/raid1/www/Hosts/bankrupt/CAR_Public/991210.MBX                 C L A S S   A C T I O N   R E P O R T E R

                Friday, December 10, 1999, Vol. 1, No. 218


BERGEN BRUNSWIG: Wolf Haldenstein Files Securities Lawsuit in Delaware
COMET SYSTEMS: Hit With Web Browsers’ Suit over Privacy
COMPUTER ASSOCIATES: NY Ct Denies Motion to Dismiss Securities Suit
CSX CORP: Loui. Judge Pares Jury’s $2.5B Award to $850M for Car Fire
DELTA & PINE: Agrees to Settle Missouri Suit Re Bronze Wilt of Cotton

DELTA & PINE: DOJ Investigates on Acquisition and Antitrust
DELTA & PINE: Farmers in Mississippi Can Sue After Loss in Arbitration
DELTA & PINE: Monsanto Indemnifies TX Suits over Gene in Cottonseed
DELTA & PINE: Settles Shareholder Suit in Dela. Re Merger with Monsanto
DELTA & PINE: Tenders out Defence of Suit in Georgia Re Glyphosate Gene

DELTA & PINE: Tenders out Defense of Loui. Suits over Soybean Seeds
DELTA & PINE: Arbitration with Farmers Goes on in Georgia, Ark. & Fla.
DIGNITY PARTNERS: SIA Urges 9th Cir to Rehear Viatical Shareholder Case
GUN MANUFACTURERS: Update on Responses to Clinton Administration’s Suit
HOLOCAUST VICTIMS: Schroder Rules out Larger Fund; Envoy Is Open to It

INMATES LITIGATION: 11th Cir in Alabama Says HIV Poses Direct Threat
LLOYD’S INSURANCE: Argues against Asbestos Related Fraud Claims in N.Y.
MONTGOMERY WARD: Presents Dela. Trent Settlement Pact to Bankruptcy Ct
NAVIGANT CONSULTING: Lowey Dannenberg Files Securities Suit in Illinois
O’QUINN: Former Clients in TX Sue over Kennedy Heights Toxic-tort Case

ORANGE UNIFIED: Retired Teachers Sue over Reneging on Medical Care
PLAINS ALL: Shepherd & Geller File Securities Suit in Texas
RUBENSTEIN: Fed Ct Oks Classes in Urologists’ Price-Fixing Case in Il.
STYLING TECHNOLOGY: Shepherd & Geller File Securities Suit in Arizona
THE YORK: Former Employees Sue over Age Discrimination in Downsizing

TOBACCO LITIGATION: French Ct Holds Seita Liable for Death of Smoker
U.S.: Fed Judge Dismisses Lawsuit over Phasing out of Marijuana Program
Y2K LITIGATION: Paper Says Act May Complicate Litigation
Y2K LITIGATION: Remediation Cost Can Be Claimed Under Property Policies


BERGEN BRUNSWIG: Wolf Haldenstein Files Securities Lawsuit in Delaware
Wolf Haldenstein Adler Freeman & Herz LLP, The Law Offices Of Charles J.
Piven, P.A., and Chimicles & Tikellis announce on December 8, 1999 that
they have filed a class action lawsuit in the United States District
Court for the District of Delaware on behalf of investors who purchased
or otherwise acquired the shares of 7.8% Trust Originated Preferred
Securities ("TOPrS" or the "Preferred Stock") of Bergen Capital Trust I
("BCT"), a subsidiary of Bergen Brunswig Corporation ("Bergen" or the
"Company") pursuant to a public offering that went effective on or about
May 26, 1999 in a public offering or thereafter on the open market until
October 14, 1999 (the "Preferred Stock Offering"), certain of its
officers and directors, and Merrill Lynch & Co., Inc., Banc of America
Securities LLC, A.G. Edwards & Sons, Inc., Goldman, Sachs & Co., Morgan
Stanley & Co., Inc., PainWebber Incorporated, and Prudential Securities,
Inc., (collectively "defendants").

The Complaint charges defendants with violations that arise under 11,
12(a)(2), and 15 of the Securities Act of 1933 (the "Securities Act").

Specifically, on May 26, 1999, Bergen consummated the Preferred Stock
Offering, selling 12 million shares of the Preferred Stock and receiving
net proceeds in excess of $290 million. As detailed in the Complaint,
the registration statement and other materials filed with the SEC
concerning the Preferred Stock Offering did not discuss, or even
mention, that the financial data for Bergen, following its recent
acquisition of Stadtlander Drug Co., Inc. ("Stadtlander") could not be
relied upon because Stadtlander was suffering from accounting

On October 14, 1999, however, Bergen, to the surprise of the markets,
announced that it would not meet analysts' consensus estimates for its
fourth quarter and fiscal year ended September 30, 1999, blaming the
shortfall on "[l]ower than expected results at Stadtlander." That same
day, Bloomberg, Dow Jones and other news services reported that Bergen
had filed a lawsuit against Counsel Corp., (the company that sold
Stadtlander to Bergen) claiming that Counsel Corp. had "fraudulently
induced" Bergen into paying an "inflated purchase price" for Stadtlander
by "grossly overstat[ing] the specialty-drug unit's earnings and net
income during periods when it actually had little or no income."

Stadtlander's huge and pervasive accounting irregularities, as described
by Bergen in its complaint against Counsel Corp., are so great that
their existence at the time of the Preferred Stock Offering is self
evident. Moreover, the Bergen lawsuit substantiates the existence of
these conditions at the time of the purchase of Stadtlander continuing
at least until October 14, 1999. Thus, the registration statement and
related documents issued during the course of the Preferred Stock
Offering were materially misleading. Defendants were directly
responsible for the contents of these documents, filed with the SEC, and
employed to effectuate the Preferred Stock Offering. Since disclosure of
this information, the TOPrS have declined significantly.

If you purchased TOPrS pursuant to the Preferred Stock Offering, or
traceable there to, you have until, January 24, 2000 to participate in
the case and ask the Court to appoint you as one of the lead plaintiffs
for the Class.

In order to serve as lead plaintiff, you must meet certain legal
requirements. If you wish to discuss this action or have any questions,
please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison
Avenue, New York, New York 10016, by telephone at (800) 575- 0735
(Michael Miske, Gregory Nespole, Esq., via e-mail at
classmember@whafh.com, whafh@aol.com, nespole@whafh.com or
Gnespole@aol.com or visit website at http://www.whafh.comor contact
Pamela Tikellis, Esq. at (302) 656-2500, or Charles J. Piven at (410)
332-0030 or by e-mail at pivenlaw@eros.com (All e-mail correspondence
should make reference to Bergen.)

COMET SYSTEMS: Hit With Web Browsers’ Suit over Privacy
Comet Systems Inc., which distributes free software that allows computer
users to change their Web browser cursor into cartoon characters, failed
to tell millions of customers that it was also tracking the sites they
visited, a class-action lawsuit filed December 8 alleges. Comet Systems
used this information about its customers' viewing habits 'for its own
benefit.' The company did not return a call seeking comment. (National
Post (formerly The Financial Post) December 09, 1999)

COMPUTER ASSOCIATES: NY Ct Denies Motion to Dismiss Securities Suit
U.S. District Court: E.D.N.Y.

QDS:03761812 -Defendants have moved to dismiss plaintiffs' Consolidated
Amended Class action Complaint pursuant to Rules 9(b) and 12(b)(6) of
the Federal Rules of Civil Procedure.


Lead plaintiffs Steven Sinsheimer, John Greco, Felix Glaubach, Mishel
Tehrani, Jerry Wehmhoefer, Lillian Herschkowitz, Bruce Montague, Kerry
Gillispie, John Biegen, Jixiang Wu, Richard Wadsworth, and Andrew
Breiman all purchased stock in Computer Associates International, Inc.
or transacted in such stock options from January 20, 1998, through July
22, 1998, the relevant period in this action. (On October 9, 1998, this
Court appointed these individuals Lead Plaintiffs.) Likewise,
plaintiffs' putative class consists of over two-hundred individuals who
purchased CA stock during the Class Period.

Defendant Computer Associates International, Inc. ("CA") is a Delaware
corporation with its principal executive offices in Islandia, New York.
CA is in the business of developing, marketing, licensing, and
supporting standardized computer software for use in a broad range of
computers on a variety of hardware platforms, operating systems, and
application development environments. (Am. Compl. PP 12, 42.) CA's
shares are traded on the New York Stock Exchange ("NYSE").

At all times relevant to this action, defendant Charles Wang was CA's
Chief Executive Officer and Chairman of its Board of Directors.
Defendant Sanjay Kumar was CA's President and Chief Operating Officer,
as well as a member of the company's Board of Directors. Defendant
Artzl, as CA's Executive Vice President of Research and Development and
Senior Development Officer, also served on the company's Board of
Directors. As officers and directors of CA, defendants Wang, Kumar and
Artzt (collectively, the "individual defendants") participated in the
drafting, preparation, and/or approval of the various financial reports,
press releases, internal shareholder communications, and Securities
Exchange Commission ("SEC") filings at issue in this action. (Am. Compl.
P 19.)

                Plaintiffs' Class Action Allegations

Plaintiffs commenced this action pursuant to Rules 23(a) and (b)(3) of
the Federal Rules of Civil Procedure on behalf of a Class, consisting of
all persons who purchased CA common stock from January 20, 1998, through
July 22, 1998. Excluded from the Class are the individual defendants,
CA's officers and directors, and members of their families. Plaintiffs
allege that this Class satisfies each of the requirements of Rule 23(a),
namely, that (1) the Class is so numerous that joinder is impractical
(2) the Class members share common issues of law and fact; (3) the
claims and defenses of the Class representatives are typical of those
belonging to the class as a whole, and (4) the Class representatives
will adequately protect the interests of the entire class. This Court
has yet to certify the putative class.

                Plaintiffs' Substantive Allegations

In 1995, CA adopted the Key Employee Stock Ownership Plan (the "1995
Plan"), the purpose of which was "to promote the creation of stockholder
value by encouraging, recognizing and rewarding sustained outstanding
individual performance by certain key employees who are largely
responsible for the management, growth and protection of the business."
(Defs.' Ex. B at 14.) Under the 1995 Plan, "three key executives,"
namely defendants Wang, Kumar and Artzt, would receive approximately $ 1
billion in CA Common and Restricted Stock as long as the price for CA's
Common Stock exceeded $ 53.33 (as adjusted after stock splits) for 60
days during any 12-month period by the end of the company's fiscal year
2000. (Defs.' Ex. B at 15.) Plaintiffs contend that as of January 1,
1998, CA stock traded above the threshold level for a mere six days
since October 1, 1997, the date that CA stock first traded above the
vesting price. (Am. Compl. P 43.)

According to plaintiffs, immediately prior to and throughout the Class
period, CA began to experience financial problems, stemming from, inter
alia: the reluctance on the part of CA's largest customers to commit
significant financial resources to CA's costly products in light of the
Y2K problem and the Asian financial crisis; (2) the increased saturation
in CA's markets, causing a decline in the demand for CA's technology;
and (3) CA's inability to diversify its business by providing
installation and maintenance services. (Am. Compl. P 46.)

In an attempt to remedy the latter problem, CA sought to acquire
Computer Sciences Corporation ("CSC"), which was in the business of
implementing, servicing, and maintaining the kind of software produced
by CA. Accordingly, on or about February 17, 1998, CA announced a
cash-for stock tender offer for all outstanding stock of CSC at $ 108
per share. (Am. Compl. P 144.) In response, CSC mounted a defense to
CA's takeover efforts, which led to a sharp decline in the price of CA's
stock - from the mid to high $ 50s to the mid to high $ 40s - well below
the price necessary for the stock grants provided to the individual
defendants under the 1995 Plan to vest. (Am. Compl. P 44.)

Plaintiffs' claim that in order to restore the sagging value of CA
stock, and therefore protect the stock interests of the individual
defendants as provided under the 1995 Plan, CA began taking steps to
artificially inflate its reported revenues and thereby conceal the
deteriorating state of CA's business. (Am. Compl. P 47.) Although
general accounting procedures "provide that revenues should not be
recognized until they are realizable, earned and the collection of the
sales price is reasonably assured," CA allegedly recognized revenue from
the sale of software on credit terms extending as long as 10 years. (Am.
Compl. PP 82, 86.) CA also offered customers excessive discounts, placed
an unusual amount of pressure on its sales force to "book" sales, and
engaged in "improper revenue recognition practices that artificially
inflated" CA's operating results. (Am. Compl. P 47.) According to
plaintiffs, each of these practices front loaded sales both before and
during the class period at the expense of future periods, thereby hiding
CA's poor earnings prospects while at the same time safeguarding the
individual defendants' interests under the 1995 Plan.

At the same time, CA allegedly made numerous false and misleading
statements during the Class period, portraying itself publicly as a
"booming company which was experiencing and would continue to experience
rapidly rising sales and profits on its core products and new product
offerings, and as a company whose order pipeline was 'strong.'" (Am.
Compl. P 45.) According to plaintiffs, each of these false statements
was either prepared, made, or released by one or more of the individual
defendants. (Am. Compl. PP 51, 56-57, 63, 67, 69.) In issuing such
statements, CA and the individual defendants allegedly failed to reveal
adverse financial information, the disclosure of which "was necessary to
make the statements not false and misleading." (Am. Compl. P 49.)

For example, on four separate occasions during the relevant period, CA
issued press releases published on Business Wire in which they boasted
record financial results and a strong worldwide demand for CA's
products. (Am. Compl. PP 51, 55, 57, 63.) On January 20, 1998, April 22,
1998, and May 19, 1998, CA reported large increases in its revenues and
earnings results for the third and fourth quarters respectively of
fiscal year 1998. (Am. Compl. PP 51, 57, 63.) Plaintiffs maintain that
each of these statements was rendered false and misleading because of
CA's failure to disclose that its revenue figures were, in fact,
artificially inflated. (Am. Compl. PP 52, 58, 64.) Similarly, on March
5, 1998, CA announced that it would allow its tender offer for CSC
expire without disclosing the primary reason for its abandonment
thereof, namely, CSC's active opposition to such offer. (Am. Compl. P

Following each of these press releases, the information contained
therein was incorporated into reports issued by analysts from various
brokerage houses, including Prudential, Bear Stearns, Furman Selz, and
AAI, characterizing CA's earnings as "strong," and giving the stock a
"BUY" rating. (Am, Compl. 60, 67). Plaintiffs emphasize that the
analysts' reports "and the estimates and recommendations contained
therein, were based upon direct communications with defendants Wang,
Kumar and/or Artzt, and were of a nature that could only have been
provided (or based on specific information provided) by the Company and
its senior management." (Am. Compl. P 68.)

