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(11/11/02) - A case in which an employee charged that he was retaliated against for taking time off under the Family Medical Leave Act to care for his aging parents has triggered an $11.65 million award.

The recent Chicago verdict -- one of the largest won under FMLA -- is just one of many that employment lawyers say they expect to see as baby boomers are faced with the predicament of caring for aging parents. In 1998, Chris Schultz, a 25-year veteran employee of Christ Hospital and Medical Center in Oak Lawn, Ill., was the esteemed "MVP Employee" with his picture hanging in the hospital lobby.

But two years later, he was out of a job. Lawyers for the 45-year-old Schultz sued the hospital in Schultz v. Advocate Health, No. 01C-0702 (N.D. Ill.), claiming that he was unfairly penalized for taking time off to care for his aging parents.

Schultz, who worked in maintenance, was entitled to take 12 weeks intermittently over the course of a year after his request for family medical leave was granted in 2000.

At the time, he was caring for his father, who suffered from Alzheimer's disease, and his ailing mother, who eventually died later that year. During the course of his leave, hospital supervisors instituted a monthly performance policy that graded maintenance employees by the amount of work they had completed within a set period of time. It was this system that led to trouble.

Schultz's lawyer, Charles Siedlecki, a Chicago-area solo practitioner, argued that the hospital's grading policy punished employees who had been granted legitimate time off, including those on sick or disability leave. "You can't hold people accountable for work when they are not there to do it," said Siedlecki. He argued the case with co-counsel John P. DeRose, a solo based in Hinsdale, Ill.

Joan E. Gale, a member of Chicago's Seyfarth Shaw, led the defense for the hospital. Gale did not return calls for comment.

After a seven-day trial and eight hours of deliberations, a jury of four men and four women awarded $10.75 million against Advocate Health and Hospitals Corp, which owns Christ Hospital.

Additional awards of $450,000 each were levied against two supervisors. The issue of equitable damages remains before U.S. District Senior Judge Milton Shadur of the Northern District of Illinois, who could opt to award "liquid damages," or twice the total amount of front and backpay.

Steve Platt, president of the Illinois chapter of the National Employment Lawyers Association and a partner at Chicago's Arnold & Kadjan, expects to see more FMLA claims against employers as baby boomers face the predicament of caring for aging parents.

Platt said he would be hard-pressed to point to another FMLA verdict as high as this one, and speculates that the jury's reaction was an emotional one.

"There's a certain amount of equity in the drama of a courtroom and juries don't always decide things based on jury instructions or the law," Platt said. "If they see [an employer doing] something that isn't fair, they're going to hit you for it."

An FMLA claim on its own would not have produced such a high verdict, said Siedlecki. "Under FMLA, the most you can get is liquid damages," he said. "To get that kind of verdict, you've got to find some state claim not subject to the caps," he said.

To seek higher damages, in addition to FMLA, Schultz sued his employer under an Illinois statute for intent to inflict emotional distress. State claims of emotional distress in employment matters are very hard to pursue, admits Siedlecki. "They almost never survive summary judgment."

Siedlecki said he won't be surprised if the verdict is reduced. "The 7th Circuit is pretty conservative," he said.

Although some may argue that a case of an attorney telling the truth would be more unique and newsworthy, here’s the story reported by Rachel Tobin Ramos in the Fulton County Daily Report.

Attorney Eric J. Hertz was so confident that he would win a case that he swore to God that if he lost - he would turn in his bar license and quit practicing law.

Hertz lost the case, but reneged on his promise.

Who knows if the jury was just calling his bluff? As it turns out, Hertz, of Hertz, Link & Smith in Tucker, Ga., has often made this promise for dramatic effect.

Hertz was quoted as saying "I'm going to tell you something about myself -- and it hasn't happened yet -- and I always pull my wallet out when I do this because I mean it, as God as [sic] my witness."

"If y'all do not go back there -- this is my Bar license (indicating) ... and mark that this guy needs to be punished ... I will turn my bar license in; I will quit the practice of law, and I can do that because I've already made a lot of wealth. ... I do this now to help people."

Reviving an age discrimination suit, the 3rd U.S. Circuit Court of Appeals has ruled that age-related comments made by a supervisor cannot be discounted as mere "stray remarks" if they were uttered by the person who made the decision to fire the plaintiff in a conversation about the plaintiff's prospects for continued employment.

In Fakete v. Aetna Inc., a unanimous three-judge panel found that a jury must decide whether Stephen Fakete was fired because of his age since he has evidence that his supervisor, Thomas Larkin, said he was "looking for younger, single people" and warned Fakete that, because of his age, he "wouldn't be happy there in the future."

"Viewed favorably to Fakete, the statement shows that Larkin preferred 'younger' employees and planned to implement his preference by getting rid of Fakete," U.S. Circuit Judge Thomas L. Ambro wrote.

