/raid1/www/Hosts/bankrupt/CAR_Public/991115.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Monday, November 15, 1999, Vol. 1, No. 199


CA PUBLIC: 9th Cir Says Age-based Disability Benefit Might Violate ADEA
CHEVRON CORP: CA Suit Over Refinery Explosion Applies To 2 Classes
CORNING INC: Awaits MI Bankruptcy Ct Conclusion Re Breast Implant
CORNING INC: Settles Arizona Environmental Litigation For $4.5 Mil
FOAMEX INTíL: Faces Securities Suit In Dela Over Trace Holdings Merger

FOAMEX INTíL: Resolves Fd & CA Breast Implant Suits; Faces Suits Abroad
FOCUS ENHANCEMENTS: Lionel Z. Glancy Files Securities Suit In MA
FOREMOST CORP: Policyholders Sue In MI Over Mobile Home Insurance
FOREMOST CORP: Sued Over Force-Placed Collateral Protection Insurance
HBR: No Harm Done, No Class Action, Rules Judge In Fla. Collection Case

HMO: Harris Methodist Settles TX Suits Re Physician Incentive Payments
HMO: Hermans Link Lawyers To Sue; Tag-Team Lawyers Make Business Blink
LETíS TALK: Penn Suit Over Cellular Phone Fees Seeks Nat. Class Status
MCKESSON HBOC: Judge To Decide On Lead Counsel In Securities Case
MILLION DOLLAR: Intends to Vigorously Defend TX Suit Re Overcharges

MIRACLE SUPPLY: Female Employees File Suit In Il. Over Bathroom Spying
NJ POLICE: Racial Profiling Case May Go Beyond Turnpike; Trial Nov 15
PATRICK STEVEDORES: Aust Govt, Reith Struck Out Of Dock Workersí Suit
PENNCORP FINANCIAL: Reaches Settlement Agreement For Securities Suit
PIERCING PAGODA: Judge Dismisses Shareholder Suit Under Advanta

SOURCE MEDIA: Faces Securities Suits In Texas; Trial Set For June 2000


CA PUBLIC: 9th Cir Says Age-based Disability Benefit Might Violate ADEA
A California law governing disability benefits received by public
employees might contravene the Age Discrimination in Employment Act,
where the employees' age when they were hired was the sole factor for
the grant of lower disability benefits. Arnett v. California Public
Employees Retirement System, No. 98-15574 (9th Cir. filed 6/2/99,
amended 8/17/99).

A group of former police officers, corrections officers and other
"safety employees" of the State of California and local agencies brought
a class action suit challenging the calculation of disability benefits
under the California Public Employees Retirement System. All the
employees were hired at age 40 or beyond, and retired from their jobs as
a result of work-related disabilities.

Until 1980, an employee's final compensation served as the only variable
in computing disability retirement benefits. However, the state
legislature enacted a new statutory section in that year granting an
injured employee the lesser of 50 percent of the final compensation, or
the amount that she would have received in service retirement benefits
if she continued to work until the age of 55. The only variable in this
computation was the employee's age at hire.

In dismissing the class action suit, a federal district court found no
disparate impact under the ADEA. In the alternative, the disability
benefit differential was justified by business necessity, it determined.

The 9th U.S. Circuit Court of Appeals reversed and remanded. Under the
holding of Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), the
calculation of retirement benefits based on "actual years of service"
constituted no ADEA violation, since this factor was merely "empirically
correlated" with age. However, the California method of computing public
employees' disability benefits based on "potential years of service" was
entirely a function of the employee's age at hire.

The court reasoned that the California method bore "no relationship to
the length of service, seniority or any other fact that might
permissibly be 'empirically correlated' with age." Thus, the practical
application of the state statute left no doubt that age at hire-rather
than actual years worked-constituted the sole basis for lower benefits.

Upon rejecting the state's argument that the employees "voluntarily"
chose to begin work at a later age, the court remanded the case for
further proceedings on their disparate treatment and disparate impact
claims. (National Public Employment Reporter Nov-3-1999)

CHEVRON CORP: CA Suit Over Refinery Explosion Applies To 2 Classes
Article from Mealeyís Litigation Report on class action on refinery
explosion, a brief report on which was included in the Class Action
Reporter of October 5, 1999:

A refinery explosion forced California residents to shut themselves
inside and caused breathing trouble, eye and throat irritation,
dizziness and other problems, according to an Oct. 1 proposed class
action (Belinda Van Tonder, et al. v. Chevron Corp., et al., No. 306908,
Calif. Super., San Francisco Co.). (Text of Complaint in Section A.
Mealey's Document # 15-991103-102.)

Belinda Van Tonder and others allege in the proposed class action that
an explosion at a refinery sent an enormous cloud of black smoke and at
least 18,000 pounds of sulfur dioxide and other hazardous chemicals into
the air. Van Tonder maintains that the explosion, fire and accompanying
release of smoke and chemicals forced thousands of residents to shut
themselves inside and caused more than a thousand people to go to the
hospital for breathing trouble, eye and throat irritation, dizziness,
nausea, vomiting and other ailments.

The refinery was owned and operated by defendants Chevron Corp., Chevron
USA Inc. and Chevron Products Co. The complaint was filed in San
Francisco County Superior Court. Claims asserted include equitable
relief, negligence, battery, negligence per se, private nuisance, public
nuisance, trespass, strict liability for ultrahazardous activity,
intentional infliction of emotional distress, unfair business practices
and punitive damages.

                              2 Classes

According to the complaint, plaintiffs would be divided into two
different classes: (1) the shelter-in-place class, which consists of all
people who were in the vicinity of the refinery and who stayed within
their shelter as a result of the refinery, and (2) the punitive damage
class, which consists of all people harmed by the explosion.

"A class action is the only available method for the fair and efficient
adjudication of this controversy. The members of the class are so
numerous that joinder of all members is impracticable if not
impossible," the complaint alleges. "There is no plain, speedy, or
adequate remedy other than the maintenance of this representative action
because prosecution of separate actions by the individual Class members,
even if economically feasible, would overburden the judicial system,
would create a risk of inconsistent or varying adjudications with
respect to individual Class members against defendants, and would
establish incompatible standards of conduct for the defendants."

According to the complaint, Chevron knowingly failed to properly inspect
a faulty valve, knowingly failed to address valve problems, and
knowingly failed to equip the hydrocracking unit with a properly
functioning emergency block valve.

Counsel for the plaintiffs include William Bernstein, Donald C.
Arbitblit and Steven M. Tindall of Leiff, Cabraser, Heimann & Bernstein
in San Francisco, Michael D. Meadows of Casper, Meadows, & Schwartz in
Walnut Creek, Calif., Anthony Ayeni of the Law Offices of Anthony Ayeni
in Oakland, Calif., and Kelechi C. Emeziem and Samuel U. Ogbu in Emeziem
& Ogbu in Oakland, Calif. (Mealey's Litigation Report: Emerging Toxic
Torts, Vol. 8; No. 13, Oct-6-1999

CORNING INC: Awaits MI Bankruptcy Ct Conclusion Re Breast Implant
Corning 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, 1998. 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 disclosure materials relating to the Amended Joint Plan of
Reorganization contained adequate disclosures. 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.
Post-hearing briefing was completed by mid-September. The parties are
awaiting the findings and conclusions of the Bankruptcy Court.

To date, the Bankruptcy Court has not issued its decision on
confirmation of the Joint Plan. If the Bankruptcy Court overrules the
objection and confirms the Joint Plan, review in the United States
District Court for the Eastern District of Michigan is probable and
further appeals are possible. The timing and eventual outcome of these
bankruptcy 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 report by the Institute of Medicine and other
studies have reached similar conclusions.

