---

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

                Monday, November 22, 1999, Vol. 1, No. 204

                                 Headlines

AMPHENOL CORP: Signs MOU for Settlement of Dela. Suit over NXS Merger
ANTHEM BLUE: Doctors Sue in Conn. over Changes in Reimbursement Rates
BENCHMARK ELECTRONICS: Kirby McInerney Files Securities Suit in Texas
BOEING CO: Agrees to Settle Case over Racial Bias in Salaries
BOSTON POLICE: Ticket Resale Controversy Heats Up; Police Won't Budge

CASINOS: Lawyers Sue in LA & Las Vegas; Debtors Treated Like Criminals
CHARLES KEATING: Ariz. 9th Cir. Overturns $4.3B Judgment on RICO Claims
COCA-COLA: Plaintiffs Voice Severe Punishments for Withholding Papers
ESCROW COMPANIES: CA State Controller Provides Update; $ 2.2 M Remitted
FEN-PHEN: Letters by Plaintiffs' Lawyers Show Disbelief in Health Risk

FMC CORP: Toxicologist Testifies for Plaintiffs at Retrial on Gas Leak
FORD MOTOR: Judge Declares Mistrial for Ignition Modules Defect Lawsuit
HMO: Lawsuit Alleges Aetna of RICO, ERISA Violations
HOLOCAUST VICTIMS: German Envoy to Discuss Compensation with Poles
MOHAWK INDUSTRIES: Contests Carpet Antitrust Suits in Georgia & CA

NELLCOR PURITAN: Ruling May Make Securities Class Action Easier in CA
SALMONELLA OUTBREAK: Aussie Lawsuit against Nippy's for Trial Next Year
SGL CARBON: Ch 11 Filing Legitimate in Face of Price-Fixing Litigation
U.S.: Missouri Landowners along Katy Trail Seek Payments
UPS: Sued in 4 States for Insurance Fraud; Money Put into Bermuda Co.

WIRETAP RULES: Privacy Groups Ask Columbia Ap. Ct. to Throw Out Rules

* Agencies & Groups Join Forces against Telemarketing Fraud

                              *********

AMPHENOL CORP: Signs MOU for Settlement of Dela. Suit over NXS Merger
---------------------------------------------------------------------
On January 23, 1997, the Board of Directors approved, subject to
shareholder approval and certain other closing conditions, and the
Company entered into the Merger Agreement with NXS Acquisition. See "The
Merger." The proposed transaction was announced to the public on January
23, 1997 and on that same date and on January 29, 1997, the Company and
its directors (four of whom are also executive officers of the Company)
were named as defendants in complaints filed in the Court of Chancery in
the State of Delaware by two persons and one person, respectively,
claiming to be stockholders of the Company, individually and purportedly
as a class action on behalf of stockholders of the Company.

In general, the complaints allege that the Company's directors have
breached their fiduciary duties by, among other things, resolving to
approve of the Merger Agreement at an allegedly inadequate price and by
allegedly failing to take adequate steps to enhance the value of the
Company and/or its attractiveness as a merger or acquisition candidate,
including failing to conduct an auction. The complaints seek injunctive
relief prohibiting the Company from, among other things, consummating
the Merger Agreement. The complaints also seek unspecified damages,
attorney's fees and other relief.

On May 9, 1997, the Company announced the signing of a Memorandum of
Understanding with respect to the settlement of the class actions. The
settlement is subject to the execution of a stipulation of settlement
and approval by the Court of Chancery in the State of Delaware following
notice to be provided to the stockholders of the Company constituting
the plaintiff class. The Memorandum of Understanding specifically
provides that the settlement does not constitute any admission of
liability by the Company or any other party with respect to the matters
alleged in the class actions.


ANTHEM BLUE: Doctors Sue in Conn. over Changes in Reimbursement Rates
---------------------------------------------------------------------
Sixteen doctors in the field of orthopedics have filed a lawsuit against
Anthem Blue Cross and Blue Shield of Connecticut for breach of contract,
saying the company arbitrarily changes reimbursement rates. The lawsuit
was filed in Waterbury Superior Court, and seeks class-action status.

The doctors' attorney, William J. Sweeney Jr., said Anthem Blues changes
reimbursement rates without notice, and pays doctors different rates for
the same procedure based on how frequently doctors request treatments.
He said a doctor who submits more treatment claims is likely to receive
a lower payment for each service than a doctor who submits fewer claims.
"They seem to be profiling doctors to decide how much to reimburse
them," Sweeney said. "The problem is we have a system that no one
understands." Sweeney also said the Blues delays payments and it's
difficult for doctors to get a fast answer on whether a patient is
covered.

Mary Ellen Butler, a spokeswoman for the Anthem plan, said the company
is reviewing the lawsuit, but does not respond to specific allegations.
"We feel we have a good program and are confident that we can work with
providers to resolve these issues," Butler said. She said 7,200 doctors
participate in the company's preferred-provider organization, while
5,700 participate in the health maintenance organization.

The lawsuit was filed under Connecticut's Unfair Trade Practices Act and
Connecticut's Unfair Insurance Practice Act. Indianapolis-based Anthem
is the Blue Cross and Blue Shield licensee for Indiana, Kentucky, Ohio,
Connecticut, Colorado and New Hampshire. Anthem, a mutual company, also
plans to buy the Maine Blues for $120 million, a transaction expected to
close sometime next summer (BestWire, Nov.10, 1999). (BestWire
Nov-19-1999)


BENCHMARK ELECTRONICS: Kirby McInerney Files Securities Suit in Texas
---------------------------------------------------------------------
The following is an announcement by the law firm of Kirby McInerney &
Squire, LLP on November 19, 1999:

Please take notice that a class action lawsuit has been commenced in the
United States District Court for the Southern District of Texas on
behalf of all purchasers of Benchmark Electronics, Inc. (NYSE:BHE)
securities between Aug. 10, 1999 and Oct. 21, 1999 (the "Class Period").
The action asserts a claim against Benchmark and certain of its officers
for violations of Sections 10(b) and 20(a) of Securities Exchange Act of
1934 by reason of material misrepresentations and omissions.

On Oct. 22, 1999, the company announced third quarter earnings that were
some 70% below consensus analyst estimates. The company attributed the
poor earnings, in part, to component defects and delays in delivery of
certain components during the third quarter. During that quarter, the
company completed a $75 million private placement, and, thereafter, used
some of the proceeds of the private placement as well as Benchmark stock
to finance a major acquisition.

Plaintiffs, institutional investors that invested more than $10 million
in Benchmark securities during the class period, have retained Kirby
McInerney & Squire, LLP, as counsel, and are also represented by Claxton
& Hill. If you are a member of the class described over, you may, not
later than sixty days from Nov. 19, 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. If you
wish to discuss this action, or have any questions concerning this
notice of your rights, please contact:

Ira M. Press, Esq. Robert Feinstein, Paralegal KIRBY McINERNEY & SQUIRE,
LLP 830 Third Avenue 10th Floor New York, New York 10022 Telephone:
(212) 317-2300 or Toll Free (888) 529-4787 E-mail: kms@kmslaw.com or

Roger F. Claxton, Esq. Robert Hill, Esq. CLAXTON & HILL 3131 McKinney
Avenue LB 103 Suite 700 Dallas, Texas 75204-2471 Telephone: (214)
969-9099 E-mail: rhill@airmail.net


BOEING CO: Agrees to Settle Case over Racial Bias in Salaries
-------------------------------------------------------------
The Boeing Company has agreed to pay at least $4.5 million to women and
minority employees who the Government says are paid less than their
white male counterparts, according to people involved in the settlement,
the largest ever under a Labor Department affirmative action compliance
program.

In addition, Boeing agreed to examine the pay of all its nonunion
employees accounting for about half of its 202,000 workers -- over the
next four years and make further adjustments if it finds evidence of pay
disparities based on a formula agreed upon with the Labor Department.

The agreement was signed and is expected to be announced. The deal comes
after several months of legal jousting between the Labor Department and
Boeing and after the settlement of a class-action discrimination suit
against the company.

But Labor Department officials are praising Boeing for its willingness
to go further than any other company by agreeing to a comprehensive
settlement. "This is the first agreement that obligates a federal
contractor to conduct self-examinations, make across-the-board salary
adjustments at every facility and then report its results to the
department," the Labor Secretary, Alexis M. Herman, said in draft
documents describing the settlement.

The $4.5 million covers back pay and raises for about 4,400 women and
1,000 minority workers at 10 Boeing operations across the country, the
company said. Boeing said that it did not know precisely how many of
those employees would receive compensation and that the $4.5 million
could grow depending on its findings. One Labor Department official
described the figure as "a floor, not a ceiling."

The deal stems from investigations dating back to 1994 by the Labor
Department's Office of Federal Contract Compliance Programs, which
audits the employment practices of companies that do business with the
federal government to ensure that they are complying with federal
antidiscrimination laws.

As part of the settlement, Boeing did not acknowledge that it engaged in
discrimination. But it agreed that it did not meet the Labor
Department's standards for equal pay at some of its operations. James B.
Dagnon, Boeing's senior vice president in charge of personnel, said that
the settlement was a way for Boeing, which has transformed itself with
two multibillion-dollar acquisitions over the last three years, to
ensure that it was meeting its obligations at all its far-flung
operations.

