and benefit
from the future use of their land.

Because the corridor entity will operate as a co-op, the landowners will
be stockholders in it and it will be controlled by a board of directors,
which will decide when to grant easements.

Patenting the corridor entity concept is the next step for Mr. Ackerson
and his growing legion of attorneys. He has hired Charles Leedom, of
Sixbey Friedman Leedom & Ferguson, in McLean, Va., to pursue the patent.
Mr. Leedom says he is confident that the patent meets the law's
requirements -- that it be "novel and unobvious." The patent process,
however, could take at least two years.

                             The legal team

What has evolved from all this litigation is an unusual legal entity. What
began as Mr. Ackerson's five-lawyer firm working on a case is now a
coalition of four firms with offices in eight states and the equivalent of
23 attorneys working full time on the cases. They also have links with 20
lawyers at as many firms across the country.

This all came about as Mr. Ackerson's firm gradually took on more
individual claims against the railroads, telecommunications companies and
others. Mr. Ackerson realized that in order to handle the class actions,
he would need more resources and finances than could be provided by his
firm and Mr. Price's firm, Price Potter & Mellowittz, in Indianapolis,
which began working with Mr. Ackerson's firm on the Penn Central case in
1997.

So they began looking for other firms with the experience and resources to
collaborate. They selected Washington, D.C.'s Koonz, McKenney, Johnson,
DePaolis & Lightfoot, a 22-attorney litigation shop experienced in class
actions, and Minneapolis' 70-attorney Zelle, Hoffman, Voelbel & Gette,
which specializes in dispute resolution.

Mr. Ackerson won't explain the financial arrangements among the four firms
in the joint venture. He does, however, say, "We have gone to great
lengths to avoid any incentives that will result in competition among our
firms.... Finances are pooled and then allocated to cases as necessary,
according to simple procedures and subject to commonsense limitations."

Although not a requirement, it is probably not a coincidence that the key
players in this group are all Midwesterners, including Mr. Leedom.

"I think it is part of the chemistry," says Mr. Johnson, of Washington,
D.C.'s Koonz McKenney, who is originally from Michigan.

Ultimately, Zelle Hoffman's John Massopust says, the glue that really
holds the four firms together is the merits of the case. "The fact is that
we are right in what we're doing," he says. (The National Law Journal
8-16-1999)


QUANTUM CORP: California Ct. Dismissed Securities And Derivative Suits
----------------------------------------------------------------------
The Company and certain of its current and former officers and directors
were named as defendants in two class-action lawsuits, one filed on August
28, 1996, in the Superior Court of Santa Clara County, California, and one
filed on August 30, 1996, in the U.S. District Court of the Northern
District of California. The plaintiff in both class actions purported to
represent a class of all persons who purchased the Company's common stock
between February 26, 1996, and June 13, 1996. The complaints alleged that
the defendants violated various federal securities laws and California
statutes by concealing and/or misrepresenting material adverse information
about the Company, and that individual defendants sold shares of the
Company's stock based on material nonpublic information.

Following a hearing on plaintiff's appeal of the District Court's
dismissal with prejudice of plaintiff's amended complaint in the federal
class action on May 13, 1999, and prior to a ruling on the appeal, the
plaintiff agreed to dismiss with prejudice the state and federal class
action lawsuits. Pursuant to a letter agreement dated May 21, 1999,
plaintiff agreed to dismiss the lawsuits with no financial contribution
from the defendants. A stipulation of dismissal with prejudice was filed
in federal court on June 10, 1999, and in state court on June 17, 1999.
Each side agreed to bear its own costs and fees.

Certain of the Company's current and former officers and directors were
also named as defendants in a derivative lawsuit, which was filed on
November 8, 1996, in the Superior Court of Santa Clara County. The
derivative complaint was based on factual allegations substantially
similar to those alleged in the class-action lawsuits. Defendants'
demurrer to the derivative complaint was sustained without prejudice on
April 14, 1997. Plaintiffs did not file an amended complaint. On August 7,
1997, the Court issued an order of dismissal and entered final judgment
dismissing the complaint.