"Larkin made his statement in direct response to a question from Fakete about how he fit into Larkin's plans. In this context, a reasonable jury could find that Larkin's statement was a clear, direct warning to Fakete that he was too old to work for Larkin, and that he would be fired soon if he did not leave Aetna on his own initiative," Ambro wrote in an opinion joined by 3rd Circuit Judge Dolores K. Sloviter and visiting Senior Judge Milton I. Shadur of the Northern District of Illinois.

The ruling reverses a May 2001 decision by U.S. District Judge John R. Padova of the Eastern District of Pennsylvania that granted summary judgment for Aetna.

According to court papers, Fakete was hired by U.S. Healthcare in April 1992 as an audit consultant. In 1996, USHC merged with Aetna to form Aetna U.S. Healthcare.

At the time of the merger, Fakete was 54 years old and the oldest audit consultant at USHC. The merger agreement prevented Aetna from terminating any USHC employees for at least two years following the merger, absent approval from a USHC executive.

That agreement expired in July 1998, when Fakete was 56 years old and eligible to retire on a substantial pension within three years.

At the same time, Aetna reorganized its audit department, and Larkin became Fakete's supervisor.

Fakete claims that when he asked Larkin about his future with the company, Larkin responded that "the new management" -- which included Larkin -- wouldn't be favorable to Fakete because they were "looking for younger single people that will work unlimited hours," and that Fakete "wouldn't be happy there in the future."

Within a few months, Fakete claims, Larkin issued him a written warning alleging unexplained absences from the workplace, and threatened to place Fakete on probation if he did not explain future absences.

In December 1998, just three months before Fakete's pension would have vested, the suit alleged that Larkin fired him on trumped-up charges of violating the terms of the warning, falsifying travel expense reports, and failing to reimburse Aetna for personal phone calls charged to his company card.

Padova found that since Fakete was replaced by someone just three years his junior, he would need "direct" evidence of age-related bias to survive summary judgment.

Padova concluded that Fakete failed to muster any direct evidence because Larkin's alleged comment "was a stray remark that did not directly reflect the decision-making process of any particular employment decision."

Now the 3rd Circuit has ruled that Padova erred because his summary judgment decision "resolved a genuine factual dispute over whether Fakete's age was a substantial motivating factor in Larkin's decision to fire him."

Ambro found that "a reasonable jury" could conclude that Larkin's comments were direct evidence of age-related bias, and that Fakete's age was therefore "more likely than not a substantial factor in Larkin's decision to fire him."

The comments allegedly made by Larkin cannot be dismissed as merely "random office banter," Ambro found, because they "informed Fakete of [Larkin's] preference for 'younger' employees in a serious one-on-one conversation about Fakete's future under Larkin's watch."

Fakete was represented by attorney Andrew M. Smith of Marcino Bowman & Smith in Fort Washington, Pa.

Aetna was represented by attorneys Eric J. Bronstein, John M. Elliott, Brian J. McCormick and Raymond J. Santarelli of Elliott Reihner Siedzikowski & Egan.

For the second time in less than a month, Deloitte & Touche on Wednesday found itself the defendant in another major lawsuit -- Adelphia Communications Corp. has charged the auditing firm with professional negligence, breach of contract and fraud.

According to the complaint filed in the Philadelphia Court of Common Pleas, Adelphia was forced to file for bankruptcy protection in New York as a direct result of Deloitte's own wrongful conduct. Adelphia terminated its contract with Deloitte in June of this year…

Previous article about Duke Energy’s auditor

Regulators Sue Deloitte & Touche

(11/1/02) - (Washington, DC) Judicial Watch, the public interest group that investigates and prosecutes government corruption, reported today that a federal court judge said he would refer allegations of threats against Judicial Watch Chairman and General Counsel Larry Klayman to the U.S. Attorney for the District of Columbia. Judicial Watch learned through various sources that Republicans and the Bush Administration were improperly investigating Klayman and seeking to have him jailed. Earlier, a Bush Justice Department official had told conservative columnist Robert Novak, in the context of Judicial Watch’s lawsuits against the Administration, “What are we going to do about this Klayman?” As it is criminal to threaten individuals and coerce attorneys in litigation, Judicial Watch asked the judge hearing its case against Vice President Cheney’s Energy Task Force, The Honorable Emmet G. Sullivan, to take legal action. In hearings over the last two days, Judge Sullivan said that he would criminally refer the serious allegations to the U.S. Attorney Roscoe Howard for investigation and possible prosecution.

And in an order issued today, Judge Sullivan ruled that the Bush Administration would not be granted a stay pending appeal of his earlier rulings that Vice President Cheney’s Task Force turn over documents and answer interrogatories about its operations. Judge Sullivan ruled that the Bush Administration had no legal basis for asserting that it would be harmed in divulging documents and privilege logs concerning the Task Force and cited the historic Supreme Court case Clinton v. Jones in pointing out that the executive branch is subject to discovery in court proceedings. The ruling comes in the context of a lawsuit filed against the Energy Task Force by Judicial Watch under the Federal Advisory Committee Act (open meetings law) after it was rebuffed in its requests for information on the Task Force by Vice President Cheney. Several months later, the Energy Task Force was also sued by the Sierra Club, which is now a co-plaintiff in Judicial Watch’s lawsuit.