                         Implant Tort Lawsuits

In the period from 1991 through September 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 September 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 directed 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, summary judgment dismissing all claims by
plaintiffs and a cross- claim by Dow Chemical was entered in favor of
Corning on February 21, 1997, but this judgment was later 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 70 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. In late
1997, Corning 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 took no
position on Corning's 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.

                      Federal securities case

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

Plaintiffs claimed the need to take depositions before responding to the
motion for summary judgment. The Court permitted limited additional
discovery of certain Dow Corning, Corning and Dow Chemical officers and
directors. These depositions were completed in the second quarter of
1999. On September 23, 1999, the Court granted in part the request by
plaintiffs for certain additional documentary discovery. 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: Settles Arizona Environmental Litigation For $4.5 Mil
Environmental Litigation. 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. It is Corning's policy to accrue for its
estimated liability related to Superfund sites and other environmental
liabilities related to property owned by Corning based on expert
analysis and continual monitoring by both internal and external
consultants. Corning has accrued approximately $20.1 million for its
estimated liability for environmental cleanup and litigation at
September 30, 1999.

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 third quarter,
the personal injury cases and the class action property damages cases
were settled for $4.5 million, subject to court approval of the terms of
the class action settlement. The hearing for court approval of the
settlement is likely to be set in the first quarter of Management
expects that approximately 60% of the settlement payment will be offset
by insurance recoveries.

FOAMEX INTíL: Faces Securities Suit In Dela Over Trace Holdings Merger
Report of Foamex International Inc for the quarter ended September 30,
1999 filed with the SEC as of November 2, 1999:

On or about March 17, 1998, five purported class action lawsuits were
filed in the Delaware Chancery Court, New Castle County (the "Court"),
against the Company, directors of the Company, Trace Holdings, and
individual officers and directors of Trace Holdings: Brickell Partners
v. Marshall S. Cogan, et al., No. 16260NC; Mimona Capital v. Salvatore
J. Bonanno, et al., No. 16259NC; Daniel Cohen v. Foamex International
Inc., No. 16263; Eileen Karisinki v. Foamex International Inc., et al.,
No. 16261NC and John E. Funky Trust v. Salvatore J. Bonanno, et al., No.
16267. A sixth purported class action lawsuit, Barnett Stepak v. Foamex
International Inc., et al., No. 16277, was filed on or about March 23,
1998 against the same defendants. A stipulation and order consolidating
these six actions under the caption In re Foamex International Inc.
Shareholders Litigation Consolidated Action No 16259NC was entered by
the Court on May 28, 1998 (the "Shareholders Litigation").

The complaints in the six actions allege, among other things, that the
defendants have violated fiduciary and other common law duties
purportedly owed to the Company's stockholders in connection with Trace
Holdings' initial proposal to acquire all of the outstanding shares of
the Company's common stock (the "First Merger Agreement"). The
complaints sought, among other things, class certification, a
declaration that the defendants have breached their fiduciary duties to
the class, preliminary and permanent injunctions barring implementation
of the proposed transaction, rescission of the transaction if
consummated, unspecified compensatory damages, and costs and attorneys'

The parties to the Shareholders Litigation entered into a Memorandum of
Understanding, dated June 25, 1998 to settle the Shareholders
Litigation, subject to, inter alia, execution of a definitive
Stipulation of Settlement and approval by the Court following notice to
the public stockholders and a hearing, and on September 9, 1998, the
parties entered into a definitive Stipulation of Settlement. On November
10, 1998, counsel for certain of the defendants in the Shareholders
Litigation gave notice pursuant to the Stipulation of Settlement that
such defendants were withdrawing from the Stipulation of Settlement. On
November 12, 1998, the plaintiffs in the Shareholder Litigation filed an
amended class action complaint against the Company, Trace Holdings and
certain individual directors of the Company alleging that (i) they
breached their fiduciary and other common law duties purportedly owed to
the Company's stockholders in connection with Trace Holding's revised
proposal to acquire all of the outstanding shares of the Company's
common stock (the "Second Merger Agreement"), (ii) the individual
defendants violated the Delaware Code in approving the Second Merger
Agreement, and (iii) Trace Holdings breached the Stipulation of

FOAMEX INTíL: Resolves Fd & CA Breast Implant Suits; Faces Suits Abroad
As of November 16, 1998, the Company and Trace International Holdings,
Inc. were two of multiple defendants in actions filed on behalf of
approximately 5,000 recipients of  breast implants in various United
States federal and state courts and one Canadian provincial court. Some
of these actions allege substantial damages, but most of these actions
allege unspecified damages for personal injuries of various types. Three
of these cases seek to allege claims on behalf of all breast implant
recipients or other allegedly affected parties, but no class has been
approved or certified by the court. In addition, three cases have been
filed alleging claims on behalf of approximately 700 residents of
Australia, New Zealand, England, and Ireland. The Company believes that
the number of suits may increase.

During 1995, the Company and Trace Holdings were granted summary
judgments and dismissed as defendants from all cases in the federal
courts of the United States and the state courts of California. Appeals
for these decisions were withdrawn and the decisions are final.

Although breast implants do not contain foam, certain silicone gel
implants were produced using a polyurethane foam covering fabricated by
independent distributors or fabricators from bulk foam purchased from
the Company or Trace Holdings. Neither the Company nor Trace Holdings
recommended, authorized or approved the use of its foam for these
purposes. Foamex L.P. is indemnified by Trace Holdings for any such
liabilities relating to foam manufactured prior to October 1990.
Although Trace Holdings has paid the Company's litigation expenses to
date pursuant to such indemnification, there can be no assurance that
Trace Holdings will be able to provide such indemnification in the

FOCUS ENHANCEMENTS: Lionel Z. Glancy Files Securities Suit In MA
Pursuant to Section 21(D)(A)(3)(a)(i) of the Securities Exchange Act of
1934, Notice is hereby given that a Class Action has been commenced in
the United States District Court for the District of Massachusetts on
behalf of a class consisting of all persons who purchased the common
stock of Focus Enhancements, Inc. ("Focus") (NASDAQ: FCSE) between July
17, 1997 and February 19, 1999, inclusive.

The Complaint charges Focus and its Chief Executive Officer with
violations of federal securities laws. Among other things, plaintiff
claims that defendants' material omissions and the dissemination of
materially false and misleading statements regarding the nature of
Focus' operations drove Focus' stock price to a Class Period high
of$7.1875 per share and enabled insiders to profit from sales of Focus
common stock at artificially inflated prices. Focus common stock fell to
a low of $1.125 per share, inflicting enormous damages on investors.

Plaintiff is represented by the Law Offices of Lionel Z. Glancy, a law
firm with significant experience in prosecuting class actions, and
substantial expertise in actions involving corporate fraud.

If you are a member of the Class described above, you may move the
Court, not later than 60 days from November 9, 1999, to serve as lead
plaintiff, however, you must meet certain legal requirements. If you
wish to discuss this action or have any questions concerning this Notice
or your rights or interests with respect to these matters, please
contact Lionel Z. Glancy, Esquire, or Michael Goldberg, Esquire, of the
Law Offices of Lionel Z. Glancy, 1801 Avenue of the Stars, Suite 311,
Los Angeles, California 90067, by telephone at 310/201-9150 or toll-free
888/773-9224 or by e-mail to info@glancylaw.com

FOREMOST CORP: Policyholders Sue In MI Over Mobile Home Insurance
In August 1999, Foremost Corp of America was named as a defendant in an
action in the State Circuit Court of Jefferson County, Mississippi
purportedly filed on behalf of Foremost policyholders. The complaint,
which seeks both compensatory and punitive damages, challenges the
Company's sale of mobile home insurance containing coverage for adjacent
structures as part of the package of coverages included in its standard
policy. The complaint alleges that the Company and its Mississippi
agents failed to disclose information about the adjacent structures
coverage. The Company denies the allegations and intends vigorously to
defend the suit. The Company has removed the case to the United States
District Court for the Southern District of Mississippi. Plaintiffs have
filed a petition seeking to remand the case back to the state court.
There has been no ruling by the federal court on plaintiffs' remand
motion. The Company believes that the case lacks merit. The Company has
not established a specific reserve for this case because the amount of
the Company's liability exposure, if any, cannot be reasonably

FOREMOST CORP: Sued Over Force-Placed Collateral Protection Insurance
In April 1996, national class actions were filed by the same group of
plaintiffs' attorneys in Wisconsin, Illinois and Florida state courts
against Foremost Corp of America and certain other defendants alleging
misrepresentations in connection with the sale of force-placed
collateral protection insurance. The complaints sought unspecified
compensatory and punitive damages.