"We have both agreed on the yardstick that is going to carry us
forward," he said. "It is a yardstick we can live with and they can
judge us by."

Mr. Dagnon added that it was too early to determine how much money the
agreement would cost the company.

Though the agreement is the largest so far for the Labor Department, it
is eclipsed by settlements of civil lawsuits contending discrimination.
Texaco, for example, settled such a lawsuit in 1996 for $176 million.

And in January Boeing agreed to pay $15 million to settle the
class-action lawsuit filed on behalf of minority workers who said they
were discriminated against.

Some Boeing workers subsequently challenged the settlement, which was
brokered by the Rev. Jesse Jackson. A judge approved the deal in
September, but his decision is being appealed.

The agreement with the Labor Department comes as something of a
surprise. In July, the department took the unusual step of suing Boeing,
which received $11 billion in Government contracts last year, after the
company refused to meet its demands for employment information at three
of its operations.

The lawsuits were later settled before they got to court, and the
agreement commits Boeing to begin compiling more data on job applicants
so that the Labor Department can better determine in the future whether
the company is discriminating against women and minorities. Previously,
Boeing kept records only of applicants who were interviewed, not those
who expressed interest in jobs and were turned away.

The Boeing operations that will share in the $4.5 million are in
Philadelphia; Huntsville, Ala.; Tulsa, Okla.; Wichita, Kan.; Long Beach,
Calif.; Mesa, Ariz.; Stennis Miss., and Kingsville, Tex.
(The New York Times Nov-19-1999)


BOSTON POLICE: Ticket Resale Controversy Heats Up; Police Won't Budge
---------------------------------------------------------------------
Just because a district court judge and prosecutors think they're wrong,
don't expect Boston police to change their minds about arresting
ordinary folks at Fenway Park or the Fleet Center for reselling a spare
ticket at face value.

Even last week's lawsuit accusing officers of wrongful arrest, filed by
a Canton veterinarian who said he was simply unloading a spare Red Sox
ticket when he was hauled in last summer, hasn't made the Police
Department budge from its view of the state's scalping law. Police
officers insisted they will continue to arrest private citizens who
resell a spare ticket for face value or less. Police are sticking to
their view that the state's 1924 scalping law requires any ticket
reseller - regardless of the number of tickets and their price - to be
licensed by the state.

They said they won't stop making such arrests unless lawmakers redraft
the statute. "Any changes in the statute must come from the
Legislature," said police spokesman Kevin Jones.

The comments came after Gary A. Lainer, 44, of Canton, filed a
class-action lawsuit last Wednesday against Boston officers who arrested
and handcuffed him on July 31 after he sold a spare $18 Red Sox ticket
at face value. While the charges were ultimately dismissed by a judge,
Lainer said he is challenging the Police Department's power to arrest
him under the scalping law. He is seeking unspecified damages, as well
as a court order to prevent Boston police from making similar arrests.

Lainer's lawsuit also came after several law enforcement attorneys and
government officials were quoted in the Globe last month questioning the
Boston police interpretation of the law.

The officials - Tim Shea, chief of the public protection bureau of the
Massachusetts attorney general's office; Gerry Stewart, a Suffolk
assistant district attorney who oversees cases at the Boston Municipal
Court; and Joseph Lalli, acting commissioner for the state Department of
Public Safety, which licenses ticket resellers - said the law demands a
state license only for those who are "in the business" of reselling
tickets. Being in the business, they said, means exhibiting certain
behavior, such as marking up tickets or carrying large numbers of
tickets.

The Lainer suit will be a fascinating test case of the state's scalping
law, said Martin Rosenthal, a Boston lawyer who has been trying for
years to focus attention on scalping arrests at Fenway Park and other
arenas. If a judge rules that Lainer was wrongfully arrested, the Boston
police will have to change their ways or face major legal consequences,
he said.

Governor Paul Cellucci wants to fix the problem another way. This month
he filed a bill that would make it legal to resell a ticket at face
value or less in most cases. The only exception would be if a sports
facility sets up a ticket resell zone, in which case people at the arena
would have to resell in that area or face arrest.

But others don't think a change in law is necessary for such casual
ticket sales. Henry Eaton, a former assistant attorney general who has
handled many scalping cases and is now in private practice, said he
doesn't see how Lainer, selling a spare ticket with no profit, has
committed a crime. "I'd be hard-pressed to see how he engaged in
criminal behavior," he said.

It seems Lainer is not alone in his experience. His laywer, Robert
Mendillo, said he received a phone call from another man who said he was
arrested by Boston police after selling a spare ticket for less than
face value.

A Roxbury district court magistrate, Harvey Buckley, said last month he
dropped charges against a New Hampshire minister who was arrested by
Boston police for reselling some spare Red Sox tickets at face value.
Buckley said he did not see the minister's actions as criminal.

Meanwhile, Lainer said he is looking forward to his day in court. Having
never before been arrested for any crime, the avid Red Sox fan said he
still can't believe he landed in a police station in late July, after
expecting to watch the Red Sox play the New York Yankees with Roger
Clemens on the mound. Instead, he found himself handcuffed at a police
station, missing the game in which his team triumphed, 6-5. "It's the
theater of the absurd," he said. (The Boston Globe Nov-19-1999)


CASINOS: Lawyers Sue in LA & Las Vegas; Debtors Treated Like Criminals
----------------------------------------------------------------------
When Manuel Osvaldo Nacrur stepped off a plane in Miami last year, he
got a rude surprise. Instead of catching his connecting flight home to
Los Angelems, Nacrur was handcuffed, jailed 10 days, then hauled around
the country in a prisoner van for more than two weeks. Finally, a
federal lawsuit charges, he was delivered to the Las Vegas authorities
who had issued a warrant for his arrest. His alleged crime? The San
Fernando Valley resident owed the MGM Grand casino $ 45,000 in gambling
debts.

Nacrur's experience, critics say, represents a troubling trend in the
way gambling houses are collecting their unpaid markers -- vouchers that
allow gamblers to keep playing when their cash runs out. Rather than
treating these debts as civil matters, casinos in the nation's three
largest gambling states --Nevada, New Jersey and Mississippi -- are
turning to police and prosecutors as enforcers, threatening gamblers
with jail time unless they pay up. "This borders on misusing the
criminal justice system," said I. Nelson Rose, a gambling law expert at
Whittier Law School in Costa Mesa. "The criminal justice system was not
designed for private debt enforcement."

Now two Los Angeles attorneys have launched what is believed to be the
first challenge to this practice. In a series of four class-action
lawsuits filed in Los Angeles and Las Vegas federal courts, the lawyers
allege that Nevada prosecutors have been using their state's bad check
law to collect markers for some of the state's biggest casinos,
including the MGM Grand, Caesars Palace and the Las Vegas Hilton. "Why
are we keeping people in jail to collect gambling debts?" asked Richard
Fine, who filed the cases with colleague Gerald Werksman. "It's a
horrible use of public funds, and it's an unconscionable means to
collect debts."

But Clark County Dist. Atty. Stewart Bell, whose territory includes Las
Vegas, contends he is merely enforcing Nevada's laws, which make it a
crime to write a bad check to "obtain credit extended by any licensed
gaming establishment." "These markers are checks under Nevada law," Bell
said. "When you present an instrument for payment, and it's not honored,
it's a crime."

Representatives for the casinos named in the suits said they could not
discuss pending litigation.

Markers, printed by the casinos, look like checks, right down to the
signature line. They list a player's name, bank account numbers, and a
dollar amount, which can range from a few hundred dollars up to $ 1
million. A gambler can either pay up immediately or through billed
installments. If he defaults, the marker is "cashed" by the casino,
which has permission to tap directly into a player's bank account. In
the old days, if the account was dry, the casinos were out of luck. That
is because most states traditionally considered betting to run counter
to good public policy and courts did not enforce gambling debts, even in
Nevada, Rose said.

But gaming interests changed that in 1983 when they lobbied two bills
through the Nevada Legislature making gambling debts enforceable in
civil court and, under criminal law, equating unpaid markers with bad
checks, records and interviews show.

                        Special Unit Formed in 1995

The criminal provision was not actively enforced until 1995, when the
newly elected Bell formed a unit to handle bad checks and the Las Vegas
casinos asked him to prosecute gamblers who would not pay their markers.
Bell said that of the thousands of bad check cases his office handles
each year, only 5% to 10% are from casinos -- and just a small portion
of those involve markers. Those cases involving $ 250 or more are
prosecuted as felonies. The Las Vegas district attorney's office is not
alone in its casino work. The Lake Tahoe branch of the Douglas County,
Nev., district attorney's office does a brisk business in unpaid
markers, and prosecutors in Reno say that at least half of their bad
check cases involve casino vouchers. Prosecutors in Atlantic City, N.J.,
and Mississippi --the nation's second and third largest gambling areas
-- say they also pursue unpaid markers as crimes. "Anything over $ 100,
and you're going to jail," said Kevin Otis, head of the bad check unit
in Vicksburg, Miss., one of about half a dozen Mississippi towns that
together pull in billions of dollars from riverboat gambling.