“Any member of the Bush Administration and any Republican who threaten to ‘jail’ those who pursue investigations against them ought to be prosecuted. We applaud Judge Sullivan’s criminal referral to the U.S. Attorney’s Office. We will not be intimidated from pursuing our legal actions against the Vice President nor any other politician,” stated Judicial Watch Chairman and General Counsel Larry Klayman.

(11/1/02) –Two years ago, Kentucky coal miner Fairon Johnson was just trying to get a decent shower when he flipped a switch to increase his water pressure and ignited an explosion that badly burned his face.

That accident in his well house recently landed him a $270 million jury award -- the largest ever in Kentucky.

A Knott County, Ky., jury on Oct. 17 ordered Kentucky West Virginia Gas and Equitable Resources Inc. to pay Johnson the huge award after hearing testimony that explosive gas seeping from an old gas well allegedly caused the blast.

"If there's one thing I've got to stress, the reason the jury did this is -- it was not a runaway jury, it was not a crazy jury -- they did this because they want somebody to look at these gas wells," said the plaintiff's attorney, Gary Johnson of Gary C. Johnson P.S.C. in Pikeville, Ky.

Fairon Johnson, 42, alleged that gas traveling through an underground water aquifer seeped into his well from a nearby gas well.

Johnson's attorney said the gas company had removed the steel casing when they drilled the gas wells, allowing waste, gas, brine and salt water to seep into the water aquifers.

Kentucky West Virginia Gas, a subsidiary of Equitable Resources Inc. in Pittsburgh, denied the allegations and is appealing.

"We continue to believe these allegations are completely without merit," Kentucky West Virginia Gas President Jeff Burke said in a press release.

The defendant's attorney, Robert Connally of Stites & Harbison in Louisville, Ky., would not return calls seeking comment. According to a company statement, the June 5, 2000, accident was caused by the accumulation of naturally occurring gas in the plaintiff's well house, not the gas well in question. The defendants maintain that the well was built in 1941 in accordance with regulations, and has operated without incident for six decades.

Gary Johnson said he proved otherwise by presenting the jury with 14 charts detailing how the wells were drilled and the casings removed, and two experts testified that the sole source for the explosion was the gas well.

"I asked the jury, 'Did they breach ordinary care when they drilled the gas well and removed the casings?'" he said.

(10/31/02) - A man arrested during a local appearance by President Bush got his protest sign back, and police got a scolding, at a hearing this morning.

District Justice Shirley Rowe Trkula dismissed a disorderly conduct charge against Bill Neel, 65, of Butler, without any defense witnesses having to testify.

Neel was arrested because he refused to move to a fenced-in area for protesters before Bush's Labor Day appearance at a union picnic in Neville.

"This is America," said Trkula during the hearing at her office in Coraopolis. Allegheny County police "went a little too far" in attempting to curb protests, she said.

County police detective Thomas Ianachione testified that he arrested Neel because, even though he was polite and never used foul language, he refused to enter the fenced area where all the other protesters agreed to go.

Defense lawyer Thomas Farrell asked him if people with pro-Bush signs were allowed to remain on the roads that Bush was to travel.

Ianachione replied that he didn't know, but he said he saw mostly anti-Bush signs.

Trkula said none of Neel's actions rose to the level of disorderly conduct, and beyond that, he had a right to express his point of view.

Neel's sign, which said "The Bush family must surely love the poor, they've made so many of us" was returned to him after he won the case.

He stood outside Trkula's office and asked everyone associated with the case to sign it.

"I'm excited," he said.

Farrell, who defended Neel at no charge at the request of the American Civil Liberties Union, said the ruling was a victory for the Constitution.

"Sure, the President should be safe. But I don't think arrests like this help," he said.

(10/28/02) - Linda M. Gilbert works as a millwright at the DaimlerChrysler Jefferson North Assembly Plant in Detroit. A millwright is a sort of troubleshooter. The work is hard, it pays well, and it is unusual to see a woman doing it.

In 1999, a jury in Detroit found that Ms. Gilbert's male colleagues had harassed her for years with pornographic messages, vulgar talk and insults. It awarded her $21 million. The award is the largest affirmed for an individual sexual harassment plaintiff in United States history.

None of that money was for punitive damages, which are meant to punish and deter the defendant rather than compensate the plaintiff. Punitive damages are often said to be the main reason for outsized jury awards; indeed, Michigan, like a handful of other states, prohibits punitive damages in most cases.