The Wisconsin case was conditionally class certified by the Wisconsin
state court, before service of the complaint. On June 22, 1998, the
Circuit Court of Waupaca County, Wisconsin, issued an Order vacating the
class certification dismissing all claims against the Company in the
Wisconsin action, without prejudice. The case filed in the Circuit Court
of the Sixth Judicial Circuit, Champaign County, Illinois, was dismissed
by stipulation without prejudice on April 6, 1999. The action filed in
the Circuit Court of the Eleventh Judicial Circuit in and for Dade
County, Florida, has been stayed.

The Company will defend this remaining case, if the stay is terminated,
and believes that the case lacks merit. The Company has not established
a specific reserve for these related actions, because the amount of the
Company's liability exposure, if any, cannot be reasonably estimated.

HBR: No Harm Done, No Class Action, Rules Judge In Fla. Collection Case
Should a bill collection company face a possible $ 75 million to $ 95
million class-action judgment for violating state consumer protection
laws if none of the class members suffered actual harm?

Not in my court, Palm Beach Circuit Court Judge Lucy Chernow Brown
wrote. Brown rejected a bid by two lawyers claiming to represent between
150,000 and 190,000 Floridians. Each sought $ 500 in maximum statutory
damages plus legal fees for alleged violations of the Florida Consumer
Collection Protection Act.

West Palm Beach lawyers Phillip L. Valente Jr. and Louis Silber, a
partner with Lewis Vegosen Rosenbach & Silber, urged Brown to certify a
class action claiming that HBR, a subsidiary of Coastal Physicians
Group, mailed invoices in 1996 threatening the debtors with possible
action by the state attorney general and/or a collection expense equal
to 32 percent of the outstanding balance for emergency medical services.
The threat, the lawyers say, is a violation of the consumer protection

Silber said he was disappointed in the ruling. He and Valente are
considering an appeal to the 4th District Court of Appeal within 30
days. While conceding none of the people who received HBRs billings were
actually harmed, Silber stressed that the act aims to deter unsavory
collection tactics and protect the consumer, regardless of whether they
are aware that their rights have been violated. Moreover, he argued,
Brown agreed that the consumers claims satisfied all elements of a class

But Brown ruled that the individuals rights to relief reigned superior
to those available in a class action. Each affected consumer still has
the right to claim $ 500 in damages, on an individual basis. With court
filing fees amounting to about $ 250 -- nearly half of the damage claim
-- few if any of those possible plaintiffs will find it cost effective
to prove HBR and Coastal wrong.

Brown decided that the plaintiffs as a class shouldnít be entitled to a
windfall judgment close to a billion dollars when thereís no proof of
economic harm, said Coastal lawyer Fred Goldberg, of Fort Lauderdales
Berger Davis & Singerman.

Goldberg successfully persuaded Brown that to permit such a class action
to go forward was to expose HBR to annihilating damages -- damages that
could shut down the company when no one suffered actual injury. Goldberg
said that HBR simply copied someone elseís billing form without first
getting legal counsel. And when the Florida attorney general asked HBR
what it was doing making reference to possible action by its office, HBR
immediately eliminated that threat from its invoices.

Goldberg said he suspects plaintiffs may appeal. Goldberg and Silber
agree there is little or no judicial precedent to guide the court or
litigants. (Broward Daily Business Review, Nov-11-1999)

HMO: Harris Methodist Settles TX Suits Re Physician Incentive Payments
Harris Methodist Health Plan agreed to pay $ 4.6 million to settle two
enrollee class-action lawsuits over the Texas HMO's physician incentive

The settlement should clear away any major overhanging liabilities so
Harris Methodist can find a buy-out partner. It's currently talking to
PacifiCare Health Systems Inc., after breaking off talks this summer
(MCW 6/21/99, p. 8) with the merged Blue Cross and Blue Shield of
Illinois and Texas (see related story, p. 4).

The settlement came as the managed care industry reels from class-action
law-suits filed this month against Humana Inc. and Aetna Inc., alleging
the firms with-held important information from enrollees, such as how
physicians are allegedly paid to limit care (MCW 10/11/99, p. 3). More
such suits are expected soon.

The Texas class-action suits differ from the Aetna/Humana cases because
enrollees alleged that Harris Methodist Health Plan affirmatively
misrepresented it did nothing to interfere with the physician-patient
relationship. In fact, the enrollees charged, the HMO's incentive
payment system interfered with MDs' medical decisionmaking.

Another differentiating factor in the Texas cases: The Texas Insurance
Department in 1998 found Harris' MD payment system was unlawful and
ordered the HMO to pay $ 3.5 million to settle charges that the
financial incentives encouraged doctors to limit medically necessary
services (MCW 8/31/98, p. 2).

The $ 4.6 million settlement resolves (1) an enrollee class-action suit
filed under ERISA alleging Harris breached its fiduciary duty, and (2) a
class-action filed under state tort law by non-ERISA enrollees alleging
marketing misrepresentations. Ingram vs. Harris Health Plan, No.
98-CV-179 (USDC E.D. Texas, settlement filed Oct. 12, 1999).

"This is the first class-action case we're aware of where enrollees have
won payments based on alleged misrepresentations and breach of fiduciary
duty" beyond the class-action suits against various Blue Cross-Blue
Shield plans over improper copayments charged to enrollees, says George
Parker Young, an attorney for the enrollees. (Managed Care Week

HMO: Hermans Link Lawyers To Sue; Tag-Team Lawyers Make Business Blink
Without even setting foot in a courtroom, Russ and Maury Herman have
frightened a fortune out of the health insurance industry. The brothers
and law partners have created a "national mega-firm," linking lawyers
across the country to sue HMOs for a variety of alleged frauds. It's
unclear whether these cases will win over judges or juries. But spooked
by litigation filed by the Hermans and others, investors unloaded shares
of national HMOs in a late-September frenzy, erasing $ 12 billion in
stock value in a single day. Some of the companies have yet to recover.

"What the HMOs need is an attitude adjustment," drawls Russ Herman, the
older of the pair. The sell-off highlighted a new style of legal attack
that has helped plaintiffs' lawyers win record-setting sums in the past
year. Once loners by nature, trial lawyers are now allying to split
costs, share information and demonstrate that their pockets are deep
enough for protracted war.

The strategy is giving corporate America a gang problem of its own. The
key audience in these campaigns isn't the targeted companies, whose
coffers still dwarf the combined bank accounts of even the wealthiest
plaintiffs' firms. It is Wall Street, which in some notable cases has
severely battered the share prices of corporate defendants, pushing them
to the settlement table.

By leveraging the might of the stock market, these legal collectives are
altering the balance of power in the never-ending battles between trial
lawyers and the companies they sue.

