The ruling, released on Tuesday, addresses the first of two complaints the Bush administration has lodged, alleging that Canada had breached a 2006 trade deal by shipping too much lumber and exacerbating woes for struggling U.S. lumber firms.

The United States accused Canada of misinterpreting the agreement to give its exporters an unfair advantage.

The ruling marked a victory for the Western Canadian provinces of British Columbia and Alberta when the panel found against the U.S. claim that the provinces owed millions of dollars in export taxes aimed at limiting export surges.

Under the deal, Canadian lumber exporters can either pay export charges of up to 15 percent based on their selling price to the United States or cap the charge at 5 percent along with an export quota that restrains volume.

British Columbia has traditionally produced about half of all the softwood that Canada exports to the United States.

However, the court found that Quebec and Ontario in Canada's east, which are also big producers and use the quota option to limit their exports, had sent too much lumber south.

"Under the panel decision, producers in the east of Canada will be penalized for over-shipping their allowable quota," said Zoltan van Heyningen, executive director of the Coalition for Fair Lumber Imports, the U.S. industry group that has been driving the complaints from Washington.

Canada claimed at least partial victory and said the ruling was a healthy step for the bilateral 2006 agreement, which was designed to avoid repeating years of long, costly lawsuits.

"While Canada believes that it has fully complied with the agreement, we respect the tribunal's ruling ... Today's decision provides clarity with respect to the implementation of the SLA (Softwood Lumber Agreement) in the future," said Canadian Trade Minister David Emerson.

The United States had argued that the starting point for calculating export charges and volumes should be the first quarter of 2007, while Canada argued it should be July 2007. The court sided with the United States on that issue.

Court papers filed recently suggest two partners at one of the nation's most active firms for shareholder lawsuits asked a federal court to approve expenses that were improperly inflated.

The documents were filed in federal court last week as part of a guilty-plea agreement for John Torkelsen, a former expert witness on damages who was used by Milberg Weiss LLP and other plaintiffs class-actions firms in the 1980s and '90s. Mr. Torkelsen agreed to plead guilty to perjury for making false statements in federal court.

In connection with the plea agreement, the government submitted a statement, which Mr. Torkelsen attested to as true, saying that on at least three occasions he submitted inflated fee requests to courts, and that the law firm he worked with knew the requests were inflated. That firm, which the plea papers refer to only as a New York firm, was Milberg Weiss, according to a person familiar with the situation.

Two partners at the law firm now called Coughlin Stoia Geller Rudman & Robbins LLP, which spun off from Milberg Weiss in 2004, were involved in a lawsuit mentioned in the plea statement while they were lawyers at Milberg Weiss. Filed in 1995, the lawsuit alleged that Sunrise Medical Inc., a medical-product manufacturer, fraudulently overstated its income. In 1996, Mr. Torkelsen filed a sworn statement that his firm incurred $420,000 in fees in the case. But according to the plea statement, that amount was inflated by $130,000, a discrepancy that both Mr. Torkelsen and the law firm knew about, according to the plea papers.

In 1996, Coughlin Stoia lawyer Keith Park, then at Milberg Weiss, filed a sworn declaration in the Sunrise case that asked the court to reimburse its expenses for experts. Mr. Torkelsen's firm was one of Milberg's experts in the case. Mr. Park asserted that Milberg Weiss had kept an accurate record of its expenses.

Coughlin Stoia name partner Patrick Coughlin, then a Milberg Weiss lawyer, filed a sworn statement asking the court to approve the settlement and to reimburse Milberg Weiss for its expenses in the case. Mr. Coughlin described Mr. Torkelsen's firm and other experts in the case as "instrumental in developing the evidence and quantifying the damages suffered by the class." The expenses were approved, as was the settlement of the case, for $21 million in damages.

It isn't known whether Messrs. Park or Coughlin knew fees were inflated. They aren't named in Mr. Torkelsen's plea papers. "Any suggestion that anyone here did anything improper in this matter is inaccurate and irresponsible," said Coughlin Stoia in a statement. A firm spokesman declined to provide specifics. Through a spokesman, Messrs. Coughlin and Park declined to comment.

Neither of the lawyers, nor the firm, has been accused of wrongdoing, and prosecutors are unlikely to charge any lawyers in connection with Mr. Torkelsen's criminal conduct, according to people familiar with the investigation

"We are not aware of any partner of Milberg Weiss LLP having knowledge of any of the misconduct detailed in Mr. Torkelsen's plea agreement," Milberg Weiss said in a statement.

The government's investigation of Mr. Torkelsen was part of a broader investigation of Milberg Weiss, which was charged in 2006 with paying improper kickbacks to clients. Milberg Weiss and its senior partner, Melvyn Weiss, are fighting the charges. Three other former Milberg Weiss lawyers, including William Lerach, who moved to what is now the Coughlin firm at the time of the 2004 split, have pleaded guilty.

As part of Mr. Lerach's plea agreement, reached last fall, the government agreed not to prosecute Messrs. Coughlin or Park in connection with various matters, including the work of a "Princeton" damages expert for Milberg Weiss or Coughlin Stoia. Mr. Torkelsen's firm was called Princeton Venture Research Inc. No other lawyers were specifically named in Mr. Lerach's plea agreement.