Instead, the jury awarded Ms. Gilbert $1 million for potential lost earnings and medical expenses and $20 million for pain and suffering.

As all sorts of limitations have recently been placed on punitive damages, creative lawyers have shifted their attention to pain and suffering, a little-scrutinized form of compensation for psychic harm.

"Plaintiffs' lawyers are repackaging their punitive-damages claims to put the money load into pain-and-suffering damages," said Victor E. Schwartz, co-author of the leading law school textbook on torts.

The two sorts of damages are meant to be conceptually distinct.

"Pain and suffering focuses on the harm done to the plaintiff," said Catherine M. Sharkey, a fellow at Columbia Law School. "Punitive damages looks to the conduct of the defendant. It's a separate question whether juries in practice have in mind a certain number and will get there no matter what."

In its appeal to the Michigan Supreme Court, DaimlerChrysler argues that the verdict was "a disguised punitive-damages award."

"There is absolutely no correlation between $21 million and the impact that cartoons and verbal comments have had on this woman," said Elizabeth Hardy, a company lawyer.

Ms. Gilbert's lawyer, Geoffrey N. Fieger, who had asked the jury for $140 million, says the award merely compensates his client for the effect of the abuse. Ms. Gilbert still works at the plant and has not received any of the awarded money. At DaimlerChrysler, she has made as much as $100,000 a year, with overtime.

Recent United States Supreme Court decisions have encouraged judges to scrutinize punitive awards, while damages for pain and suffering, and other awards that compensate plaintiffs for losses, are treated with deference. In addition, punitive damages have recently become subject to the federal income tax, while pain-and-suffering awards are not.

Many states that do allow punitive damages have enacted fixed caps or have limited the permissible ratio between compensatory and punitive damages. Florida does both: in most cases it limits punitive damages to $500,000 or three times the compensatory award, whichever is greater.

Other states have diverted some punitive awards to their treasuries. Oregon allocates 60 percent of them to a state fund for crime victims.

These limitations and others, Mr. Schwartz said, have driven hundreds of millions of dollars into pain-and-suffering awards. He cited recent verdicts for tens of millions in California, Mississippi and New York, in cases involving injuries in automobile accidents, medical malpractice, asbestos and a heartburn drug.

David A. Schkade, a business professor at the University of Texas and a co-author of a recent book on punitive damages, said there had been no systematic study of the trend.

"There is evidence that there is leakage between different kinds of damages," he added. "It's like Willie Sutton. You go where the money is."

David W. Leebron, the dean of Columbia Law School, agreed.

"When you cut down on one kind of award, you'll see a shift in investment to another kind of award or a shift to other kinds of cases," he said.

There are certainly fewer limitations on pain-and-suffering awards, and less judicial scrutiny.

"The law provides no guidance, in terms of any benchmark, standard figure, or method of analysis, to aid the jury in the process of determining an appropriate award," Dean Leebron wrote in The New York University Law Review in 1989. "The only judicially articulated standard of review requires that the award `not shock the judicial conscience.' "

But the concept of pain and suffering has its own critics. In a 1990 study, Peter W. Huber, a senior fellow at the conservative Manhattan Institute for Policy Research, wrote that "it is easy for plaintiffs to feign or exaggerate psychic injury" and that "even if fear or pain can be proved, they are impossible to price." That makes such claims attractive to lawyers even without the pressure on punitive damages.

Mr. Fieger, who represents Ms. Gilbert, said the award to her was justified by years of crushing abuse.

"They brutalized her," he said. The abuse, while not physical, caused her to be hospitalized several times and to attempt suicide, he said.

Ms. Gilbert reported six incidents to her managers, including a picture of male genitalia taped to her toolbox, a copy of Penthouse magazine left on top of it and a ribald poem posted in a nearby carpenters' shop.

DaimlerChrysler told the court that "shop talk and similar vulgar activities are the norm in the plant setting." It emphasized that Ms. Gilbert alleged no physical contact, propositioning for sex or retaliation. The award, it said, was 70 times the size of the largest affirmed sexual-harassment verdict in Michigan history, and 70 times the maximum award for such claims for compensatory and punitive damages combined under federal harassment law.

Mr. Fieger's closing argument to the jury, according to DaimlerChrysler, was laced with impermissible appeals to punish the company.

"Never again," he had said. "That is a line used by the sabras in Israel, the land of Israel, to mean that the unspeakable horrors that were perpetrated on the people of Israel, on the Jews, must never be forgotten and must never happen again."

He later added, "And I can assure you that the verdict will be heard from the floor of that plant on Jefferson to the boardroom in Auburn Hills or Stuttgart," referring to DaimlerChrysler's two headquarters.

The company said this argument was a plea to punish it. The appeals court disagreed, noting that Mr. Fieger "never drew any explicit connection between the Nazis and the German corporation."