Juries are increasingly willing to punish businesses with huge
punitive-damages verdicts, angling to send messages to other players in
an industry. In 1998, the top 10 verdicts awarded in the United States
totaled $ 2.8 billion, up 375 percent over the top 10 verdicts of 1997,
according to Lawyers Weekly USA. Those figures have turned courts into
increasingly treacherous and unpredictable terrain for corporations.
"It's the fear of the nuclear-bomb verdict that gives leverage to
plaintiffs' lawyers to make threats and play off a company's stock
price," said George Priest, a professor at Yale Law School. "Jury
verdicts nowadays can put companies out of business."

At the same time, a handful of judges, frustrated with the paralysis of
legislatures, have been allowing plaintiffs' lawyers to try out legal
theories once considered adventurous at best. The New York lawsuit that
helped breathed life into what is now a multi-city assault on the gun
industry, for instance, was based on a concept that other judges have
rejected for years.

Some corporate lawyers now say that the legal merits of any given case
are all but beside the point. What matters most is putting together a
squad of lawyers big and rich enough to convince Wall Street that a
company will be bogged down in courts for years. "It's legal extortion,"
said Victor Schwartz, counsel to the American Tort Reform Association, a
group that has lobbied for tighter limits on class-action suits. "Every
CEO fears the random billion-dollar verdict and the wrath of
stockholders that could bring. But when companies settle, even if it
isn't on the merits, the stock will rise."

Consumer advocates and some academics contend that plaintiffs' lawyers
are merely leveling a battleground that has long been tilted
disastrously against them. Fortune 500 companies, they say, have for
years tried to overwhelm adversaries through attrition, swamping their
far smaller antagonists with reams of documents and stalling long enough
to force them to the brink of bankruptcy. "If your opponent has
tremendous financial resources, you need tremendous financial
resources," said Heidi Li Feldman of Georgetown University Law Center.
"Until the early 1990s, the plaintiffs' bar didn't have the financial
resources to compete."

Tag-team lawyering began in earnest during the tobacco wars of the 1990s
and has since been refined by various practitioners. Aided by e-mail
messages and CD-ROMs, for instance, an allied scrum of attorneys
recently provoked American Home Products Corp. into a $ 3.75 billion
out-of-court settlement with users of the fen-phen diet pill
combination. Company executives said their willingness to deal was
driven largely by the need to resuscitate the company's shares, which
were nearly cut in half by investors fretting over the prospect of years
of litigation.

In the HMO suits, Wall Street is playing its most prominent role to
date. One lawyer who is not affiliated with the Hermans, Richard Scruggs
of Mississippi, has taken the unusual step of meeting with key HMO
analysts at Morgan Stanley Dean Witter and Prudential Securities and
even participated in a conference call with dozens of institutional
investors. According to Scruggs, the purpose of these discussions is to
educate. "In the past, nobody has communicated directly with investors
about the vulnerability of their money," Scruggs explained. "Executives
usually get their advice from company lawyers who tell them to fight
until the last investor's dollars are spent."

Officials at Aetna Inc., a defendant in one of the suits, have a more
sinister take on Scruggs's dialogue with Wall Street, describing it as
part of a campaign to frighten HMOs to the negotiating table. "In one
day, more than $ 10 billion in American savings was vaporized just by
the bark of the wolf," said Aetna chief executive Richard L. Huber,
referring to the plunge taken by HMO shares after the lawsuits came to
light. "The brazenness is astounding."

Billions in legal fees are spent every year by U.S. corporations
defending against a dizzying variety of product-liability and
personal-injury suits. To plaintiffs' lawyers, the suits are an
invaluable way to hold corporations accountable for corner-cutting that
harms consumers. Critics of the tort system contend these lawyers are
far better at enriching themselves than winning justice for clients, who
in some case have ended up with trifling sums while their attorneys
pocket millions of dollars.

Veterans of dozens of court triumphs, the Hermans are taking joint
lawyering to another level. Short, wry and ubiquitous, the brothers have
built their practice courtesy of a series of chilling accidents, such as
railroad collisions and industrial explosions. One plaque in their
office heralds a $ 3.5 million settlement for an elderly woman who was
the victim of an electric shock administered by a hand-held "personal

That award began to seem like chump change after the brothers were hired
by Louisiana's attorney general to join a group of lawyers participating
in landmark tobacco lawsuit, a case that yielded a $ 260 billion
out-of-court settlement.

Two years ago, when the Hermans conceived a full-blown attack on HMOs,
they concluded that the litigation would be too risky and expensive to
go it alone. "We're not foolish," Russ Herman said with a grin. "We've
got families to support." They decided to launch a "firm of firms," as
they call it. Enlisting firms in California, Georgia and Mississippi
that had been co-counsels with the Hermans in previous cases, the group
commissioned a study to determine where the new firm should be based.
Atlanta got the nod because it's an air-transportation hub and home to
four law schools, which will make it easier to recruit the teams of
researchers the firm needs.

For help drafting a first-of-its-kind partnership agreement, Russ Herman
called on the Washington firm of Patton Boggs, run by the Hermans'
longtime family friend Tommy Boggs. After months of research and $
500,000 in start-up costs, Herman, Middleton, Casey & Kitchens, as the
firm is called, opened its doors in July. The Hermans expect that
litigating the HMO cases could cost a total of $ 3 million, and perhaps
much more.

Since the brothers went public with their plans in late September, other
firms have filed similar actions, including a case against Humana Inc.
When news of these suits hit Wall Street, shares of Aetna dropped 18
percent and a Morgan Stanley index of health insurance stocks sank by 10
percent. The companies have since regained some, though hardly all, of
those losses. Last month, the House of Representatives added to the woes
of insurers by voting to broaden the rights of patients to sue their

While success with these suits is hardly assured, the sheer magnitude of
this onslaught, coupled with the enduring unpopularity of the HMO
industry and the pummeling of insurance companies at the hands of Wall
Street, could matter more than the legal niceties. Tobacco companies,
after all, settled at a negotiating table rather than duke it out in the
courts, where they prevailed for years. Public opinion was turning
against cigarette makers, and they finally faced foes with enough cash
to last through countless trials. Investors fled in droves.

In its basic outlines, that's the predicament facing managed care today.
"If HMO investors were smart," said plaintiffs' lawyer Richard Scruggs,
"they'll lean on their companies to see if we can work something out."
(The Washington Post, Section: A Section; Pg. A01, Nov-12-1999)

LETíS TALK: Penn Suit Over Cellular Phone Fees Seeks Nat. Class Status
Using the Pennsylvania Unfair Trade Practices and Consumer Protection
Law, a cellular telephone customer, charged a cancellation fee and
exorbitant collection fee, recently requested national class
certification in an action claiming that he and other consumers were the
victims of unfair and deceptive business and collection practices.
(Schilling v. Let's Talk Cellular and Wireless d/b/a Let's Talk Cellular
and Wireless Inc., Let's Talk Cellular of America Inc., Let's Talk
Cellular and Paging and Let's Talk Cellular, et al., No. 000285,
Philadelphia County C.P. filed 10/5/99).

                            Service Contract

In October 1998, Richard A. Schilling entered into an agreement with
Let's Talk Cellular and Wireless for a cellular telephone and wireless
telephone service. Under the agreement, Schilling was required to
maintain wireless telephone service for a minimum of 212 days. The
agreement also provided that Schilling would be liable for "all
additional collection fees allowed by law" and a 300 cancellation fee if
he terminated his contract before the 212th day.

In February 1999, Schilling cancelled his wireless service and LTC hired
ProCollect Inc. to collect his cancellation fee. ProCollect, in an
attempt to recover the cancellation fee, mailed Schilling a dunning
letter which stated that Schilling owed LTC 520. The collection letter
explained the debt had been referred to ProCollect for "immediate
action" and directed Schilling "pay this debt NOW."

Upon receipt of the dunning letter, Schilling contacted ProCollect to
inquire and dispute the amount of the debt to LTC. ProCollect informed
Schilling that the 520 consisted of the 300 cancellation fee and a 220
collection fee.