In his federal lawsuits, however, Fine has focused on Las Vegas, where
he alleges that Bell has prosecuted about 5,000 cases in the last four
years. "The gaming industry is one of the biggest industries in Nevada,"
Fine said. " Bell is servicing the industry." Clark County election
records show the industry has been among Bell's largest campaign
contributors. During his 1998 reelection, casino corporations gave more
than $ 50,000 of the $ 178,000 he raised. Those named in Fine's lawsuits
were contributors: the Las Vegas Hilton and Caesars Palace each gave $
5,000; the MGM Grand gave $ 1,500.

Bell said the idea that he would exchange favors for contributions is
ridiculous. "We have no discretion as to which laws to enforce," he
said.

Fine disagrees. His lawsuits argue that markers are civil debts, much
like credit cards, and Bell's office should not be involved. "There's no
question that the casino treats markers like credit, and when they can't
get repaid in other ways, they go to the D.A.," Fine said.

Fine admits that those being prosecuted are not all sympathetic figures
-- some may be gambling addicts -- but says that many are average
working people who get caught up in the excitement. "These aren't the
fellows that are coming in and losing $ 5 million," Fine said. "These
are guys that come to Las Vegas for a convention. They borrow $ 10,000
or $ 20,000, they gamble, and they lose. Then all of a sudden they've
got this debt they can't repay.

It could happen to anyone." Fine said this happened to Nacrur, a
65-year-old photographic technician from Panorama City who racked up $
45,000 in markers playing the tables in 1997. Nacrur was not made
available for comment. His lawsuit contends that U.S. customs officials,
acting on a Las Vegas warrant, snagged him at the Miami Airport on Jan.
31 and jailed him for 10 days before employees of a private transport
company loaded him into a van for a circuitous trip to Nevada. Once back
in Las Vegas, the prosecutor's office offered Nacrur a deal: Pay off the
markers and avoid prosecution, the suit charges. When Nacrur refused, he
was released on his own recognizance, and is now facing charges of
writing bad checks. Fine argues that the offer recalled the colonial
days of debtors prison, when those owing money were jailed. Law expert
Rose says that Fine's challenge of the practice is the first he has
heard of and gives it good odds. (Los Angeles Times, Nov-18-1999)


CHARLES KEATING: Ariz. 9th Cir. Overturns $4.3B Judgment on RICO Claims
-----------------------------------------------------------------------
The Ninth Circuit U.S. Court of Appeals has ruled that collateral
estoppel cannot sustain a summary judgment ruling in favor of the
Resolution Trust Corp. (RTC) against Charles H. Keating Jr., the figure
at the center of the Lincoln Savings and Loan scandal. The decision
overturns a $4.3 billion civil judgment against Keating and his wife on
Racketeer Influenced and Corrupt Organization Act (RICO) and other state
and federal claims. Resolution Trust Corporation v. Keating Jr. et al.,
Nos. 94-15989 and 94-16956 (9th Cir., Aug. 6, 1999).

Keating was sued by the federal government's (RTC) in the U.S. District
Court for the District of Arizona following the scandalous collapse of
California's Lincoln Savings and Loan Association. The suit alleged,
inter alia, common law fraud, civil conspiracy, breach of fiduciary
duties, and RICO and several other federal statutory violations stemming
from Keating's alleged role in the bank's failure. RTC moved for summary
judgment on several counts on the grounds that a criminal conviction had
been handed down against Keating, and that judgments had been rendered
against him in two related civil suits. RTC took the position that
issues in its suit had already been litigated and decided against
Keating and, as such, the government was entitled to summary judgment.

The district court agreed, and in May 1994, a $4.3 billion judgment was
entered against Keating. The judgment was later amended to include the
marital estate of Keating's wife, Mary Elaine, following a motion by
RTC. Both Keatings appealed to the Ninth Circuit U.S. Court of Appeals.

On appeal, the Ninth Circuit explained that in order to prove collateral
estoppel, or issue preclusion, RTC had to show that Keating had a full
and fair chance to litigate the issues of the current suit in the prior
suits, that the issues were actually litigated and were necessary to
support the judgments in the prior suits, that the issues were decided
against Keating in final judgments, and that Keating was a party to the
prior proceedings or was in privity with a party. The appellate panel
then discussed the prior actions at issue.

The first was a criminal case charging Keating with numerous crimes
arising out of the Lincoln collapse. In the criminal matter, the
conviction was reversed and a new trial was ordered by the district
court. In the meantime, however, Keating pleaded guilty to wire fraud
and concealing assets in an effort to defeat the bankruptcy code. In
connection with his plea, Keating, who had been the principal
shareholder, CEO, and chairman of the board of American Continental
Corporation (ACC), agreed that he had instructed a subsidiary of ACC to
give unsecured loans to certain insiders. Looking to RTC's complaint,
the circuit panel stated that it did not include the criminal conduct to
which Keating had pleaded guilty. Summary judgment could not be affirmed
on that basis, the panel said. In addition, the conviction had been
vacated.

The panel then discussed the case of Lincoln Savings and Loan Ass'n v.
Wall , 743 F.Supp. 901 (1990), which concerned challenges to the Federal
Home Loan Bank Board's decision to appoint a receiver for Lincoln. The
only determination necessary to the judgment was whether the board acted
in an arbitrary and capricious manner, the panel said. The case had a
limited scope of inquiry, the panel held, and preclusive effect could
not be given to the ruling.

The second suit RTC cited in support of its collateral estoppel claims
was Shields v. Keating (In re American Cont. Corp./Lincoln Savings &
Loan Securities Litigation , MDL No. 834 D AZ, 1992 ), which included
racketeering charges. Shields was a class action against Keating which
alleged that overvalued securities had been sold by ACC, the panel
stated, and summary judgment had been entered in favor of the
plaintiffs. The circuit then analyzed the issues present in Shields with
those in RTC's case at bar, using a four factor test to determine
similarity for collateral estoppel purposes.

After discussing RTC's RICO claims contained in counts one and three of
the complaint, the panel held that the issues were not the same as those
in the Shields case, in which the ACC investors asserted that they
purchased the company's securities on false representations. However, in
the case at bar, Lincoln was not an investor in ACC. While the pattern
of conduct in Shields and the present action are related, the court
observed, the damages alleged to be due to Lincoln by RTC arose from
conduct that was not adjudicated in Shields, the Ninth Circuit ruled.
The Shields case was not one that would sustain the lower court's grant
of summary judgment, the panel concluded.

The circuit panel also said that RTC's fraud and conspiracy counts were
not identical to the issues in the Shields litigation, and said the same
about the breach of fiduciary duty allegations. The lower court ruling
was reversed, and the $4.3 billion judgment against Keating was
overturned. The panel did not reach the issue of his wife's marital
estate, and the matter was remanded for further proceedings. (Civil RICO
Litigation Reporter, Vol. 16; No. 1; Pg. 7, September 1999)


COCA-COLA: Plaintiffs Voice Severe Punishments for Withholding Papers
---------------------------------------------------------------------
The plaintiffs in a racial discrimination suit against Coca-Cola Co.
said last Wednesday the company has repeatedly violated court orders
requiring it to hand over relevant documents in the case. As a result,
the court should set a "date certain" requiring the Atlanta-based
beverage giant to comply with its obligations, the plaintiffs' attorneys
said. In addition, they said, severe punishments should be set for
continued noncompliance with court orders.

Coca-Cola spokesman Ben Deutsch declined to comment on the plaintiffs'
motion. "We prefer to present our arguments to the court on Friday,"
Deutsch said, referring to a scheduled hearing before U.S. Magistrate
Judge E. Clayton Scofield.

When the plaintiffs previously raised the withholding of documents
issue, the company said it had provided them with about 40,000 pages of
documents and had offered another million pages for their review. The
company also has accused plaintiffs' attorneys of filing such motions to
unjustifiably attract media attention.

In addition to the withholding of documents issue, the magistrate was
scheduled to deal with several other matters, including: Whether the
company has shredded documents.

The plaintiffs contend that affidavits and pre-trial depositions showed
that employees asked that shredders be placed in a special room that was
set up by the company to collect documents and employment data for the
suit. Plaintiffs' attorneys also alleged that an eyewitness saw
shredders in the room.

But the company said it has never put shredders in its data collection
room, that it has never shredded any relevant documents and that the
plaintiffs are making irresponsible statements in an effort to mislead
the court and manipulate public opinion. The company said employees once
discussed the idea of using shredders in that room to discard miscopies
or extra copies of confidential documents the plaintiffs would not be
entitled to. But, the company said, that idea was " immediately vetoed"
in favor of using two confidential refuse bins.
A company attorney did purchase a shredder for his office. But he said
he did that to discard confidential information that plaintiffs'
attorneys would not be entitled to.

Whether the company has to turn over 93 disputed documents to the
plaintiffs. The plaintiffs contend the company is selectively turning
over favorable employment information, while keeping unfavorable
material from them that they have a right to see.

The company has said it has the legal right to withhold these specific
documents for several reasons, including its right to keep confidential
the communications it has with its own lawyers; whether certain
documents turned over to the plaintiffs and filed with the court can be
kept from public view. The company has stamped "confidential" on some
documents, meaning both sides are required to keep them secret, although
they can be used in the case.