The court added that jurors awarded less than the $140 million Ms. Gilbert asked for, proving that "they were exercising their independent abilities to reason." It said the jury was entitled to believe testimony that the harassment made her life joyless, "changing the fundamental chemistry in her brain." Mr. Fieger said had punitive damages been available, "I would have gotten one of those billion-dollar verdicts."

Mr. Fieger, who represents Ms. Gilbert, said the award to her was justified by years of crushing abuse.

"They brutalized her," he said. The abuse, while not physical, caused her to be hospitalized several times and to attempt suicide, he said.

Ms. Gilbert reported six incidents to her managers, including a picture of male genitalia taped to her toolbox, a copy of Penthouse magazine left on top of it and a ribald poem posted in a nearby carpenters' shop.

DaimlerChrysler told the court that "shop talk and similar vulgar activities are the norm in the plant setting." It emphasized that Ms. Gilbert alleged no physical contact, propositioning for sex or retaliation. The award, it said, was 70 times the size of the largest affirmed sexual-harassment verdict in Michigan history, and 70 times the maximum award for such claims for compensatory and punitive damages combined under federal harassment law.

Mr. Fieger's closing argument to the jury, according to DaimlerChrysler, was laced with impermissible appeals to punish the company.

"Never again," he had said. "That is a line used by the sabras in Israel, the land of Israel, to mean that the unspeakable horrors that were perpetrated on the people of Israel, on the Jews, must never be forgotten and must never happen again."

He later added, "And I can assure you that the verdict will be heard from the floor of that plant on Jefferson to the boardroom in Auburn Hills or Stuttgart," referring to DaimlerChrysler's two headquarters.

The company said this argument was a plea to punish it. The appeals court disagreed, noting that Mr. Fieger "never drew any explicit connection between the Nazis and the German corporation."

The court added that jurors awarded less than the $140 million Ms. Gilbert asked for, proving that "they were exercising their independent abilities to reason." It said the jury was entitled to believe testimony that the harassment made her life joyless, "changing the fundamental chemistry in her brain." Mr. Fieger said had punitive damages been available, "I would have gotten one of those billion-dollar verdicts."

(10/20/02) - In a warren of office cubicles in Salt Lake City, 2,000 miles from Wall Street, temporary workers are scanning e-mail messages that were written in confidence by employees of the Goldman Sachs Group but that could land Goldman on the growing pile of disgraced securities firms.

The temps — some are law-school students, some are friends or relatives of state employees — are searching for troublesome words or phrases, anything that suggests that Goldman's stock analysts were recommending shares of companies for the wrong reasons. It is a proven process that Eliot Spitzer, the attorney general of New York, used to extract a $100 million settlement from Merrill Lynch in May.

Emboldened by Mr. Spitzer's coup, a posse of state regulators from Sacramento to Boston is trying to replicate it. They are hurriedly investigating conflicts of interest within more than a dozen of the biggest securities firms in the country, including Morgan Stanley, Lehman Brothers, Bear, Stearns and UBS PaineWebber.

In at least two states, Massachusetts and Utah, regulators are close to making cases that investors were defrauded by tainted investment recommendations, people on Wall Street said. These cases would contend that analysts at Credit Suisse First Boston and Goldman Sachs exaggerated the prospects of companies from which their firms either received or sought investment banking fees.

The states' efforts to use internal documents from these firms to prove that their stock-rating systems were tainted has bewildered and frustrated Wall Street executives. Two weeks ago, Mr. Spitzer announced that he would work with Harvey L. Pitt, the chairman of the Securities and Exchange Commission, and other national regulators to shape a settlement covering all of the firms.

Reaching agreement among firms with different business models and regulators with varying agendas is "very difficult," said Christine A. Bruenn, the securities administrator in Maine and the president of the North American Securities Administrators Association. "I don't think it's going to happen as quickly as anybody thought it was going to," she added.

In the meantime, the states will pursue their investigations because, she said, "we have statutes that say you can't commit fraud in our states and we're willing to enforce those."

The national regulators have been telling the firms not to cut deals with state regulators until a global agreement has been drawn up, people on Wall Street said. That broad settlement — if one can be reached — would probably include fines against each of the firms and more independence for their research departments. The firms hope that such a settlement would resolve the entire issue with all regulators.

But some firms' analyst problems would not end there. The firms would still have to sweat out the prospect of being sued by a state or having some of their employees charged with crimes. In either case, they would be likely to suffer through a storm of negative publicity generated by the release of their most damaging e-mail messages or other documents. "It is a joke what's going on now," said a senior official of a major investment bank, who would comment only on the condition of anonymity. "All of the states are trying to outdo Spitzer."

In fact, most know they can't. Mr. Spitzer is one of a few state officials who regulate securities firms from elective office and have the power to file criminal charges.