Plaintiffs claim that as a direct result of these misstatements and
omissions, on May 22, 1998, the price per share of CA stock rose above
the threshold level of $ 53.33 for the sixtieth day within the previous
12 months. This, in turn, caused the stock to which the individual
defendants were entitled under the 1995 Plan to vest, allowing
defendants Wang, Kumar and Artzt to collect a combined $ 1.15 billion
worth of CA stock. (Am. Compl. P 70.)

Plaintiffs assert that a mere eight weeks later, a very different
picture of CA's financial status began to emerge. On July 21, 1999, CA
issued a press release in which defendant Kumar stated that although CA
had again reported increased revenues for the first quarter of fiscal
1999, it anticipated that growth over the next several quarters would be
slow in light of the Asian financial crisis and Y2K problem affecting
several of CA's clients. (Am. Compl. P 72.) CA's management also
revealed that it had reduced its estimates of CA's future revenue by $
100 million for the quarters ending September 30th and December 1, 1998.
(Am. Compl. P 74.)

On July 22, 1999, the market price of CA's shares dropped to $ 17.5 per
share, at which point market analysts quickly reduced their ratings and
estimates for CA stock. (Am. Compl. PP 74, 75.) Plaintiffs allege that
CA's reliance on the Asian financial crisis and the Y2K problem as the
source of its own financial troubles was mere "windowdressing," designed
to conceal the fact that CA's problems stemmed from its efforts to
artificially inflate CA's sales prior to and during the Class period. To
support this contention, plaintiffs rely on reports from such analysts
as Weslet Golby, who essentially accused CA, among others, of
"overinflating their current revenues at the expense of future
revenues." (Am. Compl. P 77.)

On July 23, 1998, plaintiffs commenced this action, asserting two claims
under the Securities Exchange Act of 1934, 15 U.S.C. @ 78(a) et seq.: a
claim against all defendants under section 10(b), and Rule 10b-5
promulgated thereunder, as well as a claim against the individual
defendants under section 20(a). Plaintiffs also contend that CA employed
improper revenue recognition practices that caused CA's reported revenue
and earnings per share to be materially overstated.

              Standard of Review Under Rule 12(b)(6)

Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, dismissal
is warranted where "it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief." Ricciuti v. New York City Transit Authority, 941 F.2d 119, 123
(2d Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, (1957)).
The Court must accept the facts alleged in the complaint as true and
draw all reasonable inferences from those allegations in favor of
plaintiff. Scheuer v. Rhodes, 416 US 232, 236 (1974). The complaint,
however, must "give defendants fair notice of what the plaintiffs' claim
is and the grounds upon which it rests." Conley, 355 U.S. at 47.

        Standard of Review under Rule 9(b) and Section 10(b)

When a complaint alleges fraud, Rule 9(b) of the Federal Rules of Civil
Procedure requires that the circumstances be pled with particularity.
Acito v, Imcera Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995). The
complaint must: (1) specify the statements that the plaintiff contends
were fraudulent, (2) identify the speaker, (3) state where and when the
statements were made, and (4) explain why the statements were
fraudulent. Id. However, Rule 9(b) states that "malice, intent
knowledge, and other condition of mind of a person may be averred
generally." Id. at 52.

Under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. @
78j(b), and SEC Rule I 10b-5, a plaintiff must prove that the defendant,
in effectuating an allegedly fraudulent sale, acted with scienter. Press
v. Chemical Investment Servs. Corp., 166 F.3d 529, 537 (2d Cir. 1999).
"The Private Securities Litigation Reform Act of 1995 heightened the
requirement for pleading scienter to the level used by the Second
Circuit: Plaintiffs must state with particularity facts giving rise to a
strong inference that the defendant acted with the required state of
mind. 15 U.S.C. @ 78u-4(b)(2)." Id. at 537-538. However, this
requirement may be satisfied either: (a) by alleging facts to show that
defendants had both motive and opportunity to commit fraud, or (b) by
alleging facts that constitute strong circumstantial evidence of
conscious misbehavior or recklessness. Acito, 47 F.3d. at 52.


Section 10(b) Liability is Adequately Pled

Plaintiffs adequately plead fraud with the required particularity. They
allege a number of statements made by defendants, detailing the who,
what, where, when and how of the fraudulent statements as discussed
supra, p. 3-8. See also Am. Complaint, PP 49-68. Plaintiffs supply "as
much detail of the alleged fraud as can be expected before discovery
commences." In re Anne Taylor Stores Sec. Listig., 807 F.Supp. 990, 1004
(S.D.N.Y. 1992).

Plaintiffs allege, among other things, that CA's Class Period earning
announcements and SEC-filed financial statements for the third quarter
ending December 31, 1997 and for the quarter and fiscal year ending
March 31, 1998 were knowingly and intentionally inflated. Plaintiffs
point specifically to the premature recognition of income on Unicenter
deals, long-term installment sales, and on customer support fees.
Plaintiffs detail how defendants used specific accounting practices in
violation of the Generally Accepted Accounting Principles, ("GAAP"), to
prematurely recognize revenue. See Am. Complaint, PP These allegations
render defendants' earning statements and other positive statements as
materially false at the time they were made, not merely optimistic
statements. See In re Northern Telecom Ltd. Sec. Litig, 1994 U.S. Dist.
LEXIS 11730, at **18-22 (S.D.N.Y. Aug. 19, 1994); Shapiro v. UJB
Financial Corp., 964 F.2d 272, 282 (3d Cir. 1992); In re Anne Taylor,
807 F.Supp. at 998. Similarly, these alleged statements are also not
more statements of historical performance or protected by the "safe
harbor". See Bausch & Lomb, Inc. Sec. Litig., 941 F.Supp. 1352, 1363
(W.D.N.Y. 1996).

Moreover, statements such as ones specifically attributed to defendants
Wang and Kumar in CA's own April 22 and May 21 press releases, stating
that CA's "business is stronger than ever," that there was "strong
worldwide demand" for CA software, that "[CA's] business fundamentals
are strong" and that CA was "solidly positioned for growth", were
alleged to be false and misleading for failure to disclose materially
adverse business trends and accounting practices. Am. Comp. PP 57, 63.
Thus, this statement, as well as the others concerning the supposed
health of the company, are all actionable when considered as a whole and
in light of the alleged improper accounting and revenue inflating
practices. See in re Northern Telecom Ltd. Sec. &. Litig, 1994 U.S.
Dist. LEXIS at **15-23; Ann Taylor, 807 F. Supp. at 1004-5.

Defendants' citation of San Leandro Emergency Med. Group Profit Sharing
Plan v. Philip Morris Cos, 75 F.3d 801, 804 (2d Cir. 1996) is
unavailing. San Leandro is easily distinguishable, involving whether "a
company had a duty to disclose its consideration of an alternative
business plan in order to prevent its prior statements from becoming
misleading," not allegations of glowing press releases and the like,
concerning the state of the company in the face of massive,
intentionally inflated earning statements at issue here.

Defendants only assert that CA's class period press releases and
financial statements include meaningful cautionary language consisting
of the following: that "there can be no assurances that future results
will be achieved," and that there were "important factors that could
cause actual results to differ materially." These are general
boilerplate disclaimers that do not alter that fact that plaintiffs
allege that defendants knowingly made particular factual representations
that they knew to be false, especially as to level of consumer demand
and CA's past performance, revenues, sales, and earnings. See Bausch &
Lomb, 941 F.Supp. at 1363.

Unknown specifics, such as the exact amount the earnings have been
overstated, are not fatal in this case. Plaintiffs allege such a
widespread fraudulent practice, that if true, would have a huge net
effect in error as to the company's overall figures and is the type of
information peculiarly within the defendants' control. See Bausch &
Lomb, 941 F.Supp. at 1361 ("Since many of these facts lie particularly
within defendants' knowledge, plaintiffs cannot reasonably be expected
to be able to state at this stage exactly when and how defendants
learned that B&L's sales figures were being overstated"); Craftmatic
Securities Litigation, 890 F.2d 628, 645 (3d Cir. 1989) ("Particularly
in cases of corporate fraud, plaintiffs cannot be expected to have
personal knowledge of the details of corporate internal affairs").
Plaintiffs have not simply alleged mere accounting improprieties or
mismanagement; rather, plaintiffs describe a pervasive fraudulent
scheme, including intentionally violative accounting practices and
inflated revenues, which is materially misleading.

Scienter is Adequately Pled - Motive and Opportunity

The plaintiffs have sufficiently alleged the Individual Defendants'
Motive and opportunity - the receipt of outright stock grants worth over
$ 1 billion if the price of CA's common stock traded at or above the
Vesting Price for 60 days in any 12 month period prior to March 2000.
See e.g. Am. Complaint, P 43. The combination of the timing of this
vesting, the subsequent large and unexpected drop in value of the stock,
and the mammoth grant incentive, strongly supports Individual
Defendants' motive. In addition, plaintiffs have alleged insider
trading, which supports an inference of scienter. See Goldman v. Belden,
754 F. 2d. 1059, 1070 (2d Cir. 1985).

Plaintiffs also adequately allege opportunity, as defendants Wang, Kumar
and Artzt were the three most senior officers, who participated in the
drafting, preparation, and/or approval of the financial reports, press
releases, shareholder communications, and SEC filings at issue.

Reckless or Conscious Misbehavior

The plaintiffs have also adequately alleged facts sufficient to
demonstrate reckless or conscious misbehavior. Plaintiffs detail among
other things, defendants' alleged fraudulent scheme involving
intentional and knowing improper recognition and inflation of earnings,
revenue and sales. These allegations, in combination with other
statements made by Individual Defendants, and the enormous scope and
scale of this alleged fraud, if true, rises to the level of conscious
misbehavior or recklessness. See In re MTC Elec. Techs. Shareholders
Litig. 898 F.Supp. 974, 989 (E.D.N.Y. 1995) vacated in part, 993 F.Supp.
160, 162 (E.D.N.Y. 1997). In all, plaintiffs alleged sufficient facts to
give rise to a strong inference of fraudulent intent.


For the foregoing reasons, defendants' Motion to Dismiss must be and the
same is hereby denied. So Ordered. (New York Law Journal, November 23,

CSX CORP: Loui. Judge Pares Jury’s $2.5B Award to $850M for Car Fire
Louisiana district Court Judge Wallace Edwards has left intact $ 850
million of a jury's $ 2.5 billion punitive damages award against CSX
Corp. over the railroad company's role in the leak of the toxic chemical
butadiene from a tank car parked on a CSX track. The verdict against CSX
was part of an overall $ 3.367 billion award -- all but $ 2 million of
it in punitives -- ordered against nine defendants in 1997.

In his Nov. 5 decision, Judge Edwards contended that the $ 2.5 billion
hit against CSX "shocks the conscience of this court and is therefore
manifestly unreasonable." But he declined CSX's motions to set the
punitives aside completely, calling "not unreasonable" the jury's
assessment of "reckless disregard of public safety in the storing,
handling or transportation of hazardous or toxic substances."

In his decision, Judge Edwards upheld the jury's findings of liability,
but reduced the $ 2 million in compensatory damages to about $ 700,000.
The punitive award against CSX is the only punitive award still
standing; the other four defendants hit with punitive judgments have
since settled. In re: New Orleans Tank Car Leakage Fire Litigation, No.
87-16374 (Dist. Ct., Orleans Parish, La.).

The $ 3.367 billion verdict arose from a chemical leak and subsequent
fire in the Gentilly section of New Orleans. Shortly after midnight on
Sept. 9, 1987, butadiene seeped out of the bottom of a tank car parked
on a CSX railroad track, said plaintiffs' counsel Joseph M. Bruno, of
New Orleans' Bruno & Bruno. Once the butadiene hit the air outside the
car, it was transformed into a white vapor cloud that crept along the
ground outside the car, spreading out four blocks from the track, he

The vapor hit an ignition source, and the cloud caught on fire. As it
exploded, a line of fire flashed back to the railroad car, Mr. Bruno
said. The houses in the area shook from the impact of the explosion, and
the neighborhood was awakened and evacuated as the fire in the railroad
car burned for a day and a half, he added.

The 8,000 or so residents of Gentilly, a mostly minority neighborhood
northeast of the French Quarter, sued CSX, which owned the track;
General American Transportation Co., which owned the railroad car;
Phillips Petroleum Corp., which cleaned the car before it was loaded;
and six other corporate defendants.

Under the law in Louisiana at the time of the incident, the five
defendants charged with wanton or reckless disregard for public safety
in the storage, handling or transportation of hazardous or toxic
substances were at risk for punitive damages. The law has since been
changed, but the companies were still at risk because the cases were
filed before the law was repealed, said CSX attorney Harry S. Hardin
III, of New Orleans' Jones, Walker, Waechter, Poitevent, Carrere &
Denegre L.L.P.

At the start of trial, Phillips Petroleum admitted liability; Phillips
personnel had cleaned the car out and "improperly closed it afterward,"
Mr. Bruno said. Phillips, however, never handled butadiene and was not
at risk for a punitive verdict.

                        No Real Injuries?

All the defendants vigorously contested the claims of damages to the
plaintiffs, said Mr. Hardin. "A number of people were evacuated and
inconvenienced," he said. "But no houses caught fire, nobody died, no
skin was burned, no bones were broken." The plaintiffs conceded that the
visible injuries were limited, but claimed that the smoke from the fire
left the residents at substantially greater risk to cancer, said Mr.
Bruno. The ash products from burning butadiene, he said, "are
extraordinarily carcinogenic." In addition, he said, the defendants were
negligent in failing to inspect the car and prevent the leak.

In the first phase, the claims of 20 representative plaintiffs went to
trial. Many of the leading attorneys in Louisiana were on the trial
teams, including, for the plaintiffs, Wendell H. Gauthier, of Metairie's
Gauthier, Downing, LaBarre, Beiser & Dean.