The government said Mr. Torkelsen's inflated fees were part of a broader scheme to help conceal the true nature of "the New York law firm's" payment arrangement with the expert. A person familiar with the matter identified the firm as Milberg Weiss. Mr. Torkelsen would present himself to courts as an independent expert when in fact he was paid on a contingent basis, with his payment depending on the plaintiffs prevailing in the case, the government said. Securities lawyers say that kind of payment arrangement creates a potential conflict, because it could encourage an expert to exaggerate the extent to which plaintiffs have been harmed.

Plaintiffs lawyers typically must front their expenses, such as expert fees, in contingency-fee suits, and they recoup them if the suit is successful. By paying an expert on a contingent basis, a law firm wouldn't have to take that risk.

Inflating fees in successful cases allowed the New York firm to make up for fees not paid out to Mr. Torkelsen in unsuccessful cases, the plea papers say. The costs of these makeup payments were borne at least in part by class-action plaintiffs, who in some instances paid for work that Mr. Torkelsen didn't perform in their cases.

Mr. Torkelsen is in federal prison after being convicted on unrelated charges. His lawyer didn't respond to a request for comment.

Mr. Torkelsen once was one of the top damages experts in the securities-fraud field, according to securities lawyers. From 1993-96, he billed class-action firms more than $60 million, according to the papers accompanying his plea agreement.

Coughlin Stoia is one of the nation's leading firms in securities class actions, in which shareholders typically blame stock losses on misleading statements by corporate executives. The firm topped the charts in terms of total settlements in such cases in 2006, the most recent year for such data, according to RiskMetrics Group Inc.

Coughlin Stoia has been particularly active of late in the area of securities class actions related to the subprime-lending meltdown. According to a report last month by Navigant Consulting, it has filed more such suits than any law firm -- more than a dozen. Mr. Coughlin is the lead lawyer in the Enron Corp. securities-fraud litigation, in which Coughlin Stoia seeks almost $700 million in fees for itself and other plaintiffs lawyers in the case.

Media mogul Conrad Black has lost his bid to be freed on bond and will have to report to a Florida prison on Monday.

A U.S. federal appeals court in Chicago on Thursday ruled that Black must go to jail while his appeal of his fraud and obstruction of justice convictions moves through the court system.

The Montreal-born Black was convicted July 13 of obstructing justice and defrauding shareholders of his former newspaper company, Hollinger International Inc. He was sentenced to 6½ years in prison and ordered to start serving his time on March 3.

The U.S. 7th Circuit Court of Appeals on Thursday did, however, agree to free Black's two co-defendants on bond while they appeal their own fraud sentences.

Former Hollinger executive John Boultbee was sentenced to 27 months in jail while his colleague Peter Atkinson received a 24-month jail sentence.

In explaining the decision not to free Black, the three appeal court judges who ruled on Black's case noted that he was convicted of one offence that the other Hollinger executives were not — the obstruction of justice.

The California Air Resources Board had sought to implement stricter air pollution controls within 24 miles of the state's coastline. The rules would require ships to use fuel in their auxiliary engines that emits lower levels of sulphur oxide, nitrogen oxide and particulate matter.

But the 9th U.S. Circuit Court of Appeal reinstated a lower court's injunction barring the state from enforcing its Marine Vessel Rules, finding that the Clean Air Act preempts them.

The U.S. Supreme Court handed a victory to Medtronic Inc on Wednesday, ruling that patients cannot sue medical-device manufacturers in state court over harm from a device that has approval from federal regulators.

By an 8-1 vote, the court ruled a 1976 law creating federal safety oversight for medical devices bars state-law claims challenging safety or effectiveness of devices that have won premarket approval from the U.S. Food and Drug Administration.

The decision was the Supreme Court's first ruling on the legal effect of the FDA's approval of a medical device on liability lawsuits, Medtronic said.

The ruling could benefit other device makers, who have argued that the FDA's judgment that a product is safe and effective should protect companies from being sued for liability in state court.

The Medtronic case involved a New York man who was injured in 1996 when a doctor inflated a balloon catheter during an artery-clearing procedure.

Medtronic has said the doctor in the case used the catheter contrary to labeling instructions and in a patient for whom it was not recommended. The company no longer makes that specific catheter.

A federal trial court in Albany, New York, dismissed the lawsuit, finding the patient was not entitled to state law remedies because of the FDA's prior approval of the device.

A U.S. appeals court agreed that the lawsuit was pre-empted by federal law, and the Supreme Court upheld that decision.

The US Supreme Court has dismissed a legal challenge to a domestic anti-terrorism eavesdropping programme.
President George W Bush authorised the monitoring, without a court order, of international phone calls and e-mails of US citizens after the 9/11 attacks.

The American Civil Liberties Union argued that Mr Bush did not have the constitutional authority to order the programme, which ended last year.

The Supreme Court gave no explanation for its ruling.

Legality questioned

The domestic spying programme was denounced by Democrats and rights activists when it was disclosed in 2005.

A group of civil liberties activists, journalists, academics and lawyers challenged the spying programme in the courts, arguing it violated a 1978 rule prohibiting surveillance of American citizens on US soil without a warrant.

In July last year, an appeals court struck down a lower court's ruling that found the programme to be unconstitutional.

The appeals court, based in Cincinnati, dismissed the case because the plaintiffs had failed to show that their communications had been monitored.

But the Cincinnati judges did not rule on the legality or otherwise of the programme.

The president rejected claims that he broke the law by ordering surveillance without first securing warrants. He argued the eavesdropping programme was necessary and was targeted against al-Qaeda.

The Bush administration has so far refused to release documents about the programme that might reveal who was under surveillance.