More important, he has the most powerful weapon in any state, an 81-year-old statute known as the Martin Act. Under that law, New York prosecutors do not have to prove intent to commit securities fraud, merely that fraud occurred because investors were not given all of the information they needed to make informed decisions. Not telling investors that an analyst's "buy" rating on a company was motivated by a desire to generate more banking fees could constitute fraud, Mr. Spitzer argued in his complaint against Merrill.

"Nobody else has a Martin Act," said James E. Tierney, a former attorney general of Maine. "Only four attorneys general even have the securities regulation function in their office."

But Mr. Spitzer's complaint against Merrill opened the eyes of state regulators to the possibility of assembling similar cases against other firms. Banding together through the North American Securities Administrators Association, they formed a task force and divided up a dozen other firms, with one state taking the lead in investigating each.

Mr. Spitzer took on two other firms with national brokerage operations, Salomon Smith Barney and Morgan Stanley. New Jersey is responsible for Bear, Stearns, Alabama for Lehman Brothers, Texas for J. P. Morgan Chase, Illinois for UBS Warburg, and California for Deutsche Bank and Thomas Weisel Partners.

Adding to the firms' burdens, each has also been assigned to one of the three national securities regulators — the S.E.C., the NASD or the New York Stock Exchange. While the state regulators have been racing through hundreds of thousands of e-mail messages, regulators in Washington have been interviewing executives about their firms' research practices.

The parallel attacks have created "incredible amounts of tension," said Demetrios A. Boutris, the corporations commissioner of California, who threw his support behind Mr. Spitzer in the Merrill settlement talks last spring.

"On the natural, the S.E.C. is more powerful," Mr. Boutris said. "But it is not more powerful right now. Typically, they're ahead of us on the power curve. Right now, they're not. The states have always had powerful laws, but now, because of Eliot Spitzer, they can actually do something about it."

While dozens of states are investigating a total of 14 securities firms, most are not as close to finishing as Massachusetts and Utah. Ms. Bruenn said that in some cases, state investigators had found no evidence of possible wrongdoing.

In Massachusetts, the secretary of the commonwealth, William F. Galvin, is considering filing a civil complaint against Credit Suisse First Boston after trying to negotiate a settlement with the firm, people close to the matter said. Now that Mr. Spitzer has pledged to cooperate with Mr. Pitt and other regulators, Mr. Galvin, who is also an elected official, stands out among state officials for his aggressive attack on Credit Suisse.

Across the country, S. Anthony Taggart, the director of Utah's division of securities, has quietly and methodically been building his case against Goldman, a leading underwriter of technology stocks that so far has been unscathed in the stock research scandal. Mr. Taggart declined to discuss his findings, but he said he expected his staff, and several temps he has hired for $15 to $20 an hour, to finish reviewing about 100,000 e-mail messages this month.

Mr. Taggart's team took those messages from computer disks provided by Goldman and created a database that can be searched for derogatory words and other terms that might signal discussion of pressure to appease investment bankers and their corporate clients.

"Their main charge is to find any communications that tend to show that, No. 1, there was a link between investment banking and research," Mr. Taggart said. "Some of the best ones are, maybe, from an analyst that feels pressured to say something they don't want to say."

Stacked up in Mr. Taggart's offices are about 30 brown file boxes filled with manila folders containing other documents provided by Goldman. Among them are evaluations written by Goldman's investment bankers that reveal how the firm decided to pay many of its analysts several million dollars a year.

Mr. Taggart said his staff had been working closely with investigators at the New York Stock Exchange who have been reviewing their own set of Goldman documents. But he said he thought his investigation, which covers analysts who rated stocks in a variety of industries, was broader than the exchange's.

"The key to an investigation like this is really seeing how far up the chain this goes," Mr. Taggart said.

A Goldman spokesman, Lucas van Praag, declined to discuss the investigation by Utah, except to say, "We are very focused on all measures necessary to restore investor confidence, and we are working closely with the authorities in Utah as they conduct their investigation."

UTAH would not file charges against Goldman or any of its employees without first presenting its findings to the firm's lawyers and giving them a chance to settle the matter, Mr. Taggart said. Before any of that happens, he said, the national and state regulators should devise a solution to insulate Wall Street analysts from pressure from their investment banking colleagues.

"If I find misconduct at the firm and I pursue some type of remedy, it would be kind of helpful to have that out of the way," Mr. Taggart said. "I don't want to be the national policy maker; that really isn't my role." But, he added, "I will prosecute analysts that lie in my state."

The potential remedies, he said, include suing the firm or referring criminal charges to Utah's attorney general. "The best thing would be to get money back in the hands of investors," he said. "But that's not an easy thing to do."

The lack of restitution was one of the prime criticisms of Mr. Spitzer's settlement with Merrill. Of the $100 million Merrill agreed to pay, half was to go to New York's state government and the other half to be split among the other members of the state regulators' group.

As a sign that they expect to reach settlements with other firms, the states have agreed to divide the money in proportion to their populations, people close to that agreement said.