But the plaintiffs want the court to unseal a handful of documents that
relate to the U.S. Department of Labor's 1997-98 audit of the company's
compliance with affirmative action requirements governing federal
contractors.

While some of the specifics of that audit are not available to the
public, the company was found to have violated some regulations. For
example, the audit said the company did not adequately disseminate its
equal opportunity policy. Specifically, the audit said, all managers
were not clear about the company's affirmative action program. The audit
also said the company did not adequately develop action-oriented
programs to eliminate problems and attain established goals.

Deutsch, the company spokesman, said the audit found no evidence of
discrimination by the company against any individuals. As a result, he
said, the company agreed to alter some record keeping and reporting
practices to better conform to government guidelines. (The Atlanta
Journal and Constitution Nov-18-1999)


ESCROW COMPANIES: CA State Controller Provides Update; $ 2.2 M Remitted
-----------------------------------------------------------------------
State Controller Kathleen Connell reported on November 18 that her
office's statewide audit effort against California's title and escrow
industry is progressing well and eventually will result in the recovery
of millions of dollars for California home and business owners.

She is scheduled to make a major announcement on the escrow lawsuit
shortly to report on the specific results of her audit effort to date.
Currently, 17 title and escrow companies with branch offices in San
Diego County are in the process of being audited or will soon be
audited.

"The audit results to date support our lawsuit contention that title and
escrow companies systematically cheated California home and business
owners out of millions of dollars in escrow proceeds," said Connell. "I
am committed to the recovery of every cent illegally withheld," she
added.

In San Diego County, the 17 title and escrow companies that are subject
to the controller's audit include the following: American Title Co.,
Benefit Land Title Co., Chicago Title Co., Commonwealth Land Title Co.,
Fidelity National Title Insurance Co., First American Title Co., Gateway
Title Co., Keystone Escrow Inc., LandSafe Title of California, Lawyers
Title Co., North American Title Co. Inc., Northern Counties Title
Insurance Co., Old Republic Title Co., Rancho San Pedro Escrow, South
Coast Title Co., Spring Mountain Escrow, and Stewart Title of California
Inc.

To date, these companies have voluntarily remitted approximately $2.2
million to the state (see listing below). Additional escrow and title
companies in the San Diego area are in the process of being audited or
will soon be audited.

"Although I am encouraged by the apparent willingness by some of the
companies to cooperate by voluntarily remitting funds to the state, I am
convinced that the final audit outcome will show that the amount owed is
much higher, perhaps as much as $500 million statewide," said Connell.

The statewide audit effort by the State Controller's Office stems from
Connell's filing of a class action lawsuit in May of this year on behalf
of consumers against California's title insurance and escrow industries
for numerous illegal actions in the administering of escrow accounts
from 1970 to the present.

The suit alleges that title and escrow companies illegally held dormant
and unclaimed escrow funds, retained fees charged to home buyers for
services not rendered and retained interest on deposited escrow funds
that should have been returned to their customers.

Connell spoke in San Diego before the League of California Cities. For
more information visit the Web site http://www.sco.ca.gov

Since the filing of the lawsuit on May 19, 1999, the State Controller's
Office has received $2,190,808.49 from the title and escrow companies
listed below.

Holder                                      Amount received

American Title Company                      $       379.33
Benefit Land Title Company                  $    12,231.57
Chicago Title Company                       $   143,010.77
Commonwealth Land Title Company             $   296,237.40
Fidelity National Title Insurance Company   $    20,661.75
First American Title Company                $    29,506.73
Gateway Title Company                       $    38,452.14
Keystone Escrow Inc.                        $       801.58
LandSafe Title of California                $     1,612.42
Lawyer Title Company                        $   201,421.72
North American Title Company Inc.           $    29,646.80
Northern Counties                           $       100.00
Old Republic Title Company                  $   419,947.24
Rancho San Pedro Escrow                     $       147.48
South Coast Title Company                   $     2,926.70
Spring Mountain Escrow                      $   519,486.61
Stewart Title of California Inc.            $   474,238.25

Total Received:                             $ 2,190,808.49

Contact: Office of Kathleen Connell, Controller of the State of
California Byron Tucker, 310/342-5678 Susie Wong, 916/445-2636


FEN-PHEN: Letters by Plaintiffs' Lawyers Show Disbelief in Health Risk
----------------------------------------------------------------------
A supporting document written as part of last month's $3.75 billion
tentative settlement of nationwide diet-drug litigation suggests that
some lawyers on the plaintiffs' team, despite their legal strategy to
the contrary, did not believe that their clients faced long-term health
dangers from the drugs.

The letter seems to put some plaintiffs in the position of benefiting
from a $1 billion medical-monitoring program for a disease the two
lawyers say those patients will never contract. The Oct. 6 letter,
signed by two of the Philadelphia lawyers involved in the high-profile
case and delivered to attorneys for drugmaker American Home Products
Corp., has further inflamed tense relations among some of the
plaintiffs' lawyers.

Written the day before the tentative settlement was announced, the
letter states in part that if heart-valve disease "is not present at the
time of cessation of (diet) drug use (or shortly thereafter), it will
not later occur as a consequence of drug use."

That statement appears to contradict the position taken by the
plaintiffs in the New Jersey class-action trial that helped lead to the
national settlement. In documents filed in the New Jersey case, three
medical experts hired by the plaintiffs wrote that, based on other
models, "it is reasonable to expect that valvular abnormalities might
appear only years later."

The letter, issued under the letterhead Diet Drug Litigation Negotiating
Committee, was written by Philadelphia lawyers Michael Fishbein and Gene
Locks. Asked whether the letter's proposed "findings of fact" would be
part of a final package submitted to state and federal courts,
Philadelphia lawyer Sol Weiss, who was one of the lead trial attorneys
in the New Jersey case, replied, "That is not happening." The final
settlement, which still needs court approval, may be filed as early as
November 19.

Other lawyers involved in the litigation - some of them already angry at
terms of the proposed settlement - learned about the letter only last
week when it began circulating across the country via fax. Some said
they expected the letter to be a major focus of discussion at a
dissidents' strategy meeting scheduled to start November 19 in Texas.
Others said they might sue their colleagues for undermining their legal
position. "We're in the process of preparing legal action with respect
to the individuals who signed and received (carbon) copies of it, plus
anybody who is in a fiduciary capacity as part of the negotiating team,"
said Mark Bern, a New York attorney whose firm says it represents
thousands of clients who took the AHP obesity drugs Pondimin or Redux.

The drugs were taken off the market two years ago by AHP and its St.
Davids-Pa., based Wyeth-Ayerst Laboratories unit after studies linked
them to heart-valve abnormalities. Pondimin, known generically as
fenfluramine, was the "fen" in the once-popular "fen-phen" diet-drug
combination that was used by an estimated six million overweight
Americans. Redux was the chemically similar successor to Pondimin.

In the letter, Fishbein and Locks list six points that "we intend to
include in the findings of fact which will be proposed to the court(s)
following the presentation of evidence to support each fact."

Among them: A conclusion that there is no "reliable epidemiological
evidence" that people who took Pondimin or Redux for less than 90 days -
a description that American Home says fits most Pondimin and Redux users
- are at increased risk of developing significant valve disease. But
Fishbein and Locks recommend monitoring for everyone who took the drugs
for more than 60 days.

The medical experts' report submitted to the New Jersey court said: "it
remains unknown whether a normal echocardiogram early on precludes
development of valvular abnormalities years later, even if there is no
further exposure" to the drugs. But it cited other diseases, including
childhood rheumatic fever, as examples in which significant heart-valve
damage could develop years later. The experts' report also stated that
"there have been reports of valvular lesions occurring in patients
exposed for as few as three weeks."

Weiss noted that the final sentence of his colleagues' letter states
that it "shall not be admissible in evidence for any purpose," meaning
American Home cannot use it against plaintiffs in cases going to trial.
Asked whether the letter contradicted the experts' report, he replied,
"I understand you could take that interpretation." But the points at
issue will not be in the final settlement, he said.

The proposed settlement announced Oct. 7 would require American Home to
pay $ 3.75 billion. That includes $1 billion for a medical-monitoring
program for people who used the drugs but have suffered no apparent ill
effects, and $2.55 billion for payments to people with significant
heart-valve disease. The rest of the money - up to $429 million - would
go to the plaintiffs' attorneys. Payments to patients would be made over
as many as 16 years "if and as needed." When adjusted for inflation,
total payments could reach nearly $4.9 billion.

Wyeth spokesman Douglas Petkus said the company had no comment about the
lawyers' letter. American Home is trying to complete a merger with
Warner-Lambert Co., a deal that was proposed only after the fen-phen
litigation appeared to be settled. The companies are battling a hostile
attempt by Pfizer Inc. To buy Warner-Lambert. (The Philadelphia Inquirer
Nov-19-1999)


FMC CORP: Toxicologist Testifies for Plaintiffs at Retrial on Gas Leak
----------------------------------------------------------------------
A toxicologist testifying for the plaintiffs in the retrial of a
multimillion dollar lawsuit against FMC Corp. said that he examined 143
people who came to attorneys seeking to join the class- action suit.
Thomas Schrager testified that, at the lawyers' request, he set up an
office in the same motel where potential plaintiffs were being
interviewed. Those who wanted to join the suit were sent down the hall
to Schrager for preliminary testing. Schrager told jurors that many of
those people downwind from a Dec. 5, 1995 leak of hyrdrochloric acid gas
experienced mild to moderate health problems as a result. "The release
most certainly did cause adverse health effects for those individuals in
the downwind area. Unquestionably," Schrager said. He explained that
exposure levels for the mile downwind from the plant could have been
more than 1,000 times the acceptable level.