The Company is also subject to other legal proceedings and claims that
arise in the ordinary course of its business. While management currently
believes the amount of ultimate liability, if any, with respect to these
actions will not materially affect the financial position, results of
operations, or liquidity of the Company, the ultimate outcome of any
litigation is uncertain. Were an unfavorable outcome to occur, the impact
could be material to the Company.


SABRATEK CORP.: Milberg To Expand Period Of Securities Suit In Illinois
-----------------------------------------------------------------------
Lead Counsel Milberg Weiss Bershad Hynes & Lerach LLP, in the pending
securities fraud class action litigation involving Sabratek Corporation
(NASDAQ: SBTKE), is currently preparing an amended complaint which will
extend the class period through August 23, 1999.

By Order dated April 28, 1999, the United States District Court for the
Northern District of Illinois appointed Milberg Weiss Lead Counsel in this
litigation. After filing its initial complaint, in June 1999 Milberg Weiss
filed an amended complaint which alleges that Sabratek has committed
financial fraud during the Class Period by, inter alia, improperly
reporting artificially inflated revenue in violation of GAAP and by
failing to disclose other improprieties relating to its sales practices.

The Court-appointed Lead Plaintiffs anticipate filing a second amended
complaint which will seek to recover damages for investors who purchased
during an extended class period up to and including August 23, 1999.
Contact Steven G. Schulman or Michael A. Swick at Milberg Weiss at One
Pennsylvania Plaza, 49th Floor, New York, New York 10119-0165, or by
telephone 1-800-320-5081, or via e-mail at endfraud@mwbhl.com or visit the
firm's website http://www.milberg.com


SABRATEK CORP.: Wolf Popper Files Securities Suit In Illinois
-------------------------------------------------------------
Sabratek Corp. (Nasdaq: SBTK) and one of its senior officers have been
named in a securities lawsuit filed on August 24, 1999 in the U.S.
District Court for the Northern District of Illinois. The lawsuit was
filed on behalf of all persons who purchased Sabratek common stock during
the period May 11, 1999 through August 13, 1999.

The Complaint alleges that the repeated misleading positive announcements
made by Sabratek during the class period left the unmistakable impression
that the company was in the midst of numerous positive acquisitions that
would be extremely beneficial to its shareholders. The defendants failed
to disclose that at the very same time they were making these positive
announcements, the company's business was in disarray and its earnings for
the upcoming quarter would be nowhere near what the marketplace had been
led to believe.

Investors who purchased Sabratek common stock during the class period have
until October 23, 1999 to seek to be a lead plaintiff in the class action,
commenced by the law firm of Wolf Popper LLP.

Contact Catherine E. Anderson, Esq. Wolf Popper LLP 845 Third Avenue New
York, NY 10022-6689 Telephone: 212-451-9623 Toll Free: 877-370-7703
Facsimile: 212-486-2093 E-Mail: canderson@wolfpopper.com or
wolfpopper@aol.com Website: http://www.wolfpopper.com


TELXON CORP.: Contests Post-Intervention Claims Re Derivative Suit
------------------------------------------------------------------
On September 21, 1993, a derivative Complaint was filed in the Court of
Chancery of the State of Delaware, in and for Newcastle County, by an
alleged stockholder of the Company derivatively on behalf of Telxon. The
named defendants are the Company; Robert F. Meyerson, former Chairman of
the Board, Chief Executive Officer and director; Dan R. Wipff, then
President, Chief Operating Officer and Chief Financial Officer and
director; Robert A. Goodman, Corporate Secretary and outside director;
Norton W. Rose, outside director; and Dr. Raj Reddy, outside director.

The Complaint alleges breach of fiduciary duty to the Company and waste of
the Company's assets in connection with certain transactions entered into
by Telxon and compensation amounts paid by the Company. The Complaint
seeks an accounting, injunction, rescission, attorney's fees and costs.
While the Company is nominally a defendant in this derivative action, no
monetary relief is sought by the plaintiff from the Company. On November
12, 1993, Telxon and the individual director defendants filed a Motion to
Dismiss. The plaintiff filed its brief in opposition to the Motion on May
2, 1994, and the defendants filed a final responsive brief. The Motion was
argued before the Court on March 29, 1995, and on July 18, 1995, the Court
issued its ruling. The Court dismissed all of the claims relating to the
plaintiff's allegations of corporate waste; however, the claims relating
to breach of fiduciary duty survived the Motion to Dismiss.