Because ProCollect and LTC reported derogatory credit history
information concerning him to all three major credit-reporting agencies,
Schilling felt compelled to pay the 520. However, he sued LTC and
ProCollect for violating the Unfair Trade Practices and Consumer
Protection Law, Pennsylvania common law and the Pennsylvania Debt
Collection Trade Practices Regulations.

                            Collection Fee

According to Schilling's complaint, the defendants were only permitted
to charge such collection fees as were reasonably incurred and which
were proportionally related to the efforts and costs of collecting the
debt. Schilling contends the 220 collection fee was an exorbitant and
unconscionable amount and by imposing the allegedly illegal penalty,
breached the parties' contract. Moreover, Schilling argues the
collection fee was not authorized under any state or federal statute.
Further, Schilling alleges the defendants acted in a false, deceptive
and misleading and unfair manner by threatening to communicate and
reporting information to the three major credit reporting agencies which
it knew or should have know to be false and under dispute.


As a result of LTC's and ProCollect's conduct, Schilling claims to have
sustained actual damages including payment of unauthorized amounts,
injury to his reputation, damage to his credit rating and emotional and
mental pain and anguish. He requests actual damages, statutory damages,
punitive damages, treble damages, costs, attorney's fees and an order
declaring that the defendants' actions violated common law and statutory
law of Pennsylvania and other states, the Consumer Protection Law, the
regulations and the UDAP statutes of other states. Additionally,
Schilling requests the Court of Common Pleas of Philadelphia County, Pa.
to enjoin the defendants from continuing to communicate with him.

                           Class Certification

On behalf of Schilling, James A. Francis and Mark D. Mailman of Francis
& Mailman in Philadelphia and Michael D. Donovan and David A. Searles of
Donovan Miller LLC in Philadelphia requested national class
certification for all persons who received similar letters regarding
their wireless telephone service or were charge an illegal collection
fee within the past six years. Mark Mailman informed Consumer Financial
Services Law Report that Schilling relies on the Pennsylvania Superior
Court's holding in Weinberg v. Sun Company Inc. (Pa. Super. 9/10/99) to
support his argument for nationwide class certification. In Weinberg,
the Superior Court ruled that a "Pennsylvania court may certify a
national class."

The complaint alleges that the following common questions of law and
fact affect the rights of the proposed class members: (1) whether the
defendants' imposition of the collection fees is an unfair penalty in
violation of the common and statutory laws of Pennsylvania and other
states; (2) whether the defendants attempt to collect the collection fee
violated the CPL and regulations and the statutes of other states
governing unfair and deceptive acts and practices; (3) whether the
defendants breached the parties' contracts; and (4) whether the
plaintiffs are entitled to injunctive relief and damages.

Mark Hill in Philadelphia represents Pro Collect Inc. and Lazarus
Rothstein in Miami represents the LTC defendants. (Consumer Financial
Services Law Report, Vol. 3, No. 10, Nov-3-1999)

MCKESSON HBOC: Judge To Decide Who Will Take Charge In Securities Case
San Jose U.S. District Judge Ronald Whyte has yet to make up his mind on
who will take charge of one of the largest securities class actions in
the country. But he did decide two things last week in what might be a
$1 billion case against McKesson HBOC Inc.

First, he joined a trend among federal judges and ruled that so-called
aggregation of plaintiffs into one group so as to win lead counsel
status is verboten. Second, and perhaps more important to two large East
Coast plaintiffs firms, Whyte barred an institutional investor from
Florida from serving as lead plaintiff because it is a "professional

The banning of the Florida State Board of Administration stings
Philadelphia's Barrack, Rodos & Bacine and New York's Bernstein Litowitz
Berger & Grossmann in their attempt to win lead counsel status. The two
firms represent the Florida fund along with a pension fund from New York
state, which is still in the running against a New York City fund for
lead plaintiff status.

The two firms had hoped to combine the Florida and New York pension
funds into one plaintiffs group with the biggest overall losses in the
massive stock-drop case. But with Florida knocked off the case, it
appears that the New York City fund has the inside track. That fund is
represented by San Francisco's Lieff, Cabraser, Heimann & Bernstein and
Lowey Dannenberg Bemporad & Selinger of White Plains, N.Y.

Meanwhile, Whyte knocked several firms, including San Diego's Milberg
Weiss Bershad Hynes & Lerach, out of the running for lead counsel
because they had nothing to offer as clients but disparate shareholders
gathered into one giant group. That practice of aggregation, Whyte
wrote, runs contrary to the intentions of the seminal Private Securities
Litigation Reform Act. Congress passed the PSLRA in 1996 to curb
lawyer-driven securities litigation.

"The disadvantage, of course," Whyte wrote in a Nov. 2 order, "is that
plaintiff's counsel captures control of the process by assembling groups
of litigants that will find it difficult to coordinate their supervision
of the representation: This is precisely the evil that Congress sought
to eliminate."

Whyte's aversion is part of a new trend among federal judges. Two days
after his ruling, in an unrelated case, newly appointed Northern
District Judge William Alsup told lawyers vying for lead plaintiff
status in In re Network Associates Inc. Securities Litigation, 99-1729,
that "I recognize that there are other courts that have gone the other
way, but I don't think they did it right. I think what Congress had in
mind was either one lead plaintiff or . . . if there is going to be a
group, it's got to be a pre-existing group that is not formed by the

Until recently, many judges -- including at least two in the Northern
District -- have found aggregation permissible, but not preferred.
Several lawyers, including Lieff, Cabraser's James Finberg, say one big
reason for the change is an amicus curiae brief the Securities and
Exchange Commission filed in April in a stock-drop suit in Washington,

The SEC said in In re The Baan Co. Securities Litigation, 223178, that
institutional investors should be given preference when aggrieved
shareholders are competing for lead plaintiff status. The brief stated
federal law does not "suggest that an institutional investor must or
should always be chosen as lead plaintiff . . . but it does strongly
suggest that if a 'group of persons' is to serve in that role, it should
have comparable ability to control the litigation and the lawyers."

Two years ago, Northern District Senior Judge Samuel Conti called
aggregation "permissible but suboptimal" when he appointed Milberg Weiss
as lead plaintiffs counsel of In re Macromedia, 97-3521.

And U.S. District Judge Vaughn Walker said in a September order in
Wenderhold v. Cylink Corp., 98-4296, that he didn't like the practice,
but found it "permissible if it can be shown to serve the PSLRA's
efforts to shift control of the litigation away from the lawyers and to
the investors."

In the McKesson ruling, Whyte appeared to contradict his own logic in an
earlier case, In re Read-Rite Corp. Securities Litigation, 97-20059,
where he allowed nine disparate Milberg Weiss clients to band together
and form a lead group. But in that case, Whyte said, there was no
competition for lead plaintiff status and the only objection to Milberg
Weiss obtaining the lead plaintiffs counsel status came from the

In In re McKesson HBOC Inc. Securities Litigation, 99-20743, a dozen
plaintiffs firms filed 12 competing motions for lead plaintiffs out of
the 54 suits filed. The suits were filed in the wake of McKesson's
"rather startling admissions," as Whyte termed it, in April. The giant
pharmaceutical wholesaler and medical software maker acknowledged on
April 28 that it would have to drastically restate earnings for 1998
because of accounting irregularities uncovered at HBOC Inc., the
software giant it recently purchased. HBOC had "improperly recognized"
$40 million worth of sales, McKesson admitted in a press release.

Immediately after that announcement, McKesson's stock dropped from
$89.75 a share that day to a little under $20 a share at the close of
market Wednesday. That prompted the flurry of suits by investors
claiming to have bought the stock at inflated prices.

