Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, October 27, 1994                   TAG: 9410270100
SECTION: VIRGINIA                    PAGE: C3   EDITION: NEW RIVER VALLEY 
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND                                 LENGTH: Short

RETIREES' LAWYERS' SUIT IS REJECTED

Circuit Judge Theodore J. Markow said the lawsuit by Kator, Scott and Heller of Washington, D.C., seeking 3.5 percent of the settlement ``cannot be maintained.''

Michael J. Kator, lead attorney in the case, said Wednesday that he will still try to get his legal fees taken from the settlement. The case could be appealed to the Virginia Supreme Court.

``Our feeling is that it's not unreasonable to expect those who have benefited from our labors to contribute,'' Kator said.

He represented about 400 federal retirees who filed a lawsuit seeking refunds of pension taxes they paid under a state law later found unconstitutional.

The General Assembly in July approved a $340million settlement for retirees who paid the taxes from 1985-88, before the tax law was revised.

The state tax department notified about 183,000 federal retirees that they may be eligible for refunds. They have until Tuesday to respond to the notice.