On cross-examination, defense lawyer Lee Davis Thames pointed out
Schrager became involved in the case solely because of the plaintiffs'
efforts to win money from FMC. Schrager estimates that, to this point,
his services in the trial have cost $ 45,000. Hundreds of plaintiffs
joined the 1995 class-action suit, saying that because of the release of
a plume of the gas they suffered various difficulties, ranging from
simple inconvenience to long-term health problems. They maintain that
Brian Macconnachie, manager of the FMC Nitro plant, and his employer
acted negligently.

Last year, a jury agreed and awarded the plaintiffs a $ 38.8 million
judgment. Chief U.S. District Judge Charles Haden, though, ruled that
defense lawyers had acted unfairly by calling a last-minute surprise
witness. The judge threw the verdict out, calling for the retrial
currently under way.

In the retrial on November 16, plaintiffs' lawyers devoted nearly a
whole day to grilling Macconnachie. Macconnachie withstood hour after
hour of pointed questioning from Jack Harang, a lawyer for the
plaintiffs. Harang was trying to establish that Macconnachie knew that
such a leak was probable and that he ignored opportunities to prevent
the problem. "You could have, with the stroke of a pen or the simple
lifting of a phone, prevented the release of this extremely hazardous
material, couldn't you?" Harang asked.

At this point and many others throughout the testimony, Haden reminded
Harang that he was supposed to be asking questions, not testifying. The
pen stroke and phone call Harang was talking about would have been to
expedite safety projects suggested by an FMC evaluation of the plant
months before the leak. The safety audit advised, along with several
other projects, that a leak containment system be built to capture gases
that could escape if pressure became too great in the plant's A-1
Reactor.

Harang suggested that Macconnachie chose to ignore the attendant safety
risks by deciding not to immediately build the gas capture system.
Macconnachie tried to explain that the recommendation to build the vent
capture structure was under way and progressing at normal pace, along
with other safety projects, all of which were important. Harang, though,
categorized the decision not to pick the one project over the others as
negligent. "The sooner you got it done, the less chance there was going
to be of exposing your employees and this community to what you,
yourself, have called extremely hazardous chemicals, isn't that true?"
Harang asked. (Charleston Daily Mail Nov-17-1999)


FORD MOTOR: Judge Declares Mistrial for Ignition Modules Defect Lawsuit
-----------------------------------------------------------------------
With the jury still hopelessly deadlocked on their 12th day of
deliberations over the massive class action against Ford Motor Co.,
Alameda County Judge Michael Ballachey had no choice but to declare a
mistrial on November 18 and send the divided jurors home for good.

On November 18 morning, Ballachey once again tried to rally the group to
continue pushing toward a verdict, even asking them whether a few days
of vacation might help them clear their heads enough to be able to
resolve their differences. But when the jurors returned within five
minutes from a roundtable vote on that proposal, it was clear the seven
men and five women were ready to move on with their lives. "In the words
of boxer Roberto Duran, 'No mas,'" Ballachey told attorneys,
paraphrasing the last note he received from the jury and upholding the
foreman's opinion that "the likelihood of reaching a verdict is nil."

After five months of voluminous and extremely complex testimony from
both sides, the jury was left to decide whether Ford violated consumer
protection laws when it allegedly put faulty ignition modules in its
cars and then tried to hide the defect from consumers.

Plaintiffs' attorneys presented testimony from more than 50 witnesses --
on the stand or in taped deposition -- to prove their claim. Ford spent
millions on research and expert testimony, including $9 million on one
witness and his firm. In September, attorneys feared a mistrial after
losing all but one of the alternates. The trial also was marked by
numerous breaks to accommodate vacations by jurors and Ballachey.

Two days ago, the foreman sent out the first red flag that the case was
verging perilously close to a mistrial when he reported that the jury
was only two questions into the hefty 16-page, seven-question verdict
form -- and already heading toward a deadlock. The group had tallied a
6-6 vote on the first question and an 8-4 vote on the second question on
the verdict form.

Over the last few days, the group seemed to be on the right track. They
sent out a few notes requesting additional documents for review. They
sent out a few others asking the judge and attorneys to clarify key
definitions that would help resolve differences. They were even able to
agree from which local restaurant to order take-out. But inside, the
deliberations were going nowhere. "It seemed like after a certain point,
people didn't care to listen to each other any more. They had made up
their minds," said juror Dave Kloski, who voted in the plaintiffs'
favor.

The 12th day of jury deliberations started out like most of the others.
While jurors were inside hashing over the case, attorneys from both
sides sat around Department 19 working on laptops while waiting to field
questions from jurors -- or to hear their decision.

The morning's newspapers were strewn over the chairs in the courtroom. A
few journalists circled around the courtroom like vultures waiting to
feed. Judge Ballachey spoke informally about his recurring back
problems.

At 10:30 a.m., the jury rang the bell beckoning the court attendant. The
foreman reported the group hadn't budged much at all, with a 7-5 vote on
question one and a 8-4 vote on question two -- in the plaintiffs' favor.
He respectfully asked the court to let them go. Some jurors said they
didn't mind wading through the volumes of technical testimony but were
frustrated by the constant breaks to accommodate vacation and other
plans. Others said they were frustrated with the evidence itself -- that
there were " more than enough" documents presented but not enough to
prove the plaintiffs' case.

Jurors on both sides of the debate accused the other side of relying on
emotions instead of evidence. At least two said they thought Ford might
be getting away with something and hoped the next jury would be more
united. Erik Mathews, a juror who voted for the plaintiffs, said some
people had trouble believing Ford would intentionally withhold
information from the public. "They felt that the plaintiffs were going
after Ford just because it was a big company with deep pockets," he
said. "But the clincher was the evidence. If you have a module and
you've got to keep getting it fixed, you have a real danger to
consumers."

Yet jurors who supported Ford maintained that despite the truckload of
documents and the hours of videotaped deposition from Ford executives
and engineers themselves, a preponderance of the evidence simply didn't
support the plaintiffs' claim. Juror Araceli Carbonell said at least
part of the reason she voted in Ford's favor was because prior
investigations into claims about Ford safety defects didn't pan out.
"The National Highway Traffic Safety Administration didn't find the
defect and so they closed the case. That is, for me, something," she
said.

And Carbonell said it was easy for the group's discussion to meander
about because many of the definitions as well as the questions were "too
vague." "It was not very civil in there at all," she said, referring to
jury quarters. "At times, we were at the brink of insulting each other."

Plaintiffs' counsel Barry Bunshoft, a founding partner of Hancock
Rothert & Bunshoft, said he was disappointed by the outcome. A former
director of the attorney general's consumer fraud division, Bunshoft
said he wanted the firm to take the case "not just for economic reasons
but because it's the socially beneficial thing to do."

Still, plaintiffs' attorneys said they took heart in the jury's apparent
leanings toward a verdict in their favor. "We were one juror away from
winning this case," said Steven Pavsner, a partner with Maryland-based
Joseph, Greenwald and Laake and a member of the plaintiffs'(r)MDUL/
team.

"The strongest juror against us was one who simply refused to believe
Ford could have done what the documents showed they did. It's hard to
combat that kind of prejudice," said Pavsner.

But Ford also interpreted a victory, with attorneys saying the mistrial
lends credence to their continued argument that the class action should
never have been certified. "The inability to reach a verdict is one
clear sign that the case was unmanageable as a class action," said
Donald Lough, in-house counsel for Ford. "The jury verdict form included
a total of 2,106 questions if you take into consideration the 351
different products listed," he said, adding that he didn't think the
jurors were given adequate guidance on answering the form -- as seen by
their repeated requests that the court clarify definitions and jury
instructions. "It really is unrealistic to expect 12 people to come to
an agreement on so many different issues about so many different
products," he said.

Ballachey's declaration of a mistrial, of course, doesn't mean the
attorneys will be packing up their bags and leaving Department 19
anytime soon. But it also doesn't mean they'll immediately be scrambling
back into jury selection in Howard v. Ford Motor Co., 763785-2.

Ballachey already reserved Dec. 1 for a related hearing in which he
intends to decide, independently of a jury verdict, whether Ford
practiced unfair competition. He could order a recall of cars as well as
order disgorgement of company profits that may have resulted from the
defect. But Ford maintains that the judge can't resolve that issue until
a new jury answers the question of consumer fraud.

The class covers owners of Ford vehicle model years 1983 to 1985 and
could include more than 3 million members. The California case is the
first of six identical suits pending in Alabama, Illinois, Maryland,
Tennessee and Washington courts.