Whichever plaintiffs firm ends up as lead litigator is in store for a
giant payday as the case is expected to settle quickly and for a large
amount -- perhaps as much as $1 billion. Using the recent $3 billion
settlement in a New Jersey case against Cendant Corp. as a guidepost,
the lead firms are in line for fees of at least 10 percent of the
settlement in McKesson, if not more.

Whyte said in his order that he has narrowed the lead plaintiffs race to
the two New York funds. But the judge declined to pick one fund over the
other because he said he didn't have enough financial information to
determine which had lost more in the alleged fraud.

New York state's claim to the throne suffered a huge blow when Whyte
said that the Florida State Board of Administration could not serve as
lead plaintiff. Barrack, Rodos had presented New York state and Florida
as a single plaintiff, a partnership with combined losses allegedly
reaching $236 million. That would have dwarfed New York City's claim of
$71 million.

But since Florida is already the lead plaintiff in six other securities
case, Whyte labeled it a "professional plaintiff" and barred it from
serving as lead in McKesson. The PSLRA forbids a plaintiff from serving
as lead plaintiff in more than five securities cases in any three-year
period. Barrack, Rodos argued unsuccessfully that the ban targeted
individual investors -- and not institutional investors, which Congress
called the ideal lead plaintiff.

But Whyte said lawmakers did not distinguish between individual and
institutional investors when they put the ban in place. "The text of the
statute contains no flat exemptions for institutional investors," he

Now, the two New York funds are fighting over who lost more. The city
argues that it lost $71 million, while attorneys for the state contend
that is an inflated figure and that the city lost only $55 million.
Meanwhile, the state estimates its losses at $56 million.

"While not directly averring to the possibility of a face-off between
NYS and NYC, the NYS Fund's calculations are an obvious attempt to
preclude NYC from becoming lead plaintiff even if Florida is excluded
(as it just has been)," Whyte wrote. Whyte ordered attorneys for both
parties to submit additional financial data by Nov. 19 before
determining the lead plaintiff. (The Recorder Nov-11-1999)

MILLION DOLLAR: Saloon Will Vigorously Defend TX Suit Re Overcharges
Million Dollar Saloon Inc. is one of several defendants in Cause No.
DV99-02585-L; Roy D. Stedham v. The Million Dollar Saloon, et al.; 193rd
District Court, Dallas County, Texas which is alleged to be a class
action seeking monetary damages for violation of the Texas Finance Code
concerning overcharges for purchases of certain items by the use of a
credit card. The Company has denied the allegations and intends to
vigorously contest the claims asserted. The Company does not believe
that the plaintiff/class will prevail on their claims. The monetary
damages sought, plus attorneys' fees, in management's opinion does not
constitute an amount that is material to the Company.

MIRACLE SUPPLY: Female Employees File Suit In Il. Over Bathroom Spying
Led by their visiting national president, members of the National
Organization for Women held a protest November 14, 1999 outside a
plumbing-supply company where female employees allegedly were spied upon
while using the bathroom.

"We will get rid of the jerks who harass at work," Patricia Ireland,
NOW's president, said as she stood in the back bed of a small Ford
pickup. "This is one of the most egregious harassment situations I've
ever heard of. It's a sign of the progress we've made that we meet
resistance like this." Ireland spoke outside the front gate of Miracle
Supply Co. Inc., 1580 North and South Road, just south of Page Avenue in
University City. Among the 50 people who marched and chanted with her
were the four women -- three of whom are former Miracle employees -- who
made the allegations in a lawsuit filed Oct. 4 in St. Louis County
Circuit Court.

The lawsuit accuses Martin Holtzman, president of Miracle, and its
vice-president, Michael M. Dattilo, of invading their privacy by
allegedly allowing the installation of a hidden video camera in the
office bathroom that female employees used.

Neither Holtzman nor Dattilo could be reached for comment. Dattilo, 42,
of St. Charles, was charged in April 1997 with 11 counts of invasion of
privacy, a misdemeanor. A disposition of that case was unavailable
because county offices were closed for Veterans Day.

The 50 marchers also included state Sen. William Lacy Clay, D-St. Louis,
and state Rep. Rita Days, D-Bel-Nor, both of whom took turns speaking
from the pickup. Marchers carried signs, including ones that said, "We
despise bathroom spies" and "Cameras don't belong in the john."

Before Ireland and the others spoke, protesters marched in a circle
outside Miracle's high cyclone fence. They chanted a mix of general
demands for equality and specific attacks upon Miracle management.

Betty Hofstetter of Belleville, lead plaintiff in the lawsuit, said she
was fired the day Holtzman learned of the suit. Hofstetter, 60, said she
and other employees discovered the video-taping system in April 1997
after following a cable from a hole in their bathroom wall into an
office that Holtzman and Dattilo used. "You expect privacy when you're
going to the bathroom, and when that's taken away, you don't have much
privacy left," she told reporters. Hofstetter said she continued working
there because she wanted the paycheck. When it was her turn to stand in
the pickup, Hofstetter fought tears while she briefly thanked the
marchers. She then urged them to raise a cheer for veterans.

Ira Blank, a lawyer for Miracle and its two executives, said Hofstetter
didn't file suit in St. Louis County until last month because she had
gone first to the federal Equal Employment Opportunity Commission, then
to the U.S. District Court. Blank said the federal court dismissed her

Blank said he could not comment on Hofstetter's allegations because the
company already has reached a private settlement with another person on
the matter. Hofstetter said she refused to accept a settlement.

Ireland was in the area for a debate on November 10 with Phyllis
Schlafly at McKendree College in Lebanon, Ill. (St. Louis Post-Dispatch,
Metro, Pg. B1, Nov-12-1999)

NJ POLICE: Racial Profiling Case May Go Beyond Turnpike; Trial Nov 15
A Morris County judge's finding that racial profiling may be a wider
practice than the state attorney general has admitted could open the
door to countless post-conviction motions by minority defendants,
regardless of whether or not they were arrested on the New Jersey

On Oct. 29, Superior Court Judge B. Theodore Bozonelis reopened a drug
possession conviction upon a finding that profiling -- of the type
detailed in the attorney general's "Interim Report of the State Police
Review Team Regarding Allegations of Racial Profiling" issued last July
-- may have played a part in an arrest on Route 80.

Bozonelis reasoned that because the state admitted in the report that
profiling has occurred on the turnpike, and because all troopers undergo
the same training, profiling is not limited to troopers who patrol the
turnpike. The judge has scheduled a hearing for Nov. 15 to decide on the
scope of his ruling. "I want this to be a finite period. The report does
not go back indefinitely into the 1960s or the 1970s," Bozonelis wrote
in State v. Ross, A-1237-97T4.

The defendant, Thomas Ross, was driving west on Route 80 in Roxbury in
August 1995 when he was stopped for failing to keep right. He allowed
the trooper to search his car, which disclosed five ounces of crack
cocaine and 50 grams of marijuana under the front seat. In March 1997,
Ross was convicted and sentenced to 15 years in prison, with five years
of parole ineligibility.

Ross's attorney on appeal, Shepard Kays, a Sparta solo practitioner,
argues that his client fit the profile that state troopers have admitted
using in stops on the turnpike: an African-American driving a car with
out-of-state plates (in this case, Virginia). "Troopers are trained at
one barracks and they were all taught to profile regardless of which
roadway they patrolled," says Kays.

In State v. Soto, A-5334-95T3, a 1996 Gloucester County case, two
troopers testified that they had been trained to stop motorists fitting
that profile. The state appealed the dismissal of charges in Soto, but
then withdrew the appeal and issued its July report.

Chuck Davis, a spokesman for the state attorney general, says his office
has asked judges to "look at these stops on a case-by-case basis, and
that has not occurred." He adds that the report "clearly spelled out
that it dealt solely with the southern portion of the New Jersey
Turnpike, and other roadways would be outside the ambit of the report."
The attorney general is still deciding whether to appeal, Davis says.

