/raid1/www/Hosts/bankrupt/CAR_Public/000724.MBX             C L A S S   A C T I O N   R E P O R T E R

             Monday, July 24, 2000, Vol. 2, No. 142


ANICOM INC: Milberg Weiss Announces Securities Suit in Illinois
AUDIO VISUAL: Reaches Agreement in Principle to Settle Shareholder Suit
CENDANT CORP: 3rd Cir Says Shareholders of Failed Merger Target May Sue
DR.KOOP.COM INC: Cauley & Geller