On October 31, 1996, plaintiff's counsel filed a Motion to Intervene in
the derivative action on behalf of a new plaintiff stockholder. As part of
the Motion to Intervene, the intervening plaintiff asked that the Court
designate as operative for the action the intervening plaintiff's proposed
Complaint, which alleges that a series of transactions in which the
Company acquired technology from a corporation affiliated with Mr.
Meyerson was wrongful in that Telxon already owned the technology by means
of a pre-existing consulting agreement with another affiliate of Mr.
Meyerson; the intervenor's complaint also names Raymond D. Meyo,
President, Chief Executive Officer and director at the time of the first
acquisition transaction, as a new defendant.

The defendants opposed the Motion on grounds that the new claim alleged in
the proposed Complaint and the addition of Mr. Meyo were time-barred by
the statute of limitations and the intervening plaintiff did not satisfy
the standards for intervention. After taking legal briefs, the Court ruled
on June 13, 1997, to permit the intervention. On March 18, 1998, defendant
Meyo filed a Motion for Judgement on the Pleadings (as to himself), in
response to which Plaintiff filed its Answer and Brief in Opposition. The
Motion was argued before the Court on November 4, 1998, and was granted
from the bench, dismissing Meyo as a defendant in the case. The
post-intervention claims are the subject of ongoing discovery, and no
deadline for the completion of the discovery or trial date has yet been
set by the Court.

The defendants believe that the post-intervention claims lack merit, and
they intend to continue vigorously defending this action. While the
ultimate outcome of this action cannot presently be determined, the
Company does not anticipate that this matter will have a material adverse
effect on the Company's consolidated financial position, results of
operations or cash flows and accordingly has not made provisions for any
loss or related insurance recovery in its financial statements.


TELXON CORP.: Contests Securities Fraud Suits In Ohio
-----------------------------------------------------
>From December 1998 through March 1999, a total of 27 class actions were
filed in the United States District Court, Northern District of Ohio, by
certain alleged stockholders of the Company on behalf of themselves and
purported classes consisting of Telxon stockholders, other than the
defendants and their affiliates, who purchased stock during the period
from May 21, 1996 through February 23, 1999 or various portions thereof.
The named defendants are the Company, former President and Chief Executive
Officer Frank E. Brick and former Senior Vice President and Chief
Financial Officer Kenneth W. Haver. The actions have been referred to a
single judge, and on February 9, 1999, the plaintiffs filed a Motion to
Consolidate all of the actions. On April 26, 1999, the Court heard motions
on naming class representatives and lead class counsel, but the Court has
not yet ruled on those motions.

The complaints allege claims for "fraud on the market" arising from
alleged misrepresentations and omissions with respect to the Company's
financial performance and prospects and an alleged violation of generally
accepted accounting principles by improperly recognizing revenues. The
various complaints seek certification of their respective purported
classes, unspecified compensatory and punitive damages, pre- and post-
judgment interest, attorneys' fees and costs. The defendants believe that
these claims lack merit, and they intend to vigorously defend these
actions. Defendants anticipate filing a Motion to Dismiss.

By letter dated December 18, 1998, the Staff of the Division of
Enforcement of the Securities and Exchange Commission advised the Company
that it was conducting a preliminary, informal inquiry into trading of the
securities of the Company at or about the time of the Company's December
11, 1998 press release announcing that the Company would be restating the
revenues for its second fiscal quarter ended September 30, 1998. In
cooperation with the informal inquiry, the Company has voluntarily
provided certain responsive information to the Staff. On January 20, 1999,
the Commission issued a formal Order Directing Private Investigation And
Designating Officers To Take Testimony with respect to the referenced
trading and specified accounting matters, pursuant to which subpoenas
duces tecum have been served on the Company requiring the production of
specified documents. Similar subpoenas have been issued to one of the
Company's directors, certain current Company officers and, to the belief
of the Company, former Company officers and certain unaffiliated companies
and their officers. The Company has delivered documents to, and intends to
continue cooperating fully with, the Staff. The referenced director and
current officers have also produced documents, and the director has given
oral testimony, to the Staff. Telxon believes that the unaffiliated
parties have also responded to the Staff.