Ross raised the issue of race at his original trial, and Kays says he
believes that Bozonelis' ruling will only benefit those defendants who

William Buckman, a Moorestown solo practitioner who is representing
victims of racial profiling in criminal and civil cases, takes a broader
view, saying Bozonelis' decision will have a ripple effect on all
profiling cases because it recognizes profiling as a statewide problem.

In August, Buckman laid the groundwork to extend the applicability of
the report beyond the turnpike when he persuaded Burlington County
Superior Court Judge Edmund Bernhard to pursue further discovery in a
pending criminal case, State v. Maiolino, Buckman represented a black
woman who was stopped by a trooper on Route 78 in Flemington and charged
with drug possession. Bernhard held on Aug. 13 that there was a
colorable basis that the stop was a result of racial profiling, and on
Oct. 8, he signed an order granting extraordinary discovery.

Buckman says that in order for New Jersey to correct the problems that
racial profiling has caused it needs to follow the lead of Philadelphia
prosecutors, who reopened some 1,200 cases in 1995 after a Philadelphia
drug enforcement unit was found to have conducted a series of illegal
search and seizures based on manufactured evidence. Of those convictions
42 were overturned. In New Jersey, by contrast, "the attorney general
and state police's concession of profiling has been a concession without
substance," Buckman says.

Buckman is co-counsel for a class of New Jersey plaintiffs suing the
state over racial profiling practices, Morka v. New Jersey, L-8429-97.
Felix Morka, a Nigerian national, and Laila Maher, an Egyptian-American
attorney who practices in New York City, were pulled over for speeding
on the turnpike near the Cranbury exit in 1996. They allege that two
troopers pulled Morka out of the car, verbally abused him and Maher and
held Maher at gunpoint. Morka was ticketed for speeding, but no arrests
were made.

The suit charges that since the turnpike is a public accommodation
within the meaning of the state's Law Against Discrimination, the state
police are illegally discriminating by disproportionately targeting
minorities for traffic stops. The suit seeks monetary damages, including
punitives, and calls for the use of video cameras at all stops and
mandatory sensitivity training for all troopers.

Buckman's co-counsel, Neil Mullin, a partner with Montclair's Smith
Mullin, says the class of plaintiffs stands at nearly 100,000 people who
have been profiled in the past 10 years. Also serving as counsel are
Lawrence Lustberg, a partner with Newark's Gibbons, Del Deo, Dolan,
Griffinger & Vecchione, and the American Civil Liberties Union.

A separate federal civil class action alleging racial profiling, White
v. Williams, 99-240, was filed in May in Camden by Philadelphia attorney
Allan Yatvin. The plaintiffs, Thomas White and John McKenzie, both of
Philadelphia, allege they were stopped by troopers on the turnpike
because of their race. White was stopped for driving erratically in May
1998 near Exit 7 in Burlington County. After the trooper checked White's
license, registration and insurance and searched the trunk of the car,
the trooper released him without giving him a ticket. In October 1997,
McKenzie was stopped for driving too slowly near Exit 6 in Burlington
County. McKenzie and his girlfriend were ordered out of the car while
the trooper searched the trunk and the glove compartment. Nothing was
found and McKenzie was released. The suit, filed under 42 U.S.C. 1983,
alleges that McKenzie and White were embarrassed and humiliated. The
suit names former New Jersey State Police Supts. Carl Williams and
Clinton Pagano, former Attorney General Peter Verniero and the New
Jersey Turnpike Authority as defendants. (New Jersey Law Journal, 158
N.J.L.J. 465, Nov-8-1999)

PATRICK STEVEDORES: Aust Govt, Reith Struck Out Of Dock Workersí Suit
The federal government and Workplace Relations Minister Peter Reith were
on November 12 struck out of a multi-million dollar federal court class
action by disgruntled former Dubai/Webb dock workers. A total of 267 of
the non-union workforce who were recruited and trained for the
Australian waterfront industry in late 1997 and early 1998 - including
former SAS and regular Army personnel, police officers and farmers -
brought the action after their contracts were terminated by Patrick
Stevedores Holdings.

Patricks and the National Farmers Federation recruited the non-union
workers to be trained in stevedoring work in the Port of Dubai and also
at Webb Dock at the Port of Melbourne. The workers alleged they were
lured into the contracts by promises of a "job for life" with a
competitive salary and hardship allowance.
The workers, who were members of the Australasian Stevedores Guild, were
put out of a job when the Maritime Workers Union won a federal court
case which forced Patrick to reinstate them. The court decision came at
the end of a lengthy picketting by the MUA at capital city ports
throughout the country in early 1998.

It's alleged Peter Reith was behind the strategy to change and
de-unionize the waterfront industry. The Dubai workers alleged Mr Reith
and the federal government had a duty of care to them to "take all
reasonable steps" to inform them of the part they were to play in the
"strategy" and to warn them of the risks, particularly of financial
loss, which may have deterred them from entering into the contracts.

However, Federal Court justice Susan Kiefel found the minister and the
government were not liable for what was promised by the Patricks'
companies. "It remains the case that mere knowledge of the risk of such
harm is not sufficient to give rise to a duty of care," she wrote in her

Patricks and the National Farmers Federation had been attempting to have
the Dubai workers' claim struck out in its entirety. A member of the
original Dubai group, Peter McTernan, told media outside the court they
were happy that two thirds of the class action still remained intact,
although "a little disappointed" Mr Reith and the government had been
struck out as respondents. "Overall the judge made it perfectly clear
that she wants to know more about our losses," Mr McTernan said. "It's a
win for some of our guys who are soldiers over in Dili at the moment."

The group's solicitor, Garry Scott, said they would consider appealing
the decision, and would not give up at this stage on the idea of pulling
the government and the minister back into the action. (AAP Newsfeed

PENNCORP FINANCIAL: Reaches Settlement Agreement For Securities Suit
PennCorp Financial Group, Inc. (NYSE: PFG) announced November 11, 1999
that the parties to the pending shareholder and noteholder class action
lawsuit have entered into a Memorandum of Understanding containing the
essential terms of a settlement.

Under the terms of the Memorandum of Understanding, $9 million of cash
plus interest through the date of consummation of the settlement, will
be paid in full and final settlement of all claims set forth in the
lawsuit. Of that sum, $1.5 million plus interest will be paid by the
Company and $7.5 million plus interest will be paid by its primary
insurance carrier. The settlement is conditioned upon, among other
things, confirmatory discovery, execution of a definitive settlement
agreement and related documents, notice to the Company's shareholders of
the settlement, and final approval by the United States District Court.

In the suit, plaintiffs sought to recover damages in connection with the
purchase of the Company's common stock and subordinated notes during the
period from February 8, 1996 through November 16, 1998. Separate class
action complaints were filed in August 1998, and consolidated into one
action in January 1999.

PennCorp Financial Group, Inc. is an insurance holding company. Through
its subsidiaries, the Company underwrites and markets life insurance and
accident and sickness insurance to the middle market in the United
States and Canada.

PIERCING PAGODA: Judge Dismisses Shareholder Suit Under Advanta
A federal judge has dismissed a class-action shareholders' suit against
the Piercing Pagoda chain of jewelry stores after finding the
investor-plaintiffs had no proof that company officials made materially
misleading statements in an effort to inflate stock prices.