On Aug. 25, 1997, a New Orleans jury awarded the plaintiffs $ 2 million
in compensatory damages. The jury returned the punitive award two weeks

Then the case started bouncing up and down between the trial court,
intermediate appellate courts and the Louisiana Supreme Court. The trial
court entered the judgment, but in October 1997, the state Supreme Court
vacated it, agreeing with CSX that any final entry would have to await
the trials of the remaining plaintiffs. The court later reconsidered,
Mr. Bruno said, allowing entry of judgment.

CSX will appeal this latest ruling, said Mr. Hardin. CSX's conduct was
not "of the kind to be characterized as a violation of the statute.
There was no reckless disregard of public safety." The tank car was left
for several hours on a CSX track for CSX to pick up. When the CSX crew
arrived, the car was already on fire, and CSX workers, at substantial
personal risk, he said, "disconnected all the other cars and isolated
the burning car."

The claims of 20 more plaintiffs were tried this summer and the new jury
awarded $ 330,000. Only three of the original nine defendants remain --
CSX, AMF-BRD Inc. and Novacore Inc. AMF-BRD and Novacore did not handle
the chemical and thus are not at risk for punitives. The total amount of
the settlements so far is confidential, but, Mr. Hardin said, "the
rumors on the street are that the total amount is under $ 300 million."
(The National Law Journal, November 29, 1999)

DELTA & PINE: Agrees to Settle Missouri Suit Re Bronze Wilt of Cotton
The Company and Monsanto were named as defendants in a lawsuit filed in
the Circuit Court of the State of Missouri, County of Dunklin, on April
2, 1999. This case was subsequently removed to the United States
District Court for the Eastern District of Missouri, but remanded back
to the Circuit Court of the State of Missouri, County of Dunklin. This
suit alleges that certain varieties of cotton offered for sale by D&PL
were unmerchantable as a result of the alleged susceptibility to a
malady referred to as bronze wilt. Although this litigation involves a
transgenic variety, there is no allegation in the complaint sufficient
to trigger any contractual obligation to defend or indemnify under the
terms of the Roundup Ready Agreement. A settlement of this claim has
been agreed to (but not yet consummated).

DELTA & PINE: DOJ Investigates on Acquisition and Antitrust
On July 18, 1996, the United States Department of Justice, Antitrust
Division ("USDOJ"), served a Civil Investigative Demand ("CID") on D&PL
seeking information and documents in connection with its investigation
of the acquisition by D&PL of the stock of Arizona Processing, Inc.,
Ellis Brothers Seed, Inc. and Mississippi Seed, Inc. (which own the
outstanding common stock of Sure Grow Seed, Inc). The CID states that
the USDOJ is investigating whether these transactions may have violated
the provisions of Section 7 of the Clayton Act, 15 USC 18. D&PL has
responded to the CID, employees were examined in 1997 by the USDOJ, and
D&PL is committed to full cooperation with the USDOJ. At the present
time, the ultimate outcome of the investigation cannot be predicted.

On August 9, 1999, D&PL and Monsanto received Civil Investigative
Demands from the USDOJ, seeking to determine whether there have been any
inappropriate exchanges of information between Monsanto and D&PL or if
any prior acquisitions are likely to have substantially lessened
competition in the sale or development of cottonseed or cottonseed
genetic traits. D&PL is complying with the USDOJ's request for
information and documents and with the recent Civil Investigative

DELTA & PINE: Farmers in Mississippi Can Sue After Loss in Arbitration
In 1999 and 1998, 45 farmers in Mississippi filed seed arbitration
claims against the Company and Monsanto with the Mississippi Department
of Agriculture arising from the 1998 cotton crop. The Mississippi
Department of Agriculture dismissed all but 19 of those claims due to
the failure of the farmer to provide adequate information. Those
farmers, however, still have a right to pursue litigation should they so
choose. The remaining arbitration claims were heard in March of 1999.
The Company was exonerated from liability in 16 of those cases. Three
cases resulted in the suggestion of nominal damages. Each of those
farmers has, likewise, the right to pursue litigation should they so
choose. Five of the 16 unsuccessful claimants from the 1998 crop year
filed suit on May 21, 1999, in the Circuit Court of Bolivar County,
Mississippi, against the Company and Monsanto. The Company and Monsanto
are presently investigating the claims. Pursuant to the terms of the
Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the
defense of these claims to Monsanto and requested indemnity, as Monsanto
is contractually obligated to defend and indemnify the Company against
all claims arising out of the failure of the Roundup glyphosate
tolerance gene. D&PL will not have a right to indemnification from
Monsanto, however, for any claim involving defects in seed separate from
or in addition to the failure of the herbicide tolerance gene, and such
claims are contained in these complaints. Additionally, one farmer in
Mississippi has filed a seed arbitration claim against the Company with
the Mississippi Department of Agriculture arising from the 1999 cotton
crop. The Mississippi Department of Agriculture has not yet scheduled a
hearing on this claim.

DELTA & PINE: Monsanto Indemnifies TX Suits over Gene in Cottonseed
The Company and Monsanto are named as defendants in four pending
lawsuits filed in the State of Texas. Two lawsuits were filed in Lamb
County, Texas on April 5, 1999; one lawsuit was filed in Lamb County,
Texas on April 14, 1999; and one lawsuit was filed in Hockley County,
Texas, on April 21, 1999. These lawsuits were removed to the United
States District Court, Lubbock Division, but subsequently were remanded
back to the state court where they were filed.

In each case the plaintiff alleges, among other things, that certain
cottonseed acquired from Paymaster which contained the Roundup Ready
gene did not perform as the farmers had anticipated. These lawsuits also
include varietal claims aimed solely at the Company. This litigation is
identical to seed arbitration claims previously filed in the State of
Texas which were concluded in the Company's favor.

The Company and Monsanto have investigated the claims to determine the
cause or causes of the alleged problems. Pursuant to the terms of the
Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the
defense of these claims to Monsanto and requested indemnity. Pursuant to
the Roundup Ready Agreement, Monsanto is contractually obligated to
defend and indemnify the Company against all claims arising out of the
failure of the Roundup glyphosate tolerance gene. D&PL will not have a
right to indemnification from Monsanto, however, for any claim involving
defective varietal characteristics separate from or in addition to the
failure of the herbicide tolerance gene, and such claims are contained
in these complaints.

The Company, certain subsidiaries of Monsanto and others were named as
defendants in a lawsuit filed in the Civil District Court, Williamson
County, Texas, 277th Judicial District, in April 1997. The plaintiffs
allege, among other things, that certain cottonseed acquired from
Monsanto in the Hartz Cotton acquisition and subsequently sold by the
Company, failed to perform as represented allegedly resulting in lost
yield. Pursuant to the Hartz Cotton acquisition agreement, the Company
is entitled to indemnification from Monsanto for damages resulting from
the sale of bagged seed inventories acquired by D&PL in that
acquisition. Some or all of the seed involved in this case may meet this
criteria and D&PL will therefore be entitled to indemnification from
Monsanto for any losses resulting from such seed. In October 1999, this
case was dismissed and the parties to this litigation, including the
Company and Monsanto, agreed to mediate the claims which were the
subject of this lawsuit. Should mediation fail, the parties have agreed
to enter into binding arbitration.

The Company, Monsanto and other third parties were named as defendants
in lawsuits filed (i) in the District Court of Falls County, Texas, in
August 1996 and (ii) in the District Court of Robertson County, Texas,
in March 1998. The plaintiffs allege, among other things, that D&PL's
cottonseed varieties, which contain Monsanto's Bollgard gene, did not
perform as the farmer had anticipated and, in particular, did not fully
protect their cotton crops from certain lepidopteran insects. On or
about October 8, 1999, a settlement of the Falls County case was agreed
upon, but it has not yet been consummated.

DELTA & PINE: Settles Shareholder Suit in Dela. Re Merger with Monsanto
In May 1998, five individual alleged shareholders brought suits against
Monsanto, the Company and its Board of Directors ("Directors") in the
Court of Chancery in New Castle County, Delaware. The complaints alleged
that the consideration to be paid in the proposed merger of the Company
with Monsanto is inadequate and that the Company's Directors breached
their fiduciary duties to the Company's stockholders by voting to
approve the Agreement and Plan of Merger, and that Monsanto aided and
abetted the alleged breach of fiduciary duty. The complaints were
consolidated into one action, which sought a declaration that the action
was maintainable as a class action, that the merger be enjoined, or
alternatively, rescinded, and/or an award of unspecified compensatory
damages if the merger was consummated. A settlement agreement was
reached with the named plaintiffs in November 1998. The parties intend
to apply to the Court for a date for a hearing on approval of the
settlement which, if approved, will not have a material effect on the
Company's consolidated financial statements.

DELTA & PINE: Tenders out Defence of Suit in Georgia Re Glyphosate Gene
The Company, Monsanto and other parties were named as defendants in a
lawsuit filed in the Superior Court of Calhoun County, Georgia on April
19, 1999, which has been removed to the United States District Court of
the Middle District of Georgia, Albany Division. The Company and
Monsanto are presently investigating the claim to determine the cause or
causes, if any, of the alleged problems. Pursuant to the terms of the
Roundup Ready Agreement between D&PL and Monsanto, D&PL has tendered the
defense of this claim to Monsanto and requested indemnity, as Monsanto
is contractually obligated to defend and indemnify the Company against
all claims arising out of the failure of the Roundup glyphosate
tolerance gene. D&PL will not have a right to indemnification from
Monsanto, however, for any claim involving defects in seed separate from
or in addition to the failure of the herbicide tolerance gene, and such
claims are contained in these complaints. This case was the subject of a
seed arbitration case filed in Georgia during 1997 which was concluded
in the Company's favor.

DELTA & PINE: Tenders out Defense of Loui. Suits over Soybean Seeds
On March 30, 1999, the Company, Asgrow Seed Company, L.L.C., and Terra
International were named as defendants in a lawsuit filed in the Fourth
Judicial District Court, Parish of Morehouse, State of Louisiana, which
has now been removed to the United States District Court for the Western
District of Louisiana. The suit alleges, among other things, that
certain soybean seed which contained the Roundup Ready gene did not
properly germinate and did not perform as the farmer had anticipated
and, in particular, did not fully protect their crops from damage
following the application of Roundup. The Company and Monsanto are
presently investigating the claim to determine the cause or causes, if
any, of the alleged problem. Pursuant to the terms of the Roundup Ready
Agreement between D&PL and Monsanto, D&PL has tendered the defense of
this claim to Monsanto. Pursuant to the Roundup Ready Agreement,
Monsanto is contractually obligated to defend and indemnify any and all
claims arising out of the failure of the glyphosate gene tolerance.

On June 11, 1999, Delta & Pine Land Co., Monsanto, Asgrow Seed Company,
SF Services, Terral Seed, Inc., Valley Farmers Co-Op, Red River Co-Op,
and Central Louisiana Grain Co-Op were named as defendants in a lawsuit
filed in the Fourth Judicial District, Parish of Natchitoches, State of
Louisiana. The suit alleges, among other things, that certain soybean
seeds which contain the Roundup Ready(R) gene did not perform as
advertised and did not produce promised yields. The plaintiffs in this
case are seeking certification of a class of all purchasers of Roundup
Ready soybeans during the years of 1997 and 1998. The Company and
Monsanto are presently investigating the claim; however, they believe it
to be without merit and their plan is to vigorously defend this lawsuit.
Pursuant to the terms of the Roundup Ready Soybean Agreement between
D&PL and Monsanto, D&PL has tendered the defense of this claim to
Monsanto. Pursuant to the Roundup Ready Soybean Agreement, Monsanto is
contractually obligated to defend and indemnify any and all claims
arising out of the failure of glyphosate gene tolerance, and certain
other types of claims. D&PL will have no right to indemnification from
Monsanto, however, for any claim involving defects in seed and/or
promotional representations made solely by D&PL without Monsanto's
approval. Such claims appear to be contained within this complaint.

DELTA & PINE: Arbitration with Farmers Goes on in Georgia, Ark. & Fla.
In 1999 and 1998, approximately 210 cotton farmers in Georgia had filed
seed arbitration claims arising from the 1998 cotton crop against the
Company, and in some cases, Monsanto. Approximately 180 of those cases
have now been settled. Those settlements were achieved without any
material impact on the Company's consolidated financial statements. The
remaining claimants who had filed for the 1998 crop year still have the
right to pursue litigation if they so choose. The Company believes that
these claims can be resolved without any material impact on the
Company's consolidated financial statements.

In 1999, approximately 31 cotton farmers in Georgia have filed seed
arbitration claims against the Company and, in some cases, Monsanto,
alleging damages for their 1999 crop. Six of these claims have been
scheduled for hearing, four on January 11, 2000, and two on January 20,
2000. The Company and Monsanto are in the process of investigating these
claims to determine the cause or causes, if any, of the alleged
problems. Pursuant to the terms of the Roundup Ready Agreement between
D&PL and Monsanto, D&PL has tendered the defense of these seed
arbitration claims to Monsanto and has requested indemnity. Pursuant to
the Roundup Ready Agreement, Monsanto is contractually obligated to
defend and indemnify the Company against all claims arising out of the
failure of the Roundup glyphosate tolerance gene. D&PL will not have a
right to indemnification, however, for any claim involving defects in
the seed, separate from or in addition to the failure of the herbicide
tolerance gene, and such claims are contained in some of the seed
arbitration claims filed.

In 1998, one claim was filed with the Arkansas Seed Arbitration Council.
A Motion to Dismiss has been filed. This case alleges that certain
Roundup Ready cottonseed marketed by the Company in 1997 failed to
perform as farmers had anticipated and caused the farmers to suffer crop
loss. Pursuant to the Roundup Ready Agreement between D&PL and Monsanto,
D&PL has tendered the defense of this claim to Monsanto. Pursuant to the
Roundup Ready Agreement, Monsanto is contractually obligated to defend
and indemnify any and all claims arising out of the failure of the
glyphosate gene tolerance.

In 1999 and 1998, three farmers in the State of Florida had filed
arbitration claims against the Company. Two of those claims have now
been resolved. A hearing was conducted on the remaining claim on October
12, 1999; however, no ruling has yet been received.