On February 1, 1999, Telxon filed a Complaint in the United States
District Court, Northern District of Ohio, against Symbol, to which Symbol
filed an Answer and Counterclaim on February 24, 1999. Symbol Motions to
Strike certain of Telxon's allegations and to Dismiss certain claims from
Telxon's complaint were denied by the Court on April 27, 1999. Telxon and
Symbol have finalized and approved a settlement agreement, which awaits
execution. Based on the settlement, the Court dismissed the case with
prejudice on July 31, 1999.


TELXON CORP.: Rejects Purchase Offer; Decries Merit Of Fiduciary Suit
---------------------------------------------------------------------
On May 8, 1998, two class action suits were filed in the Court of Chancery
of the State of Delaware, in and for the County of New Castle, by certain
alleged stockholders of Telxon on behalf of themselves and purported
classes consisting of Telxon stockholders, other than defendants and their
affiliates, relating to an alleged offer by Symbol Technologies, Inc. to
acquire the Company. The named defendants are Telxon and its Directors at
the time, namely, Frank E. Brick, Robert A. Goodman, Dr. Raj Reddy, John
H. Cribb, Richard J. Bogomolny, and Norton W. Rose.

The plaintiffs allege that on April 21, 1998, Symbol made an offer to
purchase Telxon for $38.00 per share in cash and that on May 8, 1998,
Telxon rejected Symbol's proposal. Plaintiffs further allege that Telxon
has certain anti-takeover devices in place purportedly designed to thwart
hostile bids for the Company. Plaintiffs charge the Director defendants
with breach of fiduciary duty and claim that they are entrenching
themselves in office. The plaintiffs seek certification of the purported
class, unspecified compensatory damages, equitable and/or injunctive
relief requiring the defendants to act in specified manners consistent
with the defendant Directors' fiduciary duties, and payment of attorney's
fees and costs. The parties have stipulated that the plaintiffs will file
an Amended Complaint and that the defendants will answer only the Amended
Complaint.

On June 2, 1998, the Court ordered consolidation of the above-captioned
cases. This action is in its early stages, with no scheduling order having
been issued by the Court; discovery has not yet commenced. The defendants
believe that these claims lack merit and intend to vigorously defend the
consolidated action.


TELXON CORP.: Sued Over Contamination Re Wynnwood Facility In Texas
-------------------------------------------------------------------
On February 17, 1998, a complaint was filed against the Company in the
District Court of Harris County, Texas, by Southwest Business Properties,
the landlord of the Company's former Wynnwood Lane facility in Houston,
Texas. The complaint alleges counts for breach of contract and temporary
and permanent injunctive relief, all related to alleged environmental
contamination at the Wynnwood property, and seeks specific performance,
unspecified monetary damages for all injuries suffered by plaintiff,
payment of pre-judgement interest, attorneys' fees and costs and other
unspecified relief. In its Answer, the Company denied plaintiff's
allegations. No hearing has been had on, or is currently scheduled for,
plaintiff's claim for temporary injunctive relief. The trial previously
scheduled for March 8, 1999 has been reset to commence on a day during the
Court's two week docket beginning October 25, 1999, with the specific
trial date to be set by the Court at that time.