Senior U.S. District Judge John P. Fullam's six-page opinion in Buck v.
Piercing Pagoda is significant if only for illustrating how powerful the
new Private Securities Litigation Reform Act of 1995 will be under the
interpretation it was given by the 3rd U.S. Circuit Court of Appeals in
In re Advanta Corp. Securities Litigation. Coincidentally, both Advanta
and Piercing Pagoda are defense wins for lawyers at Wolf Block Schorr &
Solis-Cohen. Attorney Jerome J. Shestack argued the appeal for Advanta,
and attorneys Abbe F. Fletman and Benjamin Naitove capitalized on
Shestack's win in defending Piercing Pagoda. In Advanta, the 3rd Circuit
tackled the question of whether the PSLRA codified the pleading
requirements developed by the 2nd Circuit's 1987 decision in Beck v.
Manufacturers Hanover Trust Co. or imposed an even more stringent

The court concluded that the new law "established a pleading standard
approximately equal in stringency to that of the 2nd Circuit," and held
that plaintiffs may still plead scienter by alleging facts "establishing
a motive and an opportunity to commit fraud, or by setting forth facts
that constitute circumstantial evidence of either reckless or conscious
behavior." Describing the heightened pleading standard, U.S. Circuit
Judge Anthony J. Scirica, writing for a unanimous three-judge panel,
said "motive and opportunity, like all other allegations of scienter
(intentional, conscious, or reckless behavior), must now be supported by
facts stated 'with particularity' and must give rise to a 'strong
inference' of scienter." The suit against Piercing Pagoda came after the
new law went into effect but before the Advanta decision was handed

In the suit, shareholders allege that company officials made a series of
misleading statements in connection with the July 1998 acquisition by
defendant Piercing Pagoda Inc. of 104 stores previously owned by
Sedgwick Sales Inc. Just three months after the acquisition, the suit
said, Piercing Pagoda announced that it would be declaring
lower-than-expected second-quarter results due to difficulties it
experienced in integrating the Sedgwick stores into its chain. It also
announced that its sales at those stores were lower than expected.

Attorneys Deborah R. Gross and Christopher Thomas Reyna of the Law
Offices of Bernard M. Gross, along with Barbara A. Podell of Savett
Frutkin Podell & Ryan, argued that Piercing Pagoda officials made four
misleading statements in press releases and in the company's 1998 10-K
regarding the Sedgwick acquisition. The first, they said, occurred when
the company claimed that the new stores would "complement [Piercing
Pagoda's] current geographic mix" and that the acquisition "underscores
[the company's] commitment to finding desirable real estate
opportunities." The second was the company's claim that it "believes it
can successfully apply its prior experience opening new stores and
integrating the previous acquisitions to this purchase." The third was
the announcement on July 2, 1998, that "the process of transitioning
these stores to the company's format was begun earlier this week and all
should be operating under [Piercing Pagoda's] banner by this weekend."
Finally, the suit said the company falsely asserted that "in addition to
evaluating malls in which it does not operate stores, the company
continually evaluates malls where its stores are located to determine
whether net sales volumes warrant another kiosk in such malls."

Fletman and Naitove, in their brief supporting a motion to dismiss,
argued that the claims fell far short of the new heightened pleading
standard. "This is a securities fraud case in which plaintiffs claim
that a corporate defendant and two top officers knew or recklessly
disregarded that a 104-store acquisition was doomed to fail at its
inception, and accordingly failed to disclose this 'fact' to the
company's investors," they wrote."

Plaintiffs provide no authority that lack of clairvoyance regarding the
outcome of an acquisition can form the basis for a securities fraud
action," they wrote. Fullam agreed, saying, "The first three statements
identified by plaintiffs will not, as a matter of law, support a
securities fraud claim." The first, Fullam said, "is nothing more than a
vague statement of corporate goals and strategies. It is difficult to
see how plaintiffs can allege that it is false, and even if it were, it
is not material that is, it is too general to be the type of statement
that a reasonable investor would rely upon." The second statement,
Fullam said, "is merely an example of a forward-looking, generalized
statement whereby a corporation paints itself in a favorable light. Even
if defendants knew that the statement were false at the time it was
made, it too is immaterial." The third statement, he said, was not even
alleged to be false at all. Fullam found that the most serious
allegations in the complaint concerned the unspecified daily and weekly
sales reports from each store, which Piercing Pagoda claimed to receive
as a result of their highly touted "sophisticated" management
information systems.

The plaintiffs assert that the reports should have alerted the company
to the fact that the purchase of the Sedgwick kiosks was a bad idea and
that their integration into the chain would be more difficult than the
company's allegedly misleading statements led investors to believe.
Fullam agreed that if the company officials knew they were painting a
misleadingly rosy picture, their "forward-looking" statements about the
prospects for integrating the new stores would not be entitled to the
"safe harbor" provisions of the new law. The plaintiffs allege that 53
of the 104 Sedgwick kiosks were in malls where there was already at
least one Piercing Pagoda store and that defendants knew from the sales
reports they were receiving that these malls would not support
additional stores. But Fullam found that even if there were reports that
contained such information and the plaintiffs had not identified any
such documents they had alleged nothing more than "an instance of bad
business judgment." "There are no facts pled which would permit a court
to infer that any of the defendants had actual knowledge of the falsity
of their statements," Fullam wrote.

As for the individual Piercing Pagoda executives named in the suit,
Fullam said, "Their positions with the company are not enough to support
an inference that they must have known that their positive statements
concerning the Sedgwick acquisition were false or misleading."

Plaintiffs' lawyers argued that the case against Advanta was weaker than
the case against Piercing Pagoda because the purchase of the Sedgwick
stores was the largest acquisition in company history, and therefore was
related to the company's "core business," providing "strong
circumstantial evidence" that defendants were familiar with the
"operational detail" alleged to be contained in the sales reports. They
urged Fullam to follow the logic of In Re: Aetna Securities Litigation,
in which a court greenlighted a case where investors alleged that the
individual defendants falsely represented in two quarters' financial
statements that the integration of Aetna with U.S. Healthcare after the
merger of the two companies was proceeding successfully, whereas in fact
serious problems existed. But Fullam said, "Here, only one quarter
elapsed between the acquisition of the Sedgwick stores and defendants'
announcement of lower than expected second quarter results." The
plaintiffs, Fullam said, "are not claiming that defendants were required
to have proclaimed their new venture a failure any sooner than this."
Instead, he said, the theory of the plaintiffs' case is that company
officials one of whom owns a large percentage of the company's stock
"deliberately entered into a transaction that they knew would fail and
result in a decrease in their individual net worths." The theory failed,
Fullam said, because "there are no facts pled which would support this
inference."(Copies of the six-page opinion in Buck v. Piercing Pagoda,
PICS NO. 99-1863, are available from The Legal Intelligencer. Please
refer to the Pennsylvania Instant Case Service order form on Page 11.)
(The Legal Intelligencer Oct-25-1999)

SOURCE MEDIA: Faces Securities Suits In Texas; Trial Set For June 2000
A total of fourteen class action complaints were filed against Source
Media and certain of its officers and directors in the United States
District Court for the Northern District of Texas asserting violations
of sections 10(b) and 20(a) of the Securities Exchange Act and Rule
10b-5 of the accompanying regulations. The fourteen complaints were
consolidated by Judge Buchmeyer into the first filed case, Hartsell, et
al. v. Source Media, Inc., et al., Civil Action No. 398-CV-1980-R (filed
August 21, 1998), on October 9, 1998. Plaintiffs filed a Consolidated
Amended Complaint on March 3, 1999. Defendants filed a motion to dismiss
the Consolidated Amended Complaint on April 19, 1999. Judge Buchmeyer
heard arguments on Defendants' Motion to Dismiss on July 14, 1999 and
denied the Motion. Defendants filed a motion seeking to certify the
order for immediate appeal by the Fifth Circuit Court of Appeals.
Discovery is proceeding pending a decision on the application for
immediate appeal. Trial has been set for June, 2000. The Company
believes that all of these cases are without merit and will vigorously
defend itself and its officers and directors.


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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