But Mr. Taggart said Utah had much more than money to gain from what he said was his biggest brokerage case. "We have this past history of being the penny-stock fraud capital of the world," he said. "If we take a strong stance and do a good job in this investigation and come out with a good result, that will send a strong message that things are different here."

(10/18/02) - They continue to hide relevant documents. They snub their noses at legal mandates to comply. They repeatedly obstruct attempts to verify their claims. Who? Iraq? No - the Bush administration. Yesterday US District Judge Emmet G. Sullivan ran out of patience.

Judge Sullivan once again ordered the Bush White House to turn over documents that chronicle Vice President Dick Cheney's energy task force meetings last year. The administration has been sued several times over the documents - including one case brought by its own General Accounting Office. Federal judges in those other cases have ordered the Energy Department to turn over thousands of pages of many key documents relating to Cheney's meetings with energy firms - including Enron - that were spirited off to the White House for safekeeping.

Yesterday's hearing was especially contentious and was marked by several sharp exchanges between Sullivan and Shannen W. Coffin, the Justice Department attorney handling the case for the White House.

Coffin has refused to produce the documents being sought by plaintiffs, the Sierra Club and Judicial Watch, stating that having to do so "would impose upon the executive unconstitutional burdens." But, Coffin did not specify precisely what would be unconstitutional, and he specifically did not declare the documents were "privileged."

A clearly infuriated Judge Sullivan told Coffin he could not have it both ways. "You have to produce the non-privileged documents and assert the [executive] privilege for those that are," he told Coffin. "You refuse to assert the privilege and won't respond to court orders."

Coffin countered by contending that the document request would place an "undue interference" on executive branch operations, and that "the consideration of undue interference requires special treatment by this court in this context."

Sullivan wasn't buying it. He set a November 5 deadline for the White House to either cough up the documents or return to the court with a formal declaration of executive privilege.

That's when things got really interesting.

As the judge was preparing to adjourn the hearing, Coffin asked for an extension. The reason, he said, was that they could not determine what documents might or might not be privileged since they had not inspected them yet. Judge Sullivan hit the roof.

"That is a startling revelation!" the judge said twice. "How can you be asserting this is privileged information if you haven't looked at it?"

"We haven't completed the review," Coffin said. "We've done enough to know our arguments" are correct, he said.

"How could you misspeak on something as significant as that?" Sullivan shouted back.

Now Judge Sullivan knows what it's like to be a weapons inspector in Iraq.

Shareholders who think they've been wronged in the corporate fraud scandals are beginning to adopt a form of frontier justice.

Angry about their losses, some big investors are offering their lawyers Wild West-style "bounties" to go after the lavish personal wealth of executives accused of ruining some of America's larger companies.

The investors, mostly pension funds, have trained their cross hairs on everything from the Canadian cattle ranch of Bernard J. Ebbers, the former head of WorldCom, the telecommunications company that is in bankruptcy proceedings, to the Impressionist paintings in the collection of L. Dennis Kozlowski, the high-living former chief executive of the troubled conglomerate Tyco International, who has been indicted on corporate fraud charges.

The lawsuits, of course, could last for years, and the defendants have legal tools to protect themselves. But corporate law experts say the bounty hunting has escalated the pressure on executives who may have assumed that their own assets were insulated.

"If these individuals are found to have been grossly negligent or intentionally deceitful, it's highly likely that the liability will be their personal liability," said Prof. William T. Allen, director of the Center for Law and Business at New York University and a former chancellor of the Court of Chancery in Delaware.

The California State Teachers' Retirement System, in a class-action securities-fraud lawsuit filed with two other California pension funds against WorldCom, is offering its outside lawyers a 2.5 percent bounty, on top of its base fee of 12 percent, if they recover "significant" personal assets of any of WorldCom's top managers.

"Part of the idea is to recover as much as we can, but part of the idea is also deterrence," said Christopher W. Waddell, the chief lawyer for the California teachers' fund, which has around $100 billion in assets. The lawsuit, filed in July in Los Angeles County Superior Court, names as defendants Mr. Ebbers; Scott D. Sullivan, WorldCom's former chief financial officer; and 12 other WorldCom executives whom the plantiffs accused of accounting fraud. The suit also names as defendants five banks that underwrote two WorldCom bond offerings. The California teachers' fund lost nearly $25 million on its investment in WorldCom, whose shifting of billions of dollars of expenses led to its accounting crisis.

Other plaintiffs in the complaint are the California Public Employees' Retirement System, known as Calpers, the nation's largest pension fund, which manages assets of around $136 billion and which lost $268 million on WorldCom, and the Los Angeles County Employees Retirement Association, a $26 billion fund that lost nearly $26 million.

Bounties reflect a growing desire by powerful institutional shareholders to exact a pound of flesh from executives they deem responsible for losses.

The bounties could result in additional compensation of seven or more figures for lawyers and even reshape securities litigation, which has skyrocketed amid the giant accounting and management debacles.