While the litigation with the landlord remains pending, the Company and
the landlord have agreed to file, and on July 7, 1999, filed a joint
application with the Texas Natural Resource Conservation Commission for
approval of a proposed Response Action Work Plan for the property pursuant
to the Commission's Voluntary Cleanup Program. The proposed plan projects
completion of remediation and issuance of a closure certificate in 2002.
Telxon has not to date been advised of any action by the Commission with
respect to the proposed plan, which could require modifications thereto as
a condition of approval. Until such time as the plan is accepted and
completed, its actual cost to the Company cannot be quantified; however,
the Company does not believe that remediation in accordance with the plan
as proposed would have a material adverse effect on its results of
operations for any quarter in which any associated charges would be taken.
If the plan is not accepted substantially as proposed, or closure is not
certified when contemplated by the proposed plan, and the Company were
ultimately to become responsible for the alleged contamination, the
associated loss could have a material adverse effect on results of
operations for one or more quarters in which the associated charge(s)
would be taken. Telxon believes that these claims lack merit, and it
intends to vigorously defend this action.


TOBACCO LITIGATION: Fed Judge Remands Suit Against Philip Morris
----------------------------------------------------------------
A federal judge has sent a prospective class-action lawsuit against Philip
Morris Companies back to Montgomery County Court because he found the
cigarette giant could not establish that each purported class member's
damages met the amount in controversy required for diversity jurisdiction.
Judge Bruce W. Kauffman found that Philip Morris' evidence was
insufficient to establish "to a legal certainty" that each plaintiff's
claim reaches the $ 75,000 monetary threshold for diversity jurisdiction.

In 1998, Karen McNamara filed a state-court action in the Montgomery
County Court of Common Pleas on behalf of herself and similarly situated
residents of Pennsylvania against Philip Morris. McNamara alleged that the
filter contained in Marlboro Lights, which is designed to dilute tar and
nicotine content, actually delivers more tar and nicotine than the
"Lowered Tar & Nicotine" label reflects. According to McNamara, Philip
Morris has known since the 1970s that the filter's small ventilating
holes, which are supposed to allow more air to mix with the smoke, do not
work because the smoker's lips or fingers obstruct the ventilation holes.
McNamara also claimed that Philip Morris deceptively manipulated tar and
nicotine levels to create and maintain cigarette addiction, and concealed
nicotine content and the addictive quality of cigarettes. McNamara's
complaint asserts causes of action under the Pennsylvania Unfair Trade
Practices and Consumer Protection Law, and under the common law of unjust
enrichment. She asked that the court award injunctive relief, attorneys'
fees, interest and a full refund of all money they spent on Marlboro
Lights cigarettes.

McNamara, the court points out, "was careful to plead" that damages by
each putative class member do not exceed $ 75,000. But Philip Morris
removed the case to federal court. After McNamara sought a remand to state
court, Philip Morris was placed in the position of arguing that potential
damages do in fact exceed $ 75,000. Normally, noted Kauffman, the rule is
that the sum claimed by the plaintiff controls if the claim is apparently
made in good faith. Where the defendant invokes the court's jurisdiction,
the defendant bears the burden of establishing "to a legal certainty" that
the plaintiff underestimated her claim. The court quotes the company as
arguing, "simple arithmetic illustrates that the value of [plaintiff's]
claim could easily exceed $ 75,000."

Philip Morris, the court says, then goes on to assume that the plaintiff
smoked two packs of Marlboro Lights cigarettes every day of the relevant
time period, of 1971 to the present. But Kauffman called Philip Morris'
claim "speculation, which is insufficient to establish "to a legal
certainty" that the jurisdictional amount is met. Kauffman also pointed
out that as a general rule, courts do not aggregate class members' damages
to determine jurisdictional qualifications. Kauffman went on to reject
Philip Morris' argument that the amount in controversy is met when adding
the attorney fees the plaintiff is seeking, by aggregating the amounts.

Kauffman, though, noted that the general rule is that fees are determined
on a pro rata basis. He said that each class member's pro rata share when
added to other allowable damages may not reach $ 75,000, and he found no
persuasive authority to depart from the general rule to aggregate the
attorney fees.