DIGNITY PARTNERS: SIA Urges 9th Cir to Rehear Viatical Shareholder Case
Case: Viatical Settlements: Hertzberg v. Dignity Partners Inc.

The Securities Industry Association (SIA) has filed an amicus brief
urging the Ninth Circuit U.S. Court of Appeals to reconsider its August
decision restoring a suit by viatical settlement shareholders against
the firm that offered the interests in the life insurance policies of
persons with AIDS and other terminal ailments. Hertzberg et al. v.
Dignity Partners Inc. et al., No. 98-1694 (9th Cir., order granting SIA
leave to file amicus curiae brief in support of petition for rehearing
granted Oct. 14, 1999); see AIDS LR, Oct. 8, 1999, P. 7.

The appeals court granted the group leave to file an amicus curiae brief
in support of Dignity Partners Inc.'s Sept. 10 petition for rehearing
and suggestion for rehearing en banc in the case.

In a Sept. 17 brief, the SIA echoes the defendant's assertion that the
decision contradicts numerous court rulings and over 60 years of
established securities laws by allowing investors who did not buy
securities shares within 25 days of an announced initial public offering
to sue under Sec. 11 of the Securities Act of 1933. Those who purchase
security interests after the closing of the IPO, asserts the SIA, are
known as "aftermarket" buyers whose legal remedies lie solely under Sec.
10(b) of the separate Securities Act of 1934.

In the challenged decision, the Ninth Circuit reversed U.S. District
Court Judge Charles Legge's 1997 ruling, which dismissed the allegations
of prospective class member Howard Hertzberg and others because they
bought their viatical shares from Dignity Partners on March 14, 1996, 28
days after the IPO was registered with the Securities Exchange

In an opinion written by Judge William A. Fletcher, the panel said that
Sec. 11 remedies are available to "any person acquiring such security"
and, given the fact that all Dignity Partners shares in dispute were
made available through only one IPO and were bought based on its
allegedly misleading registration statement, the date of purchase was

In its petition for rehearing, Dignity Partners argues that the decision
conflicts with the U.S. Supreme Court's ruling in Gustafson v. Alloyd
Co. (1994), and makes the Ninth Circuit the first circuit in "the more
than 60 years since the enactment of the security laws to confer
standing under Sec. 11 upon individuals who do not participate in a
public offering but who can merely trace shares acquired by them in the
aftermarket to such an offering."

The appeals court, says Dignity Partners, has shown no evidence to
support the "tracing" theory adopted in the decision. "Distinguishing
between purchasers of stock based upon traceability simply introduces an
arbitrary and unfair distinction into Sec. 11," it adds, noting that
nothing in the legislative history of the law supports such a reading.

"By extending the draconian remedies of Sec. 11 to a large class of
aftermarket purchasers, the panel's opinion dramatically alters the
balance between class action plaintiffs (and their lawyers) and
defendants, thereby raising issues of exceptional importance to the
economy and the nation as a whole."

Dignity Partners says that in reaching its decision, the Ninth Circuit
ignored important factors which require a "narrow interpretation" of
Sec. 11, mainly that the 1933 Act is concerned not with the securities
aftermarket, but only with the initial distribution of stock to the
public. Post-distribution trading, it says, is regulated exclusively
under the 1934 Act. "Because the 1934 Act provides a remedy for
aftermarket purchasers harmed by alleged misstatements in a registration
statement, it follows that there is no need to extend Sec. 11 to any
class of such purchasers."

The Ninth Circuit's finding, argues Dignity Partners, overlooked the l
egislative history of the 1933 Act, which includes a statement that it
"affects only new offerings" and "does not affect the ordinary
redistribution of securities" (H.R. Rep. No. 85, 73rd Cong., 1st Sess. 5
1933 ).

The plaintiffs are represented by William S. Lerach, Patrick J.
Coughlin, Helen Hodges, Eric A. Isaacson, Amber L. Eck, and Joseph D.
Daley of Milberg Weiss Bershad Hynes & Lerach in San Diego; Allison M.
Tattersall of Milberg Weiss' San Francisco office; and Stephen T. Rodd,
James J. Seirmarco, and Peter D. Bull of Abbey, Gardy & Squitieri in New

Gerald W. Palmer of Jones, Day, Reavis & Pogue in Los Angeles and Robert
C. Micheletto of the firm's Chicago office represent Dignity Partners.
SIA's amicus brief was submitted by William F. Alderman of Orrick,
Herrington & Sutcliffe L.L.P. in San Francisco and by SIA Senior Vice
President and General Counsel Stuart J. Kaswell and Vice President and
Associate GeneralCounsel Fredda L. Plesser of New York.

(See Document Section E for the order granting SIA's petition for leave
to file an amicus curiae brief for rehearing and the amicus curiae
brief, and Document Section F for the petition for rehearing and
suggestion of rehearing en banc.) (AIDS Litigation Reporter, Vol. 13;
No. 1; Pg. 8, November 8, 1999)

GUN MANUFACTURERS: Update on Responses to Clinton Administration’s Suit
USA Today reports on December 9 that the National Rifle Association,
whose political clout persuaded Congress not to pass sales restrictions
this year, said the administration's threat to go to court was "reckless
harassment" and risked setting a dangerous legal precedent. "No lawful
industry is safe," the NRA said. "If some deviant person misuses your
lawful product, this administration will sue you, rather than hold the
criminal responsible." Stephen Sanetti, vice president and general
counsel of firearms maker Sturm, Ruger & Co., said the government's plan
is "legally and factually wrong, and we will fight them with all of our

City and state officials welcomed the federal intervention, saying it
was likely to speed a nationwide settlement of litigation aimed at
keeping guns from criminals and children.

Housing officials are "not trying to bankrupt any company," Clinton said
at a State Department news conference. "They're trying to make their
living spaces safer, and I think it's a legitimate thing." The 100
largest public housing authorities report a total of 10,000 gun crimes
every year and are forced to spend $ 1 billion on security, Clinton

The government's goal is to step up pressure on the gun industry to
reach a settlement, HUD Secretary Andrew Cuomo said. "We don't want to
go to court, but we do want a resolution," he said.

The cities want manufacturers to equip guns with state-of-the-art safety
devices. Under the cities' settlement proposals, gunmakers would
blackball retailers who consistently sell to criminals and would tone
down advertising that might attract criminals.

"You all remember that one company advertised an assault weapon by
saying that it was hard to get fingerprints from," Clinton said,
referring to Miami-based Navegar Inc., maker of the Tec-9 assault
pistol. "You don't have to be all broke out with brilliance to figure
out what the message is there."

Los Angeles City Attorney James Hahn, who filed suit in May, said
negotiations have been moving at a glacial pace and that the weight of
federal lawyers would make a difference. "It's like the U.S. Coast Guard
sending in an icebreaker," Hahn said. "That's what we need. The industry
has yet to take these lawsuits seriously."

Plaintiff cities include Los Angeles, Chicago, Boston, Atlanta,
Cleveland, Detroit, San Francisco and New Orleans. The attorneys general
of Connecticut and New York say they'll file the first suits by states
if negotiations fail. "The intervention of the feds strengthens our
side," New York Attorney General Eliot Spitzer said. "It makes it more
likely that we'll get to our objective: safer schools and safer streets.
This is not about money. This case is about changing behavior."

White House press secretary Joe Lockhart said the administration also
wants to send a message that it will act on its own despite
congressional defeat of gun-control and anti-smoking legislation. "I
think we have enormously important public policy goals, and if the
Republican-controlled Congress wants to block sensible gun control and
if they want to block tobacco policy that the American public supports,
we're going to find a way to do it," Lockhart said.

Los Angeles Times of December 9 says that the Clinton administration's
threat to bring a class-action lawsuit against gun makers might be
largely bluster. But even if it is, Tuesday's announcement, along with
suits already filed by 29 cities and counties, reflects the real
frustration of public officials and ordinary Americans over gun
violence--the unending school shootings, workplace massacres and
domestic quarrels that turn lethal. Gun makers, then, would be wise to
enact on their own the modest, obvious steps that public officials seek,
actions intended to reduce accidental shootings and illegal sales.

The pending suits call on gun makers to adopt a variety of safeguards,
including tighter controls on distribution to reduce sales to criminals
and juveniles, inclusion of child safety locks on all new handguns, more
research on "smart" technology to prevent guns from being fired by
unauthorized people, and an end to advertising that promotes or suggests
criminal use by, for instance, emphasizing the concealability of guns or
their resistance to fingerprints. These changes will not end gun
violence, but they will help. The need for new approaches is sharply
bolstered by a new UCLA study showing that homicides committed by those
under 21 are far more likely to involve a gun.

Long, expensive litigation is in no one's interest. Even the tobacco
industry, far wealthier as a group than the firearm makers, has made
concessions rather than continue to fight snowballing lawsuits. Gun
makers can agree now to modest, responsible steps that will cut the flow
of guns to juveniles and criminals. Or they can continue to write very
large checks to their attorneys.

Chicago Tribune, December 9, reports that speaking at a news conference,
Clinton said guns are involved in roughly 10,000 crimes every year in
public housing, where the federal government spends $1 billion on
security. Stories abound of children sleeping in bathtubs and residents
afraid to answer their doors because of their fears of being shot.

The president's threat to throw the federal government's weight behind
legal action against the firearms industry by local governments was seen
as a savvy political gesture by some and as a baffling move by lawyers
for gunmakers.

Anne Kimball, a Chicago lawyer for Smith & Wesson Corp. and several
other gunmakers, said gun manufacturers assist law-enforcement
authorities, through gun traces, to solve crimes and catch criminals.
"This makes no public policy sense," Kimball said. "As a citizen, I'm
shocked that the federal government would contemplate filing a lawsuit
for conduct of hardened criminals and then blame the legitimate, legal
manufacturers of guns."

By thrusting himself into the battle and threatening to sue, Clinton was
making sure the administration had a chair at the table for any
settlement talks, said Marshall Shapo, a Northwestern University law
professor. "He has opened a second front in the war against guns," Shapo
said. "In a very loose sense, he is trying to make himself into an
informal commander-in-chief of this overall war and at the same time
become a great mediator to reaching a social goal."

The administration and the Department of Housing and Urban Development
for months have quietly discussed filing an anti-gun lawsuit in U.S.
District Court, and have talked with a number of housing authorities
about the idea. While they have not talked to Chicago Housing Authority
officials, HUD administrators have received a copy of the city's $433
million suit filed last year against 22 gun manufacturers and four
dealers. The city's suit, filed in state court, claims that gunmakers
and dealers "saturate the market . . . knowing that persons will
illegally bring them into" Chicago for their own use or for illegal

Lawyers from several state and city governments met with representatives
of the gun industry in October to consider an out-of-court settlement
that might include limitations on gun sales and mandatory locking

Chicago declined to participate because Mayor Richard Daley wants more
from the industry than his counterparts may be willing to settle for.
The city is seeking to recover the costs of treating victims of gun

Clinton, in arguing for a greater role by his administration, pointed to
a recent study by Sen. Charles Schumer (D-N.Y.) that said 1 percent of
the gun dealers sell 50 percent of the guns involved in gun crimes. "If
there's a way that the court could craft a resolution of that, that
would be a good thing," Clinton said.

But Kimball said there already were laws on the books to curb such gun
dealers. "My suggestion to the federal government is that they crack
down on that 1 percent, pull their licenses and put them out of
business," she said.

John Lowy, senior attorney for the Center to Prevent Handgun Violence,
said it was encouraging that the administration would be involved in the
talks. "It's clear from the administration statements that the industry
is going to face a very large nationwide class-action lawsuit unless it
agrees voluntarily to behave responsibly in distributing and designing
its product." Lowy said.

Robert Spitzer, political science professor at State University of New
York at Cortland, said that administration involvement will push the
sides to reach an agreement. "It increases the pressure," Spitzer said.
"Maybe the gun industry hopes it can hold off for 18 months and hope a
Republican is elected president and the policy will change. But for now
it's quite significant."

The Scotsman, December 9, says that the planned legal action is an
indication that President Bill Clinton is serious in his attempts to
tighten the country's notoriously liberal gun laws. It also says that
the decision to resort to the courts is also a sign of the White House's
frustration that the gun control issue has not been settled by the
political process. Proposed firearm control measures have already failed
to make headway in Congress this year in the face of stern resistance
from gun lobbyists.

Among the administration's objectives will be to urge manufacturers to
cut off supplies to dealers whose sales are known to have led to crimes.

A wave of opinion polls favouring stricter gun laws has swept the US
following last April's massacre at Columbine High School near Denver,
where two teenagers killed 12 fellow pupils and a teacher, and wounded
23 others, before killing themselves.

The Times (London) of December 9 reports that among other challenges,
litigants around the country are demanding that manufacturers must cut
off dealers whose guns are traced to crimes, the inclusion of safety
locks on all guns, an end to marketing aimed at children and criminals
and the end of practices such as selling guns that are impervious to
fingerprints. "We have safety caps on bottles of aspirin. It makes no
sense not to have safety devices on guns," Mr Cuomo said.

Financial Times (London)of December 9 reports Paul Jannuzzo, general
counsel for Glock, an Austrian gun manufacturer, saying: "I don't
believe you can change the (industry's) perspective at all. A settlement
decision would still be based on the common goals of stopping the
accidental or criminal use of firearms." He added, however: "I guess
(the federal intervention) is leverage, but that also sounds a lot like
blackmail to me."

Other industry lawyers argued that any federal intervention should be
channelled through the Bureau of Alcohol, Tobacco and Firearms, rather
than through Hud. They also noted the lawsuit's fortunes could depend on
who next occupies the White House.

Anne Kimball, who represents manufacturers including Sturm Ruger and
Smith & Wesson, said that from a legal perspective, the industry
remained in a "very good position".

Lawyers from both sides said there was progress in settlement talks in
Washington on Tuesday, but cautioned that the discussions were still at
early stages and that no firm agenda had been agreed.

Industry officials, meanwhile, said US gun manufacturers' sales continue
to grow rapidly. Estimating annual growth in handgun sales of 20 per
cent this year, Mr Januzzo said: "Bill Clinton has probably been more of
a prime mover for gun sales than any president since wartime."