Before letting the jurors go, Ballachey thanked the group for their
tireless efforts to try to decide the case -- likely the retired judge's
last big trial -- and praised them for their dedication to the justice
system.

One juror who moved out of the county midway through the trial has been
living in a local hotel away from her family to continue hearing the
case. Still another who suffered injuries to her face in a hit-and-run
car accident continued to come to trial on pain medication. And another,
juror Faye Farin, said she owes it to her family for being really
understanding throughout the last six months. "My son was injured, so I
had family issues to deal with. I was promoted at work, but I haven't
been there to fill the position," she said. "It's been a very long six
months." (The Recorder Nov-19-1999)


HMO: Lawsuit Alleges Aetna Of RICO, ERISA Violations
----------------------------------------------------
A class action filed Oct. 7 against Aetna Inc. and CEO Richard L. Huber
alleges the company's "undisclosed systemic policies" place profits over
the delivery of quality health care (Jo Ann O'Neil, et al. v. Aetna,
Inc., et al., No. n/a, S.D. Miss., Hattiesburg Div.; See previous
stories). The lawsuit also alleges Racketeer Influenced and Corrupt
Organization (RICO) Act and ERISA violations.

Jo Ann O'Neil filed the action on behalf of "the millions of present and
past Aetna HMO members who, as a group, have been targeted by the
defendants and induced into subscribing to and enrolling in Aetna's HMO
plan by the defendants' standardized and uniform misrepresentation and
omissions of material facts relevant to advertising, marketing and
member materials directed to the plaintiffs and the class."

                              Scheming

The action alleges Aetna engaged in a fraudulent scheme that
misrepresented to the class that its primary commitment to its HMO
members is to maintain and improve the quality of the health care
provided. Further, Aetna misrepresented that its treatment decisions are
made on the basis of medical necessity when Aetna has aggressively
engaged in implementing undisclosed systemic internal policies designed
to deny claims and medical services, according to the complaint.

The lawsuit says the internal policies are designed to discourage
physicians from delivering medical services, limit or deny the delivery
of services based upon cost criteria and interfere with the medical
judgment of the physicians by substituting the judgment of claims
reviewers without appropriate medical training.

According to the complaint, the American Medical Association (AMA) has
"voiced concerns" about the undisclosed policies, saying certain ones
are "dangerous" for patients. The AMA has also said some of Aetna's
practices are "troubling," with "serious implications for patients,"
according to the complaint.

The action cites some of the undisclosed policies as disparate treatment
of ERISA patients versus non-ERISA patients and gag clauses.

                            Exploitation

The complaint says hundreds of physicians have withdrawn from Aetna HMO
plans across the country. "Aetna is . . . not lawfully entitled to
exploit fear of economic loss or loss of business against America's
physicians in its extortionate attempts to influence, interfere with,
and deprive physicians, the plaintiff and the class of intangible
property interests inherent in the physician-patient fiduciary
relationship to which Aetna is not entitled," the action says.

                             Dominance

"Aetna's aggressive strategy to dominate the HMO market and its meteoric
rise in predominance in the HMO market has greatly heightened its profit
driven motives and its ability to reduce and limit the quality of
healthcare services it provides the plaintiff and the class through
heavy-handed and extortionate conduct," the complaint says.

The lawsuit alleged Aetna's primary goal is to maximize profits for
itself and its shareholders. "In effectuating an overly aggressive
approach pursuing its profit oriented goals, Aetna has failed to
disclose numerous material facts to the plaintiff and the class,"
according to the action.

The complaint was filed by Sidney A. Backstrom of Scruggs, Millette,
Bozeman & Dent in Pascagoula, Miss.; Ronald L. Motley, H. Blair Hahn and
Donnie E. Young of Ness, Motley, Loadholt, Richardson & Poole in
Charleston, S.C.; Walter Umphrey and Keith Kebodeaux of Provost Umphrey
Law Firm in Beaumont, Texas; Paul S. Minor of Minor and Associates in
Biloxi, Miss.; John Eddie Williams and Herbert T. Schwartz of Williams
Bailey Law Firm in Houston; Joseph C. Langston of Langston, Langston,
Michael, Bowen & Tucker in Booneville, Miss.; Hiram Eastland of Eastland
Law Offices in Greenwood, Miss.; David O. McCormick of the Law Offices
of David O. McCormick in Pascagoula; Fred Furth of Furth, Fahrner &
Mason in San Francisco; George Chandler of Chandler Law Offices in
Lufkin, Texas; R.W. Richards of Phifer & Richards in Jacksonville,
Texas; Cary Patterson of Nix, Patterson & Roach in Dangerfield, Texas;
Harry Potter of the Law Offices of Harry Potter in Austin, Texas; and
Wayne D. Blackmon of the Law Offices of Wayne D. Blackmon in Washington,
D.C. (Mealey's Litigation Report: Managed Care Liability, Vol. 3, No.
18, Oct-13-1999)


HOLOCAUST VICTIMS: German Envoy to Discuss Compensation with Poles
------------------------------------------------------------------
Poland hopes agreement on compensating former Nazi-era slave and forced
laborers can be reached during the next round of international talks on
the issue, a Polish negotiator said last Friday. ''We hope the next
round will produce a reasonable offer on the German side and we will be
able to accept it,'' Deputy Foreign Minister Janusz Stanczyk said in a
telephone interview.

Stanczyk and Jerzy Widzyk, the Polish prime minister's chief of staff,
were to meet with Germany's top negotiator, Otto Lambsdorff, in Warsaw
late last Friday.

Lambsdorff is visiting Warsaw for a meeting Saturday of the Trilateral
Commission, a club of influential citizens from the world's most
powerful countries, founded in 1973. He also is to meet Foreign Minister
Bronislaw Geremek.

Two days of negotiations on the fund, to which German industry and the
government would contribute, wrapped up last Wednesday in Bonn, Germany,
with the sides closer but still without agreement. The next round is
expected in December.

Germany offered 8 billion marks ($ 4.2 billion) in compensation an
increase from its earlier 6 billion mark ($ 3.2 billion) offer and
numbers of up to 10 billion marks ($ 5.3 billion) were discussed. That
higher figure touches the lower range of the newly reduced demands of
lawyers for the victims for between 10 billion and 15 billion marks ($
5.3 and 7.9 billion).

Stanczyk said last Friday's talks with Lambsdorff will give Polish
officials another chance to explain their position. Poland wants a
''general agreement to cover all those who have legal right to claim
compensation because of slave and forced labor,'' he said. He said
Poland will continue to press for inclusion of people forced to work on
German farms during World War II in the compensation plan, an idea
Germany so far has rejected.

An estimated 220,000 Poles who were forced to work on German farms are
still alive in Poland. Stanczyk emphasized that during the Bonn
negotiations, German officials seemed willing to accept the criterion of
deportation as the main prerequisite for defining forced labor.
''Deportation concerned also forced farm laborers, not only those forced
to work in industry or public sector,'' Stanczyk said.

German companies proposed the compensation fund in February under
pressure of class-action lawsuits in the United States. As part of the
agreement, the U.S. government has offered to file statements of
interest in courts where lawsuits are filed recommending that judges
turn the cases over to the foundation. About 50 firms, including 18 that
have publicly stated their support, have signed on to contribute to the
fund, which aims to compensate about 1.5 million to 2.3 million victims.
(AP Worldstream Nov-19-1999)


MOHAWK INDUSTRIES: Contests Carpet Antitrust Suits in Georgia & CA
------------------------------------------------------------------
In December 1995, the Company and four other carpet manufacturers were
added as defendants in a purported class action lawsuit, In re Carpet
Antitrust Litigation, pending in the United States District Court for
the Northern District of Georgia, Rome Division. The amended complaint
alleges price fixing regarding polypropylene products in violation of
Section One of the Sherman Act. In September 1997, the Court determined
that the plaintiffs met their burden of establishing the requirements
for class certification and granted the plaintiffs' motion to certify
the class.

The Company is a party to two consolidated lawsuits captioned Gaehwiler
v. Sunrise Carpet Industries, Inc. et. al. and Patco Enterprises, Inc.
v. Sunrise Carpet Industries, Inc. et. al.; both of which were filed in
the Superior Court of the State of California, City and County of San
Francisco in 1996. Both complaints were brought on behalf of a purported
class of indirect purchasers of carpet in the State of California and
seek damages for alleged violations of California antitrust and unfair
competition laws. The complaints filed do not specify any amount of
damages but do request for any unlawful conduct to be enjoined and
treble damages plus reimbursement for fees and costs.

In October 1998, two plaintiffs, on behalf of an alleged class of
purchasers of nylon carpet products, filed a complaint in the United
States District Court for the Northern District of Georgia against the
Company and two of its subsidiaries as well as a competitor and one of
its subsidiaries. The complaint alleges that the Company acted in
concert with other carpet manufacturers to restrain competition in the
sale of certain nylon carpet products. The Company has filed an answer
and denied the allegations in the complaint and set forth its defenses.

In February 1999, a similar complaint was filed in the Superior Court of
the State of California, City and County of San Francisco, on behalf of
a purported class based on indirect purchases of nylon carpet in the
State of California and alleges violations of California antitrust and
unfair competition laws. The complaints described over do not specify
any specific amount of damages but do request injunctive relief and
treble damages plus reimbursement for fees and costs. The Company
believes it has meritorious defenses and intends to vigorously defend
against these actions.