"We can't let megahouses and tens and sometimes hundreds of millions of dollars be kept by these corporate rogues," said Melvyn I. Weiss, a class-action lawyer whose New York-based firm, Milberg Weiss Bershad Hynes & Lerach, represents the California teachers' fund as lead plaintiff in the WorldCom suit.

The bounties are also an indication of the scale of losses felt by shareholders in damaged companies like Enron, WorldCom, Tyco, Adelphia Communications and Rite Aid. By some estimates, investors in Tyco lost $60 billion.

"We're going to go after the paintings, the yacht, the apartments — everything," said Jay W. Eisenhofer, a lawyer at Grant & Eisenhofer in Wilmington, Del., which represents the Teachers' Retirement System of Louisiana and the Louisiana State Employees' Retirement System in a lawsuit against Tyco. Mr. Eisenhofer, who was referring to recent headlines detailing Mr. Kozlowski's lavish life, said his firm could earn a bounty of around 2 percent, on top of a base fee of around 20 percent. His clients are part of a wider class-action securities-fraud lawsuit against Tyco. Paul Young, a Milberg Weiss lawyer who represents all the plaintiffs bundled together in the lawsuit, said total claims for damages against Tyco would run into the tens of billions of dollars.

In another example of the new bounty hunting, the State of Wisconsin Investment Board is offering its outside lawyers a reward of 5 percent, on top of its base fee of 10 percent to 20 percent, to recover some of the personal assets of the four top former managers of Anicom, a telecommunications company in Rosemont, Ill., that collapsed two years ago in an accounting scandal. The Wisconsin board, the nation's 10th-largest pension fund with assets of $61.5 billion, is the lead plaintiff in a class-action lawsuit against the Anicom managers, subsequently amended to include their auditor, PricewaterhouseCoopers. The lawsuit was filed in Federal District Court in Chicago in July 2000, after Anicom restated more than $35 million in net income and disclosed fictitious sales. The Wisconsin board said it had lost $23 million on Anicom.

"When the executives are involved in egregious conduct, we want them to pay, in particular if they profited," said Keith L. Johnson, the chief lawyer for the board, which is based in Madison, Wis. The board's outside lawyer, Kenneth E. McNeil of the law firm Susman Godfrey, based in Houston,said he was pursuing the assets of the company's founders, the father-and-son team of Alan and Scott Anixter, Chicago entrepreneurs who made a fortune in the 1980's in wire and cable.

As the zeal for bounty hunting has grown in recent years, the amount of money awarded in settlements of securities-fraud class-action lawsuits has not kept pace. While settlement amounts awards increased marginally, settlements as a percentage of estimated damages fell last year to 4.8 percent from 7.1 percent in 1997, according to data compiled by Cornerstone Research Securities, a consulting service for lawyers.

Despite their gunslinging stance, shareholders and their lawyers may find it tough to make executives pay up. Historically, securities fraud cases have been difficult to prove. Some states — including Enron's home state, Texas, and Florida, where many executives own mansions — have "debtors' paradise" laws protecting assets.

Various government agencies and state attorneys general are seeking to levy big fines on accused executives and their companies, shrinking the pot of money for redress for investors. Tyco's own lawsuits against Mr. Kozlowski and its former chief financial officer, Mark H. Swartz, to recover at least $1.36 billion may leave little for shareholders if those lawsuits succeed.

But at least one influential federal judge appears to favor the idea of making executives pay. In July, the judge, William H. Alsup of United States District Court in San Francisco, told lawyers representing NorthPoint Communications, a failed technology company that is the subject of at least one fraud lawsuit, to bring some of the executives' assets to any settlement negotiation. And Albert J. Dunlap, the ousted former chairman and chief executive of Sunbeam, which is reorganizing under bankruptcy court protection, and two other former Sunbeam executives agreed in January to pay a total of $15 million from their own pockets to settle an investor class-action fraud lawsuit.

In a highly unusual move, Gary Winnick, the billionaire chairman of Global Crossing, the bankrupt telecommunications company under investigation for inflating earnings, offered on Oct. 1 to pay employee-shareholders $25 million out of his own pocket. Mr. Winnick, the subject of several lawsuits, has denied any wrongdoing. He made $734 million by selling Global Crossing stock before the company's shares crashed.

But even wealthy executives are not flush enough to make up for investors' losses.

The damages sought in the current lawsuits far exceed the typical directors' and officers' insurance coverage of $10 million to $100 million an executive. Insurers may simply refuse to pay out — making personal assets the biggest honey pot at bankrupt companies.

Gregory J. Flood, the chief operating officer of a division of the American International Group, the giant insurer that sells policies for corporate directors and officers, said that those found to have commited fraud might find coverage eliminated. "And since they've lived such ostentatious lifestyles," he said, "there will be attempts to disgorge their gains."