HOLOCAUST VICTIMS: Schroder Rules out Larger Fund; Envoy Is Open to It
With negotiations at an impasse over a German fund to compensate
Nazi-era slave laborers, Chancellor Gerhard Schroder dismissed demands
to improve Germany's latest offer. "It is now an issue for the lawyers,"
Mr. Schroder said in a television interview, ruling out any increase in
the joint offer by German corporations and the government of eight
billion marks, or $4.1 billion.

Otto Lambsdorff, Germany's lead negotiator, said German companies might
in fact start withdrawing from the proposed settlement and striking
individual deals on their own.

German corporations, hoping to avoid protracted court battles and
negative publicity in the United States, have been negotiating with
American lawyers and Jewish organizations for months. They seemed to be
near an agreement just three weeks ago. About 60 of Germany's biggest
industrial companies and banks have offered to put up about 5.5 billion
marks and the German government has agreed to put up 2.5 billion. But in
class action suits, American Jewish groups and lawyers are demanding
about 10 billion marks, which amounts to about $1 billion more than the
current offer.

The two sides were supposed to meet on December 9 for what many had
hoped would be a final round of talks in Washington. But the talks were
canceled when it became clear they would not agree. Stuart E. Eizenstat,
the United States deputy secretary of the Treasury who has acted as
moderator in the talks, refused to comment. But in a speech this week at
the Council on Foreign Relations, he said it would be a "tragedy" if
talks collapsed over a difference of $1 billion.

People on both sides say it is still possible to reach a deal before the
end of the year. "Ironically, the two sides are closer than they have
ever been before," said Elan Steinberg, executive director of the World
Jewish Congress. Informal discussions and telephone calls continue to
take place, and both sides are under pressure to reach agreement. Groups
representing Holocaust survivors fear that a long court battle would
delay compensation until after many have died.

German corporations, meanwhile, want to avoid an avalanche of bad
publicity as well as potentially enormous verdicts handed down by
American courts.

Mr. Schroder began seeking a resolution almost as soon as he was elected
chancellor about one year ago. Reversing the hard-line stance of his
predecessor, Helmut Kohl, Mr. Schroder agreed to the government
contributing alongside industry to a fund that would compensate people
forced to work in German factories by the Hitler regime.

Experts estimate that about 250,000 slave laborers -- concentration camp
prisoners forced to work without pay -- are still alive today. (The New
York Times December 9, 1999)

The German government's envoy to negotiations over compensation for
Nazi-era forced and slave laborers indicated on December 9 he was still
open to raising the German offer even though Chancellor Gerhard
Schroeder has ruled out any more money, according to a report on AP
Online on December 9.

In an interview on ARD television, Otto Lambsdorff called on those
representing the former laborers to produce a concrete counterproposal
to the $4.2 billion the German government and businesses have put on the

On Tuesday, class-action lawyers involved in the talks sent a letter to
Lambsdorff and U.S. government envoy Stuart Eizenstat turning the German
offer down. There was no official response from Eizenstat, despite a
Wednesday deadline.

''We would like to know what one has to say to this offer and if
necessary where their own ideas lie, if the offer is not accepted,''
Lambsdorff said. ''The initiative by German industry to create this fund
will fall apart if we don't get a figure named as soon as possible that
is worthy of discussion.'' Victims' lawyers have suggested a range from
$5.2 billion to $7.9 billion.

Schroeder told ZDF television on Wednesday, however, that the German
offer would not be raised. ''The sum is not to be raised,'' he said.
''It's now up to the attorneys to yield. I hope that that still

INMATES LITIGATION: 11th Cir in Alabama Says HIV Poses Direct Threat
The most sweeping - and revolutionary - declaration of HIV as a "direct
threat" came in a class-action lawsuit filed under the Rehabilitation
Act by Alabama prison inmates who were segregated from the general
prison population and denied a range of services and programs because of
their HIV infection. The case, Onishea v. Hopper, has been appealed to
the Supreme Court under a new name, Davis v. Hopper.

In a 9-3 decision in April 1999, the 11th Circuit disregarded its
earlier holding on "direct defense" as it pertains to HIV and gave a new
interpretation, Onishea v. Hopper, 15 NDLR 65 (11th Cir. 1999), cert.
pending. In upholding Alabama's policy, the court's majority said that
integration poses a "significant" risk, a term it defined as "meaning to
be considered" or "notable," rather than "big." "It is the potential
gravity of the harm that imbues certain odds of an event with
significance," the court said. "Thus, when the adverse event is the
contraction of a fatal disease, the risk of transmission can be
significant even if the probability of transmission is low: Death itself
makes the risk 'significant.' "

The majority held that, as a matter of law, HIV presents a "significant
risk" whenever an event presents an opportunity for transmission to
occur, provided that the danger is rooted in sound medical opinion. The
state did not have to demonstrate that transmission actually occurred in
the past as a prerequisite for a finding of significant risk. All the
state had to show was that bloody fights, unprotected anal intercourse
and the sharing of drug needles do occur in prison. Each of these
activities are known to transmit HIV.

The court rejected the plaintiffs' contention the risk could be reduced
or eliminated if prison officials applied existing inmate classification
systems to exclude from programs those prisoners who had a propensity to
engage in high-risk behaviors and allow the others to participate. The
11th Circuit said the lower court made it clear in its findings of fact
that inmates were by nature too untrustworthy, volatile and
unpredictable to be accommodated under any classification system.

The majority denied it was adopting an "any risk" standard for
evaluating significant risk, but the dissent disagreed. "It is one thing
to say that objective evidence of a small risk of transmission of a
deadly, contagious disease entails a significant risk in a particular
context," Chief Circuit Judge Joseph W. Hatchett wrote in the dissent.
"It is quite another to say, as the majority does, that the probability
of transmission is irrelevant so long as transmission is theoretically

The 11th Circuit disregarded the Supreme Court's guidance in Bragdon,
according to AIDS attorneys. The court's majority asserted that Bragdon
did not shed much light on the amount or nature of the evidence that is
required to prove a risk to be significant. That isn't so, the attorneys
point out. The justices expressly rejected reliance on hypothetical or
speculative risks in assessing whether a "direct threat" existed.

The Onishea ruling is an important one, because it can extend beyond the
prison setting. The same reasoning the 11th Circuit used in finding a
"significant risk" in such routine prison activities as classroom
instruction and worship services can be applied to exclude people with
HIV from jobs, schools and public accommodations, according to the
prisoners' legal counsel, the American Civil Liberties Union, said in
appealing the ruling to the Supreme Court. The high court is expected to
announce in late December whether it will hear the appeal. (AIDS Policy
and Law, Vol. 14, No. 21, December 1, 1999)

LLOYD’S INSURANCE: Argues against Asbestos Related Fraud Claims in N.Y.
Plaintiff names underwrote Lloyd's insurance policies from the 1960s
into the 1990s. Plaintiffs allege they were fraudulently induced to
become underwriters of millions of dollars of Lloyd's insurance that,
unknown to them, was doomed to create huge losses due to concealed
liabilities and potential liabilities for asbestos-related and
pollution-related losses.

Plaintiffs maintain that unknown to them, the defendant law firms
regularly provided reports to Lloyd's insiders throughout the 1980s and
early 1990s detailing asbestos-related liability problems.

Consequently, plaintiffs, through their syndicates, underwrote insurance
or reinsurance policies which exploded with enormous losses beginning in
1991 and continuing to the present, causing damages.

As a result of defendants' malpractice, plaintiffs maintain they have
sustained damages of more than $ 6 million in the aggregate, with each
plaintiff having sustained damages of more than $ 80,000.


This complaint should be dismissed because all of the plaintiffs signed
multiple agreements as a prerequisite to their becoming Lloyd's names in
which they agreed to forum selection clauses that explicitly designated
England as the place to litigate any and all disputes relating to their

Although the defendants are not signatories to the General Undertaking,
in which plaintiffs agreed to litigate in England, the defendants are
clearly entitled to enforce its forum selection provision. A nonparty to
an agreement with a forum selection clause may enforce the clause if the
party is "closely related" to the dispute such that it becomes
"foreseeable" that it would be bound (Hugel v. Corporation of Lloyd's,
999 F.2d 206 [7th Cir. 1993]).

All claims are barred by the applicable statutes of limitations because
the claims accrued more than six years ago. The statute of limitations
has run for each separate cause of action. Additionally, the alleged
concealment cannot save the stale claims. Plaintiffs have had actual
knowledge of the allegedly concealed facts for at least four years and
those facts were widely publicized so that plaintiffs were on
constructive notice of them for at least eight years. Therefore, the
two-year concealment limitations expired at least two years before this
action began.

The fraud and fiduciary claims must be dismissed because the plaintiffs
are bound by defendants' delivery of the allegedly "concealed" reports
to their agents and because plaintiffs have failed to properly plead the
elements of those claims.

Additionally, the claims for aiding and abetting fraud should be
dismissed because plaintiffs have not and cannot plead the requisite
elements of such secondary liability, including, in particular,
substantial assistance and knowledge.

The claim under the General Business Law (GBL) Section 349 consumer
fraud statute should be dismissed because this action does involve a
consumer transaction. There are no allegations that the wrongful conduct
was directed at the consuming conduct.

Plaintiffs' cause of action for civil conspiracy must be dismissed
because a "conspiracy to commit a tort is never itself a cause of
action" (Alexander & Alexander of New York Inc. v. Fritzen, 68 N.Y.2d
968, 969, 510 N.Y.2d 546, 547 [1986]).

Finally, the complaint alleges no legal duty that defendants are alleged
to have breached, and therefore cannot sustain any cause of action for
legal malpractice or breach of fiduciary duty.

Filed July 26 by Edith Anthoine, et al


The forum selection clause is inapplicable because defendants failed to
mention that the Lloyd's contract, if applicable, would also require
that English law govern plaintiffs' claim against their lawyers.
Defendants' real position, therefore, is that American clients suing
their American lawyers for malpractice and breach of fiduciary duty must
litigate their claims in England under English law.

Additionally, the document with the forum selection clause is an
agreement between plaintiffs and the Society of Lloyd's. Defendants are
not a party to the agreement and nowhere does it state that the
agreement applies to these defendants or even refers to them.

Plaintiffs' claims are not barred by a statute of limitation because the
statute has not yet begun to run due to defendants' fraudulent
concealment, continued tortious conduct and continuing representation of
the plaintiffs. Additionally, defendants have failed to produce
documents that will further show that the statute has not yet begun to

Defendants argue that there can be no fraud claims because defendants
provided the asbestos reports to plaintiffs' agents and the knowledge of
an agent is imputed to the principal. However, principals are not bound
by the knowledge of the agents when the third party knows the agent is
engaged in a fraud or otherwise acting against the interest of the
principle and when the third party knows the agent is not informing the

Plaintiffs have pleaded all the elements of a fraud claim. For example,
fraud includes the intentional concealment or suppression of the truth,
which the complaint alleges.

Secondly, Plaintiffs have pleaded the "substantial assistance" necessary
for the claim of aiding and abetting both fraud and breach of fiduciary
duty and the claim is pleaded with specificity.

The malpractice and breach of fiduciary duty claims do not fail. Even if
defendants did not represent the plaintiffs, they still owed fiduciary
duties to the plaintiffs because as agents of the plaintiffs' agents,
they were plaintiffs' subagents and if they were lawyers for plaintiffs'
agents, they owed plaintiffs a fiduciary duty.

The complaint does allege a claim under GBL 349 because the wrongful
conduct is alleged to have corrupted the entire Lloyd's insurance

Finally, a valid conspiracy claim is alleged because the complaint
alleges participation in a conspiracy, which the court in Alexander &
Alexander held is an additional basis for liability for fraud and breach
of fiduciary duty.

Filed Aug. 20 by LB&B and Mendes & Mount


Plaintiffs' argument that their forum agreements do not apply fail for
several reasons. One reason is because plaintiffs argue that they have a
"subagency" relationship with LB&B and Mendes & Mount. But if this
relationship does exist, then the subagents have the same contractual
rights as their agents, including the right to enforce plaintiffs'
agreements to litigate only in England.

Additionally, the forum agreement is broadly written to cover any
dispute and/or controversy of whatsoever nature arising out of
plaintiffs' membership of Lloyd's; thus the agreement applies to this
action .

All claims are barred by the applicable statute of limitations and in
their opposition plaintiffs do not dispute that their claims accrued
more than six years ago. A May 1996 report of an Irish Lloyd's Names
"Action Group" shows that plaintiffs not only had inquiry notice and
actual knowledge of the allegedly concealed asbestos reports, but also
that plaintiffs had concluded that the firms had concealed the asbestos
information from them and the concealment caused loss and damage.

The "continuing tort" doctrine does not apply to claims of fraud,
malpractice or breach of duty founded on alleged concealment. The mere
"passive failure to disclose" does not constitute a continuing wrong
(Neumann v. Nassau County Medical Center, 210 A.D.2d 301, 302, 619
N.Y.S.2d 721 [2d Dep't 1994]).

Plaintiffs' opposition has failed to provide any basis why the fact that
LB&B and Mendes & Mount did not sent their asbestos reports directly to
plaintiffs could give rise to any actionable claim for fraud. Plaintiffs
fail to plead any facts to show that LB&B or Mendes & Mount knew that
plaintiffs' agents allegedly were engaged in fraud.

Additionally, plaintiffs fail to support their claim for aiding and
abetting with the required element of "substantial assistance." The
complaint fails to allege how the law firms supposedly "participated" in
creating syndicate reserves.

The complaint fails to state a cause of action for breach of duty
because there can be no breach when the purported client does not even
know that the attorney existed, much less ever relied on the attorney.

Attorneys LB&B is represented by Fredric W. Yerman and Phillip A. Geraci
of Kaye, Scholer, Fierman, Hays & Handler of New York. Norman C.
Kleinberg, William R. Maguire and David R. Biester of Hughes Hubbard &
Reed in New York represent Mendes & Mount. Plaintiffs are represented by
Robert Plotkin, Jonah Orlofsky and Karl Leinberger of Plotkin, Jacobs &
Orlofsky in Chicago, Alice McInerney and Joanne M. Cicala of Kirby,
McNerney & Squire of New York and Theodore W. Grippo Jr. of Pembroke &
Brown in Park Ridge, Ill.