NELLCOR PURITAN: Ruling May Make Securities Class Action Easier in CA
---------------------------------------------------------------------
In a ruling that could make it easier for class action attorneys to sue
officers and directors for securities fraud in California state courts,
a state appeals panel in San Francisco said all of Nellcor Puritan
Bennett Inc.'s directors may be sued as a group under state law even if
there is no proof that each of them made misleading statements to
investors Ronconi et al. v. Larkin et al., No. A079019 (CA Ct. App., 1st
Dist., Sept. 3, 1999).

The appeals court reinstated the suit after noting that two other issues
in the appeal had already been decided in the plaintiff/appellants'
favor by recent California Supreme Court rulings. In Diamond Multimedia
Systems Inc. v. Superior Court of Santa Clara Cty. (No. S058723), the
high court allowed out-of-state stock purchasers to sue under state
securities law (see Corporate Officers &Directors LR, Jan. 11, 1999, P.
10); and, in Stor-Me dia Inc. et al. v. Santa Clara Superior Court (No.
S062661), the state supreme court said a defendant company may be
considered a "seller" of stock even if it only issued shares to its
employees through an Employee Stock Ownership Plan (see Corporate
Officers & Directors LR, Jan. 11, 1999, P. 10).

Of course, any advantage this ruling might provide to plaintiffs could
be cancelled out if it was reversed by the California Supreme Court, or
if President Bill Clinton agrees to sign federal legislation that would
effectively force nearly all class actions involving multi-state parties
into federal court. The U.S. House of Representatives passed H.R. 1875,
which will allow defendants to remove most state court class actions to
federal court. One of the goals of the legislation is to plug what some
see as loopholes in recent securities reform that supposedly allow
plaintiff attorneys to "end run" its strict pleading and discovery
standards. However, the bill passed by a narrow margin and its prospects
in the U.S. Senate and the White House are uncertain.

Alfred Ronconi and other shareholders charged that they lost money
because the price of their Nellcor stock was inflated by the false and
misleading statements of company officers and directors and by their
concealment of adverse information. The trial court tossed the suit out
in an April 22, 1997, ruling that sustained defendants' demurrer to the
complaint.

By the time the appeal came before the panel in San Francisco, two of
the grounds for dismissal had been rendered moot by the Diamond
Multimedia and Stor-Media rulings, so the panel focused on the third
ground -- the position that plaintiffs could not establish reliance
under California Corporations Code Secs. 25400 and 25500 because they
could not point to allegedly false statements made by each of the
defendant directors. In the appeal, plaintiffs argued that to be liable
under Sec. 25400 a director or officer must "willfully participate" in a
violation -- which could be triggered by their affirmance of a board
decision to make an allegedly false or misleading statement.

The court agreed, noting that only this section of the law includes the
word "participate" in a violation, rather than committing a direct
violation. "The first amended complaint accuses each defendant of
'participating' in a scheme, conspiracy and course of business to
manipulate the price of Nellcor stock to artificially high levels during
the class period," the court wrote. "All of the defendants pursued a
common goal, i.e., concealing material adverse information." The
complaint also alleges that three corporate officers made false
statements and that the other officer/director defendants "knew that
false statements had been made." (Corporate Officers and Directors
Liability Litigation Reporter, Vol. 14, No. 23, Pg. 3, Oct11-1999)


SALMONELLA OUTBREAK: Aussie Lawsuit against Nippy's for Trial Next Year
-----------------------------------------------------------------------
A class action over a salmonella outbreak in Adelaide linked to orange
juice is likely to go to trial towards the middle of next year. In the
Federal Court last Friday lawyers acting for more than 300 people were
directed by Justice John Mansfield to prepare their case by the end of
February.

>From there it was expected a date would be set for trial with the issues
of liability and possible damages to be considered separately. Justice
Mansfield said the applicants should be in a position to serve the
respondents with statements of evidence and a list of proposed witnesses
by February 25. He set down March 14 for the next directions hearing.

The class action against Knipsel Fruit Juices Pty Ltd, trading as
Nippy's, was launched following the salmonella outbreak in March this
year which was traced to Nippy's orange juice. Sales were banned for
some time with the source of the bacteria eventually traced to oranges
from a Riverland supplier which had not been properly washed. That
supplier was now also involved in the court action.
About 500 people were thought to have been affected by the salmonella
outbreak. (AAP Newsfeed Nov-19-1999)


SGL CARBON: Ch 11 Filing Legitimate in Face of Price-Fixing Litigation
----------------------------------------------------------------------
A financially sound company's filing of a Chapter 11 petition in light
of potential price-fixing liability, which presents a significant threat
to its continued business, should not be dismissed as a "bad faith"
filing under sec. 1112(b) of the Bankruptcy Code, the U.S. District
Court for the District of Delaware has ruled. In re SGL Carbon Corp.,
No. 98-2779-JJF (D DE, April 23, 1999). German steel-component supplier
SGL Carbon AG is not abusing U.S. Bankruptcy laws, U.S. District Judge
Joseph J. Farnan concluded, in its legitimate attempt to deal with the
antitrust litigation's potentially devastating effects on the company.

                        $135 Million Criminal Fine

SGL Carbon AG last month agreed to pay a record $135 million antitrust
fine and plead guilty to participating in a worldwide conspiracy to fix
prices and allocate sales volume. The Department of Justice accused the
maker of graphite products and its CEO, Robert J. Koehler, with
conspiring with other cartel members to suppress and eliminate
competition in the graphite-electrodes industry from at least July 1992
to June 1997. Koehler agreed to pay a $10 million fine, the largest
antitrust fine against an individual.  SGL Carbon is the fourth cartel
member to be prosecuted in the DOJ's investigation of anticompetitive
practices that forced steelmakers in the United States and other
countries to pay inflated prices for graphite electrodes, according to
the department.

Bankruptcy Proceedings Creditors had argued that the SGL bankruptcy case
should be dismissed because it was filed strictly to gain leverage in
antitrust suits. Bankruptcy specialists view SGL's Chapter 11 status as
an added inducement for civil plaintiffs to settle their claims out of
court on terms favorable to SGL rather than pursuing a lawsuit and
becoming a creditor of the reorganized company. "The threat to the
debtor's business posed by pending antitrust litigation against it is
both real and substantial," wrote Judge Farnan. "Consistent with the
policies and purposes of Chapter 11, which encourage early filing so as
to increase the possibility of successful reorganization, the Court will
not allow the Debtor to wait idly by for impending financial and
operational ruin, when the Debtor can take action now to avoid such a
consequence."

SGL, the world's leading maker of graphite products for steelmakers, is
not insolvent, but its U.A. unit has been plagued by antitrust claims.
As a result of a federal investigation of alleged price fixing of
carbon-electrodes, it is facing multiple lawsuits, including a class
action antitrust suit by steel producers.

The unsecured creditors' committee, of which eight members are
plaintiffs in the antitrust litigation and one is a trade creditor,
sought to dismiss the case on the ground SGL was not experiencing
financial difficulty and thus seeking Chapter 11 protection was purely a
litigation ploy.

Judge Farnan, however, noted that SGL officials asserted that the
financial demands of antitrust claimants could break the company because
it could not afford to pay the damages sought by plaintiffs totaling
hundreds of millions of dollars, before trebling under the antitrust
statutes. Comparing SGL to the Johns-Manville Co., a building products
firm that filed Chapter 11 in the 1980s after extensive involvement in
asbestos litigation, the judge concluded that SGL's Chapter 11 filing
was not in bad faith. In determining that the company could legitimately
proceed on its Chapter 11 course, he said SGL "was not formed as a sham
solely for the purposes of filing bankruptcy and has a legitimate chance
of reorganizing successfully."

Laura Davis Jones, Brendan Linehan Shannon and Edwin J. Harron of
Wilmington's Young, Conaway, Stargatt & Taylor and Ronald DeKoven and
George J. Wade of Shearman & Sterling in New York represent SGL. The
creditors' committee is represented by Teresa K.D. Currier of the
Wilmington office of Philadelphia's Duane, Morris & Hechsher and by
Kenneth H. Eckstein and Philip Bentley of New York's Kramer, Levin,
Naftalis & Frankel. (White-Collar Crime Reporter, Vol. 13; No. 8; Pg.
27, september 1999)


U.S.: Missouri Landowners along Katy Trail Seek Payments
--------------------------------------------------------
Missouri landowners faced off with the Justice Department on November 18
in a closely watched case over property rights along the Katy Trail. In
the U.S. Court of Claims, lawyers representing about 300 landowners who
live along the Katy Trail argued that the government had illegally taken
private property from them for the recreational trail. And they seemed
to find a receptive ear with the presiding judge, Eric Bruggink.

At issue is a class-action suit filed in 1993, in which the property
owners argue that the government should pay them for land used for the
Katy Trail. For example, the lead plaintiff in the case, Dorothy Moore,
contests the use of a mile-long strip of land along her property near
the Daniel Boone Bridge in St. Charles County.