Philip Morris also focused on the value of the injunctive relief McNamara
asked for -- a corrective advertising campaign. The company argued that
aggregation would be permitted in this instance because the putative class
members have "a common and undivided interest" in the requested relief.
With aggregation, the company argued, the jurisdictional amount would
exceed $ 75,000.The court found, however, that while the class as a whole
has an interest in preventing the dissemination of misleading information,
for jurisdictional purposes, the focus must be the money damages sought,
not the type of relief requested. Citing a California district court case
of Smiley v. Citibank, the court noted, "[t]o hold otherwise would allow
any class of plaintiffs who were completely diverse from the defendant to
obtain federal jurisdiction merely by seeking an injunction requiring the
defendant to engage in an expensive public information campaign announcing
the error of his ways." (Copies of the 8-page opinion in McNamara v.
Philip Morris Companies Inc., PICS No. 99-1582, are available from The
Legal Intelligencer. Please refer to the Pennsylvania Instant Case Service
Order Form found on Page 3.)
(The Legal Intelligencer 8-25-1999)


UNISTAR FINANCIAL: Kirby McInerney Commences Securities Suit In Texas
---------------------------------------------------------------------
A class action lawsuit has been commenced in the United States District
Court for the Northern District of Texas on behalf of all purchasers of
Unistar Financial Service Corp. (AMEX: UAI) common stock during the period
between October 15, 1998 and July 20, 1999, inclusive.

The action asserts claims against Unistar, certain of its directors and
officers and others for violations of section 10(b) of the Securities
Exchange Act of 1934 and rule 10b-5 of Securities Exchange Commission by
reason of material misrepresentations and omissions during the Class
Period concerning the value of Unistar’s assets and business and the
Company’s financial results and conditions. During the Class Period,
Unistar’s common stock soared to over $ 61 per share, and several Unistar
executives disposed of more than 10 million shares of Unistar stock, which
was then trading at artificially inflated prices. In mid-July 1999,
Unistar’s stock price fell more than 55% in a matter of days, and,
following trading on July 20, 1999, the American Stock Exchange suspended
trading of Unistar stock pending a review. The Company’s stock has not
traded since.

If you are a member of the class described above, you may, not later than
sixty days from August 18, 1999, move the Court to serve as lead plaintiff
of the class, if you so choose. In order to serve as lead plaintiff,
however, you must meet certain legal requirements. Contact KIRBY McINERNEY
& SQUIRE, LLP Jeffrey H. Squire, Esq. Ira M. Press, Esq. Ms. Danielle
Feman, Paralegal 830 Third Avenue 10th Floor New York, New York 10022
Telephone: (212) 317-2300 or Toll Free (888) 529-4787 E-Mail:
dfeman@kmslaw.com TICKERS: AMEX:UAI


WALT DISNEY: Agrees To Settle For Suit Over Retirees’ Medical Insurance
-----------------------------------------------------------------------
The Walt Disney Co. has agreed to settle a class-action lawsuit aimed at
reducing the amount of money thousands of mostly retired workers have to
pay for medical insurance.

The lawsuit accused the entertainment giant of reneging on a promise to
fully cover the cost of medical insurance for retired studio and
theme-park workers.

The proposed settlement covers 3,800 employees with 20 years or more
service, said plaintiffs' attorney, William T. Payne. Although the total
dollar amount has not been determined yet, Payne said attorneys on both
sides plan to file a joint settlement motion next month in federal court.

Walt Disney spokesman Ken Green declined comment Tuesday. "It's still
before the court," he said.

The employees filed the lawsuit in 1996, alleging Walt Disney has promised
no-premium retirement health care insurance to 20-year employees, ages 62
and older. A settlement was reached once before in 1997, but the deal fell
apart over conflicting interpretations of the agreement, Payne said. The
employees said Disney changed the age to 65 in 1994 and then charged
premiums for all but those with health maintenance organization coverage
in 1995.

Previously, Disney officials had blamed the changes on increasing medical
costs and said they were allowed under its contract with the workers.

Under the current premium plan, a typical retired Disney employee pays
more than $ 1,000 a year for insurance for self and a spouse. But under
the settlement, Payne said the same payment would shrink to $ 102 per
year.

The agreement also calls for the cap on total deductions, premiums and
co-payments to be raised from $ 1,500 to $ 2,100, he said. (Daily Variety
8-25-1999)

                               *********


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

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

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