Case Edith Anthoine, et al. v. Lord, Bissell & Brook, et al., No.
99/102420, N.Y. Sup., N.Y. Co.; See 2/23/99, Page 14. (Mealey's
Litigation Report: Insurance, Vol. 13; No. 48, October 26, 1999)

MONTGOMERY WARD: Presents Dela. Trent Settlement Pact to Bankruptcy Ct
Montgomery Ward & Co., Inc., reports to Judge Walsh in the Delaware
Bankruptcy that, after obtaining relief from the automatic stay in
mid-1998, the parties returned to Wyoming to continue litigating the
Trent Plaintiffs' class action lawsuit. On December 16, 1998, the
Debtors report, after briefing on the Class Certification Motion was
complete, the United States District Court For The District of Wyoming
sua sponte determined as a result of a Tenth Circuit Court of Appeals
case that it lacked subject matter jurisdiction over the class action
case, and remanded the proceedings to state court. On December 30, 1998,
the Trent Plaintiffs filed a motion for reconsideration of that decision
and a supplemental memorandum in support of that motion. The Wyoming
District Court denied the motion. On February 12, 1999, the Trent Class
Plaintiffs filed a Motion to Extend the Deadline for Certain Proofs of
Claim. That Motion was resolved by stipulation dated March 18, 1999. On
March 5, 1999, the Trent Class Plaintiffs filed a putative class proof
of claim in an unliquidated amount. On March 8, 1999, the Trent Class
Plaintiffs commenced an Adversary Proceeding (Adv. Pro. No. 99-72) to
liquidate as a Class Action their claims against Montgomery Ward. On
March 15, 1999, the Trent Class Plaintiffs filed a Motion For an Order
Certifying a Class. A hearing on the Class Certification motion was held
on April 20, 1999 and the matter is sub judice.

On September 9, 1999, after lengthy, arduous and complex negotiations,
the Trent Class Plaintiffs and the Defendants mutually consented to the
resolution of the Class Proof of Claim and the Adversary Proceeding as
memorialized in the Settlement Agreement. The Settlement Agreement
requires the Trent Class Plaintiffs and the Defendants to seek the
prompt entry of an order preliminarily approving the Settlement
Agreement and the form of notice to be directed to all class members
notifying them of the terms of the settlement and of the date of the
hearing when the parties will request that the Court finally approve the
settlement in all respects and consider the application of counsel to
the Trent Class Plaintiffs for an award of counsel fees and costs to be
paid from the proceeds of the settlement.

Subject to the final approval of the Bankruptcy Court, the Settlement
Agreement provides, among other things, that:

* the Trent Class shall hold an allowed MW Class 3 Unsecured Claim, in
  the gross amount of $7,000,000, which will be used for the eventual
  payment of the Trent Class Plaintiffs' counsel fees (not to exceed
  $1,500,000 as may be approved by the Bankruptcy Court and for cash
  distribution to the Trent Class;

* Wards will distribute to the Trent Class merchandise credit
  certificates (i.e. gift certificates) in the total amount of

* Wards will distribute to the Trent Class discount coupons which have
  a total value of approximately $6,700,000;

* Wards will pay the sum of $250,000 representing a reimbursement of
  expenses incurred by Plaintiffs' counsel in prosecuting this case of
  $200,000, and a payment to each of the Trent Class plaintiffs of

The Trent Plaintiff Class will consist of all persons employed as
commissioned sales associates at Reorganized MW & Co., Inc., formerly
known as Montgomery Ward & Co., Inc., in the electronics department or
appliance department (Electric Avenue); the furniture department (Rooms
& More); and the automotive department (Auto Express) during the period
between March 1, 1992 and June 30, 1997.

The Debtors are convinced that these settlement terms are reasonable and
in the best interests of the Debtors' estate, Wards and the Trent Class.
Accordingly, pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Debtors ask Judge Walsh for authority to take all steps
necessary to compromise and settle the Trent Class Claim on these terms.
(Mongtomery Ward Bankruptcy News, Issue No. 47, Dec-7-1999)

NAVIGANT CONSULTING: Lowey Dannenberg Files Securities Suit in Illinois
Notice is hereby given that Lowey Dannenberg Bemporad & Selinger, P.C.
("Lowey Dannenberg") has filed a securities class action lawsuit in the
United States District Court for the Northern District of Illinois
against Navigant Consulting Inc. ("Navigant" or the "Company") (NYSE:
NCI) and certain officers and directors of the Company on behalf of
purchasers of common stock during the period May 6, 1999 through
November 22, 1999, inclusive (the "Class Period").

Plaintiffs' complaint alleges that defendants violated the federal
securities laws by misrepresenting or failing to disclose material
information about the Company's accounting practices, as well as the
impropriety of certain loans made to its senior officers. Specifically,
the complaint alleges that defendants issued false and misleading press
releases and financial statements to the investing public concerning
Navigant's financial results that inflated the price of Navigant stock
purchased by investors during the Class Period.

On November 23, 1999, Navigant announced that the Company's Chairman,
Chief Executive Officer and President had been forced to resign over
concerns about the propriety of a $10 million dollar loan which he took
from the Company; that two other Navigant officers had been terminated
amid concerns over similar loans which they had received from the
Company and used to purchase Navigant stock; and that the Company's
independent auditors were examining the propriety of the Company's
accounting practices and the reporting of Navigant's financial results
in light of these and related transactions. The market price of the
stock dropped as much as 55% ($14.50 per share) on the news, down from
$26.00 per share just two days earlier, and down from a class period
high of $54 per share.

If you are a member of the class described above, you may, not later
than sixty days from November 26, 1999, move the court to serve as a
lead plaintiff, provided you 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 this matter, please
contact: David Harrison or Richard Bemporad Lowey Dannenberg Bemporad &
Selinger, P.C. The Gateway, 11th Floor One North Lexington Avenue White
Plains, NY 10601-1714 Telephone 914-997-0500 Telecopier 914-997-0035
e-mail at ldbs@westnet.com

O’QUINN: Former Clients in TX Sue over Kennedy Heights Toxic-tort Case
About 50 former clients of John O'Quinn sued the Houston plaintiffs
lawyer Nov. 22 claiming he breached his fiduciary duty in his handling
of a toxic-tort action known as the Kennedy Heights suit. In that 1996
suit, about 2,400 residents of the Kennedy Heights subdivision in
Houston sued Chevron U.S.A. Inc., claiming it had contaminated their
water supply. The suit settled this year for $ 12 million. Plaintiffs in
Bob Chambers, et al. v. John M. O'Quinn, et al. allege the settlement
was too low. In their complaint filed in state district court, O'Quinn's
former clients allege he assured them for three years that the Kennedy
Heights suit was worth more than $ 500 million but later, in 1998,
allegedly suggested the suit could not be won and should be settled for
$ 12 million.

Interestingly, Houston solos Benton Musslewhite, his son, Charles B.
Musslewhite Jr., and Newton B. Schwartz represent the plaintiffs in
Chambers. In a separate case, Benton Musslewhite is suing O'Quinn, his
former business colleague, claiming O'Quinn owes him money for
referrals. Charles Musslewhite also has a history with O'Quinn: He
testified against his father and O'Quinn in a State Bar of Texas
grievance suit that alleged that the elder Benton and O'Quinn
unethically solicited clients after a 1994 plane crash in North
Carolina. A jury exonerated the two men of the barratry allegations.
Schwartz says O'Quinn's former clients were abandoned for $ 12 million.
"They want their day in court," he says. The Musslewhites and O'Quinn
could not be reached for comment. (Texas Lawyer November 29, 1999)

ORANGE UNIFIED: Retired Teachers Sue over Reneging on Medical Care
A $75-million lawsuit filed on behalf of 700 retired teachers charges
that the Orange Unified School District has reneged on a 23-year-old
agreement to give retirees free lifetime medical care in exchange for
lower salaries. The suit, filed late Monday, also contends the school
district for years didn't pay into a fund for the health care.

The lawsuit is the latest salvo in the war between the school district
and its teachers. But in this case, not only is Orange Unified Education
Assn. President John Rossmann attacking the school board, he also is
accusing previous union leadership of selling out the retirees.

James Bowles, the district's labor law attorney, said the district was
not supposed to pay into a health care fund, that the retirees' health
care was never free and that any changes in retirement benefits were
negotiated during collective bargaining.

But the lawsuit says that according to state law, the teachers union
cannot negotiate for retirees, since they are no longer employees. "I'm
not claiming the district or the union did something wrong," said Mark
Lerner, attorney for the retired teachers. "They just did something
beyond the scope of their ability."

Bowles called the lawsuit a bargaining tactic, and made no attempt to
hide his distaste for the union president. "What's happening is a new
union regime, the Rossmann regime, is supporting the lawsuit against an
agreement its predecessor negotiated," Bowles said. "They don't like the
deal they cut two years ago."

The suit, which also seeks class-action status, is similar to one filed
by 325 nonteaching retirees that is scheduled to go to trial next month.

Inescapable in any dealings between the teachers and the school district
is their acrimonious relationship. Orange Unified teachers earn less
money than their counterparts elsewhere in the county. Many stayed with
the district because of the promise of lifetime health insurance, which
the district has said it can no longer afford.

Rossmann said "affording" has nothing to do with it, since that money
belonged to teachers. But instead of going for salaries, he said, it was
supposed to fund health care.

After more than a year of bargaining, the district and the union agreed
on a contract last spring. But the rank-and-file rejected the offer and
Rossmann was elected union president.

The relationship between the union and the district has continued to
deteriorate--complete with accusations of unfair labor practices--and a
contract still has not been agreed upon. (Los Angeles Times, December 8,

PLAINS ALL: Shepherd & Geller File Securities Suit in Texas
The Law Firm of Shepherd & Geller, LLC announced on December 8 that it
has filed a class action in the United States District Court for the
Southern District of Texas on behalf of all individuals and
institutional investors that purchased or otherwise acquired the common
limited partnership units of Plains All American Pipeline,
L.P.("Plains") (NYSE:PAA) and the common stock of Plains Resources, Inc.
("Plains Resources") (AMEX:PLX) between November 17, 1998 and November
26, 1999, inclusive (the "Class Period").

The complaint charges that Plains, Plains Resources and certain of its
officers and directors violated the federal securities laws by providing
materially false and misleading information about the Company's
operations, earnings growth and overall financial condition. As a result
of these false and misleading statements the Plains' partnership units
and Plains Resources' stock traded at artificially inflated prices
during the class period. When the truth about the companies was revealed
on November 29, 1999, the price of Plains' partnership units dropped to
as low as $9-5/8, a 55% decline from its Class Period high, and Plains
Resources' stock dropped 45% the same day.

Contact: Shepherd & Geller, LLC, Boca Raton Jonathan M. Stein,
561/750-3000 Toll Free: 1-888-262-3131 E-mail:
jstein@classactioncounsel.com or Shepherd & Geller, LLC, Media, Pa.
Scott R. Shepherd, 610/891-9880 Toll Free: 1-877-891-9880 E-mail:

RUBENSTEIN: Fed Ct Oks Classes in Urologists’ Price-Fixing Case in Il.
U.S. District Judge George W. Lindberg has granted plaintiff Judith
Thompson's motion for class certification as to a plaintiff class and a
defendant class in a price-fixing conspiracy action against various
urologists in the Chicago area who perform lithotripsy and related
services. Sebo et al. v. Rubenstein et al., No. 98 C 8394 (ND IL,
Eastern Div., Sept. 9, 1999).

Thompson sought to certify a plaintiff class of lithotripsy patients and
a defendant class of urologists/shareholders of defendants Stone Centers
of America and Urological Stone Surgeons Inc. under Fed.R.Civ.P.

The district court held that the proposed classes fulfilled the
requirements of Rule 23(a): (1) the class is so numerous that joinder of
all members is impracticable (numerosity); (2) there are questions of
law or fact common to the class (commonality); (3) the claims or
defenses of the representative parties are typical of the claims or
defenses of the class (typicality); and (4) the representative parties
will fairly and adequately protect the interests of the class (adequate

Defendants did not disagree that the approximately 25,000 members of the
plaintiff class satisfy numerosity, the court reported. The court found
commonality as to injury or impact with respect to plaintiff's
price-fixing claim in violation of the Sherman Act. Plaintiff said that
common proofs exist that w ill demonstrate that defendants conspired to
raise, fix, maintain, or stabilize prices for lithotripsy professional
and machine services in the Chicago area. The court agreed that the
overriding common issue of conspiracy on the part of defendants
predominates over individual issues such as damages.

Similarly, the court agreed that the question whether defendants engaged
in willful acquisition of monopoly power, as alleged in plaintiff's
Sherman Act monopolization claims, involves issues common to the class.

It also found commonality in plaintiff's allegations of a "tying
arrangement," whereby defendants agreed to perform lithotripsy services
only if the patient agreed to purchase lithotripsy machine services and
anesthesia services through their medical center. The district court
said plaintiff Thompson maintains she can prove fact of injury for the
class by demonstrating that had a conspiracy not existed, the
competitive price would have been lower than the prices paid during the
class period.

The court rejected defendants' contention that Thompson failed to
establish typicality because she pled the doctrines of equitable tolling
and fraudulent concealment in response to defendants' affirmative
defense of the statute of limitations. The court said those defenses to
the statute of limitations appear to involve factual issues related to
proving the conspiracy and these issues would not be so consuming that
they would take away focus from the merits of the case.

The court also found Thompson to be an adequate representative of the
plaintiff class, questions of law and fact common to the class members
predominated over q uestions affecting individual members and class
action is a superior method of adjudication for the case. The court
noted that class actions are especially suited for cases where each
class member may have suffered a small individual loss but where the
collective loss is large.

Using a similar analysis, the court certified a defendant class of
urologists and shareholders. According to the court, due process
mandates that a defendant class should be certified only where the
plaintiff class has a colorable claim against each member of the
defendant class. In antitrust price-fixing cases, the court said, where
each participant in a conspiracy is jointly and severally liable to
victims of the scheme, a plaintiff such as Thompson would have a claim
against each member of the defendant class even though she only dealt
with two of the doctors alleged to be part of the conspiracy.