Lawyers for the plaintiffs said landowners could be entitled to $ 10
million to $ 25 million. Conservation and outdoor groups are keeping
close tabs on the case because there are at least 145 similar trails in
28 states, according to the Rails-to-Trails Conservancy, which filed a
brief in support of the government's case.

The arguments on November 18 also included two related cases. One
involves a couple from Warren County who live along the trail, and the
second involves Grantwood Village, which is seeking compensation for
easements on a six-mile bike trail near Grant's Farm.

The Justice Department attorneys cited a 1983 law passed by Congress
that allows old railroad corridors to be turned over to states and trail
groups for recreational purposes. Congress created the program, called
"railbanking," as a way to preserve the lines for possible
transportation use. Under that law, if a railroad does not want to
abandon its line, it can lease or sell the land for another use without
giving back old easements, as long as the new use benefits the public
and meets other conditions.

Lawyers for the property owners argued that under Missouri law, when the
railroad tracks along the trail were pulled up, the century-old railroad
easements should have reverted to the original property owners. Because
they can't get the property back, they should get paid for it, they
argued.

The judge seemed skeptical that the railroad ever intends to revive the
lines at issue in the three Missouri cases.

After hearing more than three hours of arguments, Bruggink said he was
inclined to find that railbanking was not a legitimate use of the
easements under Missouri law. Bruggink is not expected to issue a formal
decision for more than a month, said William Travis, an attorney for the
plaintiffs. (St. Louis Post-Dispatch Nov-19-1999)


UPS: Sued in 4 States for Insurance Fraud; Money Put into Bermuda Co.
---------------------------------------------------------------------
Customers who bought insurance over the past 16 years for packages
shipped by United Parcel Service have filed a lawsuit accusing the
world's largest package delivery company of insurance fraud. United
Parcel Service has not seen the lawsuit but feels it has acted properly
and will fight the allegations, company spokesman Norman Black said last
Friday.

The Atlanta-based shipper recently sold stock to the public, raising
nearly $5.5 billion in the biggest initial public offering to date. In
afternoon trading on the New York Stock Exchange, UPS shares were down
$1.311/4 at $65 a share.

The lawsuit, filed November 18 in Montgomery County Common Pleas Court,
seeks $14 billion in compensatory damages. However, if the judge
approves it as a class-action lawsuit, that amount would be tripled to
$42 billion, Dayton attorney James Swaim said. Swaim said the lawsuit
was filed on behalf of about 20 UPS customers from Indiana, Texas,
Kentucky and Ohio.

The lawsuit claims that UPS fraudulently collected fees to pay insurance
for packages with values of more than $100 when the company was
self-insured. ''The money collected for the insurance wasn't used to buy
insurance but was directed to a Bermuda business owned by UPS
stockholders,'' said Swaim. The suit said UPS was operating as an
insurance company without a license to do so.

The lawsuit stems from documents obtained in the federal government's
case against UPS in U.S. Tax Court on Aug. 9. A Tax Court judge ruled
that UPS set up a Bermuda-based corporation as an insurance company to
avoid paying income taxes. The judge found that UPS must pay taxes on
the money sent to the Bermuda company.

UPS recently took a $1.44 billion charge as a result of the ruling and
made a $1.3 billion payment to the government to stop interest penalties
while it considers an appeal, Black said.

Until 1984, UPS sold and provided its own insurance for customers.
Rather than face the possibility of being regulated by state insurance
commissioners as an insurance company, Black said UPS then began using
Pittsburgh-based National Union Fire Insurance Co. To write the
insurance for UPS packages.

National Union Fire Insurance, a co-defendant in the lawsuit, used
Overseas Partners Ltd. In Bermuda to reinsure the coverage National
Union Fire had written. Overseas Partners includes the company that UPS
spun off when it exited the insurance business in 1984. It is owned by
holders of private UPS stock but is independent of UPS, Black said. ''We
believe we followed every state regulation and rule interpretation and
application at the time we were exiting the insurance business,'' Black
said. Because of the tax dispute with the government, UPS on Oct. 1 got
back into providing its own package insurance through a subsidiary,
GlenLake Financial, that is licensed to write insurance in all 50
states, Black said.

Other defendants in the new suit include American International Group,
of New York; AIG Risk Management Inc., of New York; Frank B. Hall
Insurance Brokers of Paramus, N.J.; Prometheus Funding Corp., of New
York; and Aon Group Ltd., of Bermuda. (AP Online Nov-19-1999)


WIRETAP RULES: Privacy Groups Ask Columbia Ap. Ct. to Throw Out Rules
---------------------------------------------------------------------
Leading U.S. privacy groups last Thursday filed a lawsuit to block new
federal wiretapping rules they said would require the tracking of
wireless telephone users and monitoring of Internet traffic.  The groups
said the new rules, released by the Federal Communications Commission in
August, would lead to vast surveillance abuses and exceeded a 1994 law
that called for updated wiretapping standards.

The American Civil Liberties Union and the Electronic Privacy
Information Center asked the U.S. Court of Appeals for the District of
Columbia to throw out the rules.  ``We are now at a historic
crossroad,'' said Barry Steinhardt, associate director of the ACLU. ``We
can use emerging technologies to protect our personal privacy, or we can
succumb to scare tactics and exaggerated claims...and give up our
cherished rights, perhaps forever.''

A U.S. Justice Department official said the government would ask the
court to move as quickly as possible to dismiss the lawsuit.  ``We're
going to vigorously oppose this lawsuit,'' Assistant Attorney General
Stephen Colgate said. ``We didn't get everything we wanted from the FCC.
We think they played their role as a neutral arbiter.''

Major local telephone companies have also complained that the rules
exceeded the law's mandate and required them to make costly changes to
their networks that could raise prices for consumers. Industry groups
are also expected to file suit to block the new rules.

Traditional wiretap techniques do not work with digital technology,
which would be impenetrable without assistance from the phone
companies.  Under the 1994 Communications Assistance for Law Enforcement
Act, telecommunications carriers were supposed to negotiate with law
enforcement officials led by the FBI to create rules that would allow
for court-authorized wiretapping on newly installed telephone switches.
Lawmakers at the time said the act was intended to preserve wiretapping
capabilities that existed on older systems without granting any expanded
monitoring power.

After years of disputes, industry and privacy groups rejected nine
capabilities that the FBI requested be built into the network, such as
monitoring a conference call after the person being tapped hangs up and
reporting the location of wireless callers.

The law established that the FCC should resolve disputes and in rules
released Aug. 31, the agency decided that the industry should be
required to add most of the disputed capabilities.  The FCC included the
location of a wireless telephone caller as one of the law's
requirements, meaning wireless carriers would be required to build
networks capable of tracking their customers. That outraged privacy
groups.

The groups also objected to a provision allowing law enforcers to get
access to electronic packets of digital data that include both the
contents of a portion of a phone call and identifying information about
the call even when a court has granted authority only to access the
identifying information. (Washington Reuters Nov-18-1999)


* Agencies & Groups Join Forces against Telemarketing Fraud
-----------------------------------------------------------
It's time for the American public to know what 10 percent of the
telemarketing industry knows. It's time to "Know Fraud." Local
representatives for the U.S. Postal Service, the U.S. Attorney's Office,
the Better Business Bureau and the American Association of Retired
Persons joined forces to help launch a nationwide promotion to educate
and protect consumers from mail and telemarketing fraud.

The program includes television announcements, videotapes that are
available for viewing at area libraries and fraud avoidance post cards,
which will be mailed to households nationwide. "The primary goal of
'Know Fraud' is to help consumers help themselves by teaching them how
to avoid being a victim of telemarketing or mail fraud," said U.S.
Postal Inspector Rey Santiago. It is estimated that each year Americans
are bilked for about $ 40 billion by such scams, said Dan Brandt of
AARP. "There are approximately 140,000 telemarketing firms in the United
States," he said. "Approximately 10 percent, or 14,000, of those firms
are frauds. Many victims of these scams are people over age 50."

The Tulsa Better Business Bureau receives about 70,000 phone calls a
year from people in eastern Oklahoma. A lot of those calls are from
individuals who have been defrauded by mail or over the telephone, said
Rick Brinkley, president of the Tulsa Better Business Bureau.

Currently, the most popular mail scams involve work-at-home schemes, he
said. One popular telemarketing scheme involves a notice of winning a
large sum of money in a Canadian class-action lawsuit. It requires the
participant to send large sums of his or her own to cover "settlement
fees," Brinkley said. Also popular are guaranteed loan programs that
require the first installment be paid before receipt of the loan.

Telemarketing fraud is prosecutable and stiff penalties accompany a
finding of guilt, said Stephen Lewis, U.S attorney. But by that time,
such organizations have spirited the money to a Swedish bank account or
some other hidden treasure box. "Rarely do the victims derive
restitution from prosecution," he said. "That is what makes victim
avoidance education critical to safeguarding the public." (Tulsa World
Nov-18-1999)

                               *********

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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.

The CAR subscription rate is $575 for six months delivered via e-mail.

Additional e-mail subscriptions for members of the same firm for the
term of the initial subscription or balance thereof are $25 each.  For
subscription information, contact Christopher Beard at 301/951-6400.


                    * * *  End of Transmission  * * *