Plaintiffs are represented by Michael Raymond Collins of Collins &
Collins; Marvin Alan Miller, Patrick Edward Cafferty, Kenneth A. Wexler,
Jennifer Winter Sprengel, and Adam J. Levitt of Miller, Faucher Cafferty
and Wexler, Chicago; Joseph Peter Brent of Fumagalli, Tecson & Brent,
Chicago; and Louis W. Brydges of Brydges, Riseborough, Morris, Franke &
Mill, and George E. Riseborough of Hinshaw & Culbertson, both of
Waukegan, IL.

The defense is represented by Anthony C. Valiulis, John Hester Ward, and
Peter Dostal McWeeny of Much, Shelist, Freed, Denenberg, Ament &
Rubenstein; and Jack R. Bierig, Richard D. Raskin, Bruce Michael Zessar,
Theodore R. Scarborough Jr. and Scott David Stein of Sidley & Austin,
all in Chicago. (Antitrust Litigation Reporter, Vol. 7; No. 5; Pg. 6,
November 1999)

STYLING TECHNOLOGY: Shepherd & Geller File Securities Suit in Arizona
The Law Firm of Shepherd & Geller, LLC announced on December 8 that it
has filed a class action in the United States District Court for the
District of Arizona on behalf of all individuals and institutional
investors that purchased or otherwise acquired the common stock of
Styling Technology Corp. (the "Company") (Nasdaq:STYLE) between May 5,
1998 and November 29, 1999, inclusive (the "Class Period").

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws by providing materially
false and misleading information about the Company's sales and earnings.
As a result of these false and misleading statements the Company's stock
traded at artificially inflated prices during the class period. The
Defendants took advantage of the inflated stock price by completing a
$100 million note offering the proceeds of which the Company used to
fund acquisitions. When the truth about the Company was revealed, the
price of the stock dropped significantly.

Contact: Shepherd & Geller, LLC, Boca Raton Jonathan M. Stein,
561/750-3000 Toll Free: 1-888-262-3131 E-mail:
jstein@classactioncounsel.com or Shepherd & Geller, LLC, Media, Pa.
Scott R. Shepherd, 610/891-9880 Toll Free: 1-877-891-9880 E-mail:

THE YORK: Former Employees Sue over Age Discrimination in Downsizing
Four men who were fired by The York Group in 1997 are suing the company,
alleging age discrimination in what the company said was a restructuring
and reduction in its work force. Lewis T. Knaub, 65, of Red Lion; Gary
McBrien, 61, of Felton; Dale Newcomer, 54, of Dover; and Kevin C. Stump
Sr., 46, of York were all supervisors for the company's York Casket Co.
and York Wood Products divisions.

In addition to alleging age discrimination, the lawsuit says the company
violated the Americans With Disabilities Act in its dismissal of Knaub.
He had been diagnosed and treated for bone cancer in 1991. Company
officials did not return phone calls seeking comment. (York, Pa. The
Associated Press, December 7, 1999)

TOBACCO LITIGATION: French Ct Holds Seita Liable for Death of Smoker
In a country where smoking is a social grace not a disgrace, a court
ruling that held a tobacco company partially responsible for the death
of a three-pack-a-day smoker has sparked a nationwide debate about who
is responsible for smokers' deaths.

For the first time, a French court ruled on Wednesday that Seita, the
manufacturer of quintessentially French cigarette brands Gauloise and
Gitanes, shared the blame for the death of a 49-year-old confirmed
smoker from lung and larynx cancer this year.

The ruling might come as no surprise in the United States where last
year tobacco companies agreed to pay around dlrs 206 billion over 25
years to settle lawsuits against them by Connecticut and 45 other states
over the costs incurred to treat sick smokers. But in Europe, where
smoke-filled cafes and bars are the norm, anti-smoking campaigners plow
a lonely furrow and such civil suits are few and far between.

In France, where 60,000 people die of smoking-related diseases each
year, a county court ruled on Wednesday that Seita had committed a fault
by not giving committed smoker Richard Gourlain enough information about
the dangers of his habit. But it also blamed the smoker, dividing
responsibility between the two parties based on when the first law
forcing manufacturers to display warnings on cigarette packets came into
force. ''It's a first in France. Seita has been declared responsible for
the damages it caused to a smoker though a lack of information,''
Gourlain family lawyer Francis Caballero said after the ruling.

Gourlain brought a lawsuit against Seita in December 1996. His widow
continued the action after his death this year, claiming the company did
not provide enough information about the health risks.

The judge held Seita entirely responsible between 1963 - 1969, during
which time Gourlain was a minor. He found Seita carried 60 percent of
the responsibility between 1969 - 1976, when the law about printed
warnings was introduced. Thereafter, he said Gourlain alone was

Seita, which has agreed to merge with Spanish tobacco giant Tabacalera,
said in a statement it will appeal the ruling. ''Seita is astonished by
this ruling. It considers that Mr. Gourlain was informed of the risks of
smoking...it was with full knowledge that (he) took the decision to
smoke and continue smoking despite his multiple health problems'' the
company said.

Gourlain's case stands in sharp contrast to the efforts of 53 lung
cancer victims in Britain to win damages in Britain's first class-action
lawsuit against two tobacco companies -- Gallaher Ltd. and Imperial
Tobacco Ltd. The majority of the victims dropped the case in February
this year because their lawyers said the chances of victory were slim.

In Poland, a country of heavy smokers, the first suit against a tobacco
company began this week, and in the Netherlands a man suffering from
chronic emphysema is suing R.J. Reynolds, Philip Morris and two other
tobacco companies.

But in France, some doubted whether the new, somewhat nuanced ruling
would open a Pandora's box of smoking lawsuits. Left-leaning French
daily Liberation said in an editorial that the real blame lay with the
state, once the majority shareholder in Seita which was privatized in
1995. ''Which court in the name of which victim will call (the state) to
account,'' it said. (AP Worldstream, December 9, 1999)

U.S.: Fed Judge Dismisses Lawsuit over Phasing out of Marijuana Program
A federal judge has dismissed a closely watched class-action lawsuit
seeking the right to medical use of marijuana, after finding that the
government did not act irrationally in deciding to slowly phase out a
program that still provides the drug to eight individuals.

"Providing marijuana to eight people without legal consequence is
somewhat strange," Senior U.S. District Judge Marvin Katz wrote in his
14-page opinion in Kuromiya et al. v. United States. "Even odder is the
government's having provided marijuana to a small group of people over
the years in the compassionate use program without having obtained a
single useful clinical result as to the utility or safety of marijuana
as a medicine to alleviate the symptoms of illness. If morphine were
thus dispensed, the absurdity would be even more apparent," Katz wrote.
But Katz said that a court's job in weighing such an equal protection
challenge is to employ the "rational basis" test and not to use that
standard "as an excuse to judge the wisdom of policy choices. "When
pressed, Katz said, government lawyers and witnesses offered sound
explanations for why the medical marijuana program was always so tiny;
why they resisted letting it grow; and why they decided to phase it out
through "attrition," allowing all current participants to retain access
to the drug until their deaths. Katz also applauded the government's
decision to allow for larger scale tests of medical uses of marijuana
that will provide the first truly reliable data on the drug's efficiency
and safety." The government has finally instituted a program to make its
supply of marijuana available to serious researchers to determine the
utility of the substance as medicine based on scientific empiricism
rather than shibboleth," Katz wrote. "In time, knowledge sometimes has a
chance to prevail over ignorance.... One hopes that both the advocates
and opponents of medical marijuana will allow science to substitute for

The ruling comes in a suit brought by 160 plaintiffs in nearly every
state who originally claimed that the legal prohibition against
marijuana violates a fundamental right to make use of any plant. Filed
in June 1998 by attorney Lawrence Elliott Hirsch, the suit alleged that
"the right to consume, ingest or smoke a plant that grows wild in
nature, such as cannabis, is antecedent to and more fundamental than the
right to vote." The suit didn't get much attention until Judge Katz took
it seriously. Although he dismissed most of the claims, Katz refused to
dismiss the equal protection challenge in which the plaintiffs
complained that it was unfair for the government to operate a
compassionate use program for only a handful of sick people who say
marijuana cures their symptoms. The case then went forward, with the
government forced to produce witnesses to explain how the program works.

Katz's opinion lays out the details. The compassionate use program was
established in 1978 to settle a civil lawsuit. Initially, only one
individual, Robert Randall, received marijuana from the government for
treatment of his glaucoma. The government later agreed to supply medical
marijuana to several other individuals through the same mechanism. But
unlike most experimental drug trials, in which a large enough sample
takes a new drug under controlled conditions to study its effects, the
marijuana program was set up as a series of individual trials.
Government doctors later said such single patient tests cannot establish
the scientific efficacy of new drugs and are not intended to permit the
widespread distribution of unapproved drugs. After the number of
patients swelled to 13, applications for the program dramatically
increased, in part due to the AIDS crisis and the belief among some AIDS
patients that marijuana is the most effective appetite-inducing agent to
battle AIDS "wasting syndrome." Ultimately, Dr. Louis Sullivan, the
Secretary for Health & Human Services, adopted the recommendations of
Assistant Secretary for Health, Dr. James O. Mason, that the program end
except for those patients already receiving marijuana. In memos to
Sullivan, Mason stated that the "widespread use of marijuana for medical
purposes, especially where alternative medications are available, is bad
public policy and bad medical practice." But Mason said he also felt
that it would be problematic for the government to cut off the supply to
those who had already started receiving it. He recommended continuing to
supply the 13 patients then using the drug while at the same time
encouraging them and their doctors to use alternate therapies, and
designing a protocol to begin a well-controlled clinical trial of Megace
and Marinol, the most promising agents studied to date for HIV
wasting-syndrome .

                   Judge Approves of Attrition

At the time the program stopped accepting new applicants in March 1992,
there were 13 participants; presently, eight remain. Judge Katz found
that the government's actions and its rationale met the legal test for
establishing a rational basis. "The government's submissions suggest at
least four bases for the termination of the compassionate use program:
bad public policy, bad medicine, a lack of marijuana for the remaining
patients, and the existence of alternative treatments," Katz wrote. "The
government explains its decision to continue providing marijuana only to
the remaining individuals in the program as a means of balancing the
government's desire to avoid distributing marijuana to increasing
numbers of individuals with the interests of those who had already
relied upon the drug. These justifications provide a rational basis for
the government's decisions." Katz said the plaintiffs had a "very heavy
burden" in challenging a government decision under rational basis
review. Testimony of high ranking officials, Katz said, showed that the
program ended "because the government did not wish to expand it in the
wake of the increased applications, particularly as the government
believed that alternative treatments were safer and more effective." The
government was also "uncomfortable with distributing marijuana as a
medication to increasingly large numbers of patients given that
marijuana was and is a controversial and currently illegal drug," he
wrote. Katz also found that allowing a handful of users to continue
getting the drug did not undermine the government's rationale. The
explanation for the disparate treatment, Katz said, was that "these
individuals had relied on the government-supplied marijuana for many
years and that it did not wish to harm those individuals by abruptly
cutting off their supply." But Katz said the government's efforts to
persuade those patients and their doctors to utilize alternative
treatments "is also consistent with its overall goal of limiting its
role in distributing marijuana."

                   Plaintiffs' Challenge Fails

Katz found that such a decision to discontinue a controversial program
by attrition cannot be labeled an infringement of equal protection
principles. The plaintiffs, he said, offered no evidence that the
government's actions were irrational. Instead, he said, their arguments
focused mostly on advocating the benefits of medical marijuana and very
little on challenging the government's reasons for continuing the
program only for a few. Although some evidence suggested that the
increasing number of applications from individuals suffering from AIDS
played a role in the decision to terminate the program, Katz said the
same documents "also indicate that the concern stemmed from the
increasing numbers and expansion of the program rather than any animus
towards AIDS sufferers." In closing, Katz noted that the government has
informed the court of a new program in which "research grade" marijuana
will be made available to doctors and scientists interested in
conducting research on the medical benefits of marijuana. "The
government emphasizes that these trials will be directed 'toward
multi-patient clinical studies' because of concerns that the single
patient format cannot produce useful scientific data," Katz wrote.
"These regulations seemingly indicate an increased willingness to
consider new research protocols that are intended, from their inception,
to lead to meaningful results." (The Legal Intelligencer, December 3,

Y2K LITIGATION: Paper Says Act May Complicate Litigation
Geoffrey Bestor is counsel at Washingtons Dickstein Shapiro Morin &
Oshinsky. He recently served as deputy assistant attorney general in the
Office of Policy Development of the Department of Justice, where he
represented the department on the Clinton administrations Y2K Act
negotiating team. The views expressed herein are his own.

Alarmed by predictions that Y2K would unleash a trillion dollars in
(mostly frivolous) litigation, industry groups heavily lobbied Congress
for legislation to encourage remediation, discourage litigation, and
protect responsible companies from the depredations of plaintiffs

Although Congress passed the industry-backed Y2K Act, many potential
defendants may find that the law won't live up to their expectations.
The legislation may discourage a few class actions, but is likely to
make the litigation that does occur more uncertain, complicated, and

Since the Y2K Act was signed into law July 20, those trillion-dollar
predictions have been shrinking steadily, and it is not clear that the
anticipated explosion of litigation is going to involve much more than
companies suing their insurers over Y2K remediation costs.

Reports from President Bill Clinton's Y2K adviser and the Senate Y2K
Committee have been reassuring-essential services are safe and Y2K
consequences (at least in the United States) are expected to be minor
and short-term. Predictions of massive disruption of our
technology-dependent society have disappeared.

Estimates of remediation costs are much less than once feared. While the
airlines might have some empty seats on Jan. 1, there appears to be
little stockpiling of canned goods and generators, and not much money to
be made from Y2K fears-seen any Y2K-preparedness books in the
supermarket checkout line lately? Even the millennium itself seems to
have bored the public.

Diminished Y2K fears notwithstanding, Congress has given us an extremely
broad statute. The law states that it will apply in every suit, in state
or federal court, "in which the plaintiff's alleged harm or injury
arises from or is related to an actual or potential Y2K failure, or a
claim or defense arises from or is related to an actual or potential Y2K
failure." See Y2K Act, '3(1)(A).

The statute covers nearly every aspect of civil litigation-from
pre-litigation notice to pleading to substantive liability law to
damages to class actions.

Given that the law's provisions favor defendants in almost all
instances, defendants have a strong incentive to be covered by the
statute. Since the applicability of the act will be determined at the
outset of any litigation, any action in which a computer or computer
chip is potentially involved could be a Y2K lawsuit.

There will not need to be massive numbers of actual computer failures
for the Y2K Act to have a significant impact on civil litigation in the
next few years.

But there is a real question whether defendants have really gained that
much from the Y2K Act. When President Clinton signed the law, he gave it
the following ringing endorsement:

"I hope that we find that the Y2K Act succeeds in helping to screen out
frivolous claims without blocking or unduly burdening legitimate suits.
We will be watching to see whether the bill's provisions are misused by
parties who did little or nothing to remediate in order to defeat claims
brought by those harmed by irresponsible conduct."

One might think-as was suggested at the time-that the forces of tort
reform had won a significant victory and that Y2K defendants at least
would benefit from the various pro-defendant changes to civil litigation
that tort reform proponents had been unable to win more broadly. One
might be wrong.

                     Pre-Litigation Provisions

We can start with the act's pre-litigation notice provisions. Section 7
requires prospective plaintiffs to provide detailed notice of the claim
to the prospective defendant at least 30 days before filing suit. If the
prospective defendant responds within 30 days with an offer to fix the
problem, or to engage in alternative dispute resolution, the plaintiff
must wait an additional 60 days to sue.

This all sounds fine, except for two problems. The first is that few
plaintiffs, if they have any choice, are going to allege Y2K defects
because no plaintiff is going to want the pro-defendant provisions of
the Y2K Act to apply.

In addition, there are forum-shopping concerns for plaintiffs to
consider. If the plaintiff provides notice, the defendant has 30 days to
choose the forum by filing a pre-emptive suit. Even if the act's notice
provisions apply to the defendant's action, the defendant is in the
forum it wants, and the Y2K Act provides only for stay, not dismissal,
of suits filed without the requisite notice. Prudent plaintiffs may well
decide to sue and file notice at the same time-the worst that will
happen is a short delay in the suit.

                     Appellate Issues Abound

Another problem with the Y2K Act from the point of view of its intended
beneficiaries is the very breadth of the statute. It is safe to say that
no one-no one-knows how the statute will work in practice. One thing is
certain, however; there will be appellate issues built into every
verdict where the act applies.

For example, there are substantial arguments that certain provisions are
unconstitutional directions by the federal government to the states.
Further, there are no pattern jury instructions for claims under the

Lawyers will have to be paid to resolve the law's thorny issues. The
statute is likely to turn at least some straightforward state law
contract claims into a tangle of interpretive and constitutional issues
that would tax the abilities of the most seasoned Supreme Court

If the act applies (the first issue requiring a round of motions), how
is the applicable law to be determined? Section 4(d) provides that
written contract terms "shall be strictly enforced" unless the term
would "manifestly and directly contravene state law embodied in any
statute in effect on January 1, 1999, specifically addressing that

Common law apparently is to be disregarded, except for "doctrines of
unconscionability, including adhesion, recognized as of January 1, 1999,
in controlling judicial precedent." If the contract is silent on an
issue, state law as of the time the contract was executed controls,
unless, of course, the contract is silent as to damages, in which case
'11 provides that the law "at the time the contract was effective"

The statute does not tell courts what law to apply when a written
contract term only arguably applies, or is ambiguous. And how does one
"strictly enforce" an ambiguous term?

Section 8 imposes special pleading requirements as to damages,
materiality of defects, and state of mind. What about the legal
principle that the "general rule, bottomed deeply in belief in the
importance of state control of state judicial procedure, is that federal
law takes the state courts as it finds them"? See Johnson v. Frankel,
520 U.S. 911 (1997).

Section 6, which addresses proportionate liability and contains
exceptions and special rules for contribution, discharge through
settlement, and allocation of orphan liability, is fairly described as

The Y2K Act does not apply to personal injury and wrongful death claims,
but what about the hospital sued for wrongful death that asserts a
third-party contract claim against a medical device manufacturer? Is
that third-party claim covered by the law?

Curiously, Section 9, which imposes a duty to mitigate "in addition to
any duty to mitigate imposed by State law," is not limited to contract
actions. Does this mean that the duty applies in tort cases?

                 Uncertainties Will Be Resolved

All of this is not to suggest that the Y2K Act will be without effect.
During the next several years, many of these uncertainties will be
resolved by appellate judges (although, since the statute applies in
every court in the land, potentially with differing results). Moreover,
the act was intended to force contract claims to be decided according to
contract rules, and it may well have this effect by making it more
difficult for plaintiffs to couch contract and warranty claims as tort

The act also may discourage some class actions, since tort claims will
be harder to assert and the law creates presumably less hospitable
federal jurisdiction for any class action seeking punitive damages.

Until the meaning of the Y2K Act has been determined through litigation,
however, the poor defendants who were supposed to be assisted by the law
will still have to pay their lawyers to find out if the bill's
proponents were successful.

If nothing much goes wrong on Jan. 1, all those lawyers who have geared
up for a trillion dollars' worth of Y2K litigation, including those who
represent defendants, can take solace in the knowledge that the few
suits that result will probably cost far more per case than they
otherwise would have. (Fulton County Daily Report December 9, 1999)

Y2K LITIGATION: Remediation Cost May Be Claimed Under Property Policies
Although companies have spent millions of dollars on Y2K compliance and
remediation programs, many remain unaware that these costs may be
recoverable under the "sue and labor" clause contained in their property
insurance policies. Several companies already have been forced to file
lawsuits to recover the money spent on their Y2K programs. Given the
amounts at stake and the unsettled legal landscape, further litigation
seems inevitable.

                     The "Sue and Labor" Clause

The "sue and labor" clause affords companies significant promise for
potential recovery of the millions of dollars being spent on Y2K
compliance and remediation programs. This clause requires a policyholder
to undertake measures to prevent or minimize threatened loss to covered
property that the insurer would be required to pay and obligates the
insurer to pay the expenses reasonably incurred by the policyholder in
taking such measures. In fact, if the policyholder fails to take
appropriate steps, coverage may be forfeited.

The "sue and labor" clause is advantageous in the Y2K context because a
policyholder may recover by showing only imminent loss or damage,
without having to prove actual loss or damage. Indeed, companies should
have little difficulty demonstrating that their Y2K remediation efforts
prevented some covered loss or damage. The "sue and labor" clause also
is beneficial to policyholders because attempts to repair non-compliant
programs need not be successful to recover under the provision. Finally,
"sue and labor" recoveries are supplemental recoveries that do not
otherwise erode the policy limits.

                       "Sue and Labor" Defenses
* Covered Loss

  The initial obstacle to recovering on a "sue and labor" claim is
  proving that the loss sought to be avoided would have been covered
  under the policy. Because the purpose of the "sue and labor" clause
  is to prevent or minimize covered losses for the benefit of the I
  insurer, the clause is ineffective unless the harm prevented would
  have been covered in the first instance.

  Property policies cover damage to a policyholder's own property. In
  the Y2K context, this could be damage to a company's computer system
  or other property such as manufacturing equipment. Property policies
  may be drafted to cover only specifically enumerated "named perils"
  such as fire, explosion, smoke, earthquake or water damage, or to
  cover "all risks" except those that are specifically excluded. Until
  recently, neither type of policy specifically addressed computer
  failure. Accordingly, the broader "all risk" policies are more likely
  to provide coverage for Y2K claims than are "named peril" policies
  because computer failure would have had to be specifically identified
  as a "named peril." However, property policies issued in the last few
  years often contain specific language either insuring or excluding
  Y2K coverage claims. Companies should continue to monitor renewals
  carefully and resist the insertion of Y2K exclusions because they may
  be detrimental to coverage.

  Insurance companies are expected to argue that the prevented loss is
  not covered because it would have been subject to a variety of
  exclusions sometimes found in property policies. Specifically,
  insurance companies will likely rely upon exclusions for "latent
  defects" and "design errors." These exclusions have been construed
  very narrowly in other contexts and should not prevent coverage. For
  example, a "latent defect" generally is interpreted as one that
  cannot be discovered by a routine or customary test, but Y2K problems
  are readily discernible and therefore not "latent." Similarly, a Y2K
  problem cannot easily be characterized as a "design error" because
  the computer programs operate as designed. In fact, the use of two-
  digit date fields was "state of the art" computer design when the
  practice began and remained an industry standard until the late
  1990s. (Note, however, that this creates an apparent tension with the
  "fortuity doctrine," discussed below).

* Actual or Imminent Loss or Damage

  To recover under the "sue and labor"clause, a company's remedial
  program must have been driven by "[actual] loss or damage or imminent
  loss or damage." To prove actual "loss or damage," a company must
  demonstrate "direct physical loss or damage to property." A debate
  already has begun as to whether the word "physical" modifies only
  "loss" or both "loss" and "damage." If the damage need not be
  "physical," policyholders can easily demonstrate that the
  incorporation of Y2K non-compliant components caused economic
  consequences. However, if the damage must be "physical," the result
  is somewhat less obvious. For instance, is there "physical damage"
  when data is corrupted or processing capabilities are compromised? In
  such instances, policyholders will rely, at least in part, on a
  theory known as the "incorporation doctrine," pursuant to which
  "physical damage" is deemed present when a defective component is
  incorporated into a larger product, rendering the larger product
  unusable or less valuable. The incorporation doctrine is readily
  applicable in the Y2K context because a computer system is physically
  damaged by the installation of Y2K non-compliant software. However,
  acceptance of the incorporation theory is not universal, and some
  courts may agree with the insurers that physical damage exists only
  when there has been a physical alteration or change in form.

  Proving "imminent loss or damage," however, is a much lower hurdle
  for companies seeking to recover under the "sue and labor" clause.
  Insurers will argue that companies began their remediation programs
  in the mid-1990s when the new millennium was not "imminent." However,
  such a narrow interpretation is untenable in the Y2K context because
  the "imminence" of anticipated loss or damage must be viewed relative
  to the scope of the problem and the time needed to "sue and labor" to
  prevent it. For companies that needed to identify, repair and test
  thousands of non-compliant programs in facilities throughout the
  country to avert disaster, the turn-of-the-century may readily have
  been characterized as "imminent" at the outset of their compliance
  programs. In fact, had these companies waited until shortly before
  the new millennium to begin their Y2K programs, the programs would
  have failed and their insurers would have argued that the companies
  violated their obligations to "sue and labor," thus forfeiting

* Ordinary Business Expense

  The insurance industry also is expected to argue that the money spent
  by companies on Y2K compliance programs constitutes "ordinary
  business expense," a category of costs not covered by insurance.
  However, most Y2K fixes are far from "ordinary" and cannot be equated
  with regular computer system maintenance and upgrade simply because
  of the sheer magnitude of the problem and the catastrophic damages
  that would result if remediation is not undertaken. Accordingly, to
  the extent that the purpose of Y2K remediation programs is to save
  fully functional systems that are about to be rendered obsolete,
  rather than to replace worn out or antiquated systems, coverage
  should be available. Remediation prompted by mixed motives, however,
  will need to be evaluated carefully.

* The Fortuity Defense

  Inherent in every insurance contract is the assumption that, in order
  to be covered, a loss must be "fortuitous." The insurance industry
  asserts that Y2K remediation costs are not fortuitous because systems
  are operating exactly as intended, having been designed with two-
  digit date fields in order to conserve memory. The insurers also
  point out that the Y2K problem has been well publicized for at least
  the last few years. Although both contentions are accurate, neither
  necessarily suggests a non-fortuitous loss.

  For one thing, fortuity must be measured by the policyholder's
  subjective knowledge. A lack of fortuity is present only when the
  policyholder knew that a particular loss was going to occur at the
  time the policy was purchased. Indeed, most user companies were not
  aware of the Y2K problem until the late 1990s and, even after that
  time, were not focused on the problem when they purchased their
  policies. In fact, certain "triggers of coverage" assign the damages
  to earlier policy periods when "fortuity" is not an issue (i.e.,
  coverage placed in the year of installation, rather than the year the
  problem manifested). Moreover, many courts require a showing of
  "specific intent," and few companies contemplated the exact type or
  extent of damage now projected. Accordingly, even though the
  processing limitations were well known in the computer industry,
  knowledge of such limitations cannot be imputed to all companies, nor
  can such knowledge necessarily be equated with an expectation of

* Notice

  Property policies contain notice requirements that are likely to be
  the subject of substantial debate in the Y2K context. Insurance
  companies are expected to claim that policyholders' notice of Y2K
  loss is late because the policyholders have been aware for some time
  of Y2K system risks and potential claims, and, indeed, many companies
  even implemented their Y2K programs without providing notice. Yet,
  typical notice of loss provisions require that notice be given only
  when actual loss or damage is known; mere knowledge of the conditions
  giving rise to the loss does not trigger the notice requirement.
  Moreover, notice provisions are often limited to the knowledge of the
  company's Risk Manager only. An individual employee's knowledge –
  even that of a senior manager or an employee responsible for
  technology - is not necessarily relevant. Furthermore, even if a
  policyholder's notice is deemed late, most jurisdictions do not allow
  an insurer to avoid coverage unless it has suffered prejudice from
  the delay. In the Y2K context, insurers will have a difficult time
  proving "prejudice" because they likely would not have done anything
  different even if they had been notified earlier. Finally, in some
  jurisdictions, a company's delayed notice may be forgiven if the
  policyholder had a justifiable excuse for the delay (for instance, if
  a company reasonably believed that no coverage for Y2K claims was
  available under its policies). Because insurance companies, their
  trade associations, and their lawyers have been preaching for the
  last three years that no coverage is available for Y2K claims, a
  company's belief in non-coverage very well may be justified.


To maximize the potential for an insurance recovery companies should:

* Review the language of existing policies to ascertain the scope of
  coverage available.

* Provide insurance carriers with immediate notice if claims are

* Consider using a "stand still" agreement in the event of pre-
  litigation communications with an insurer to preserve the ability to
  select the most favorable forum.

* Inspect all policy renewals and resist the introduction of Y2K

* Organize and preserve all documentation relating to Y2K compliance

* If coverage litigation appears inevitable, carefully evaluate
  alternative forums and examine the applicable choice of law decisions
  and substantive law.

(The Metropolitan Corporate Counsel, December, 1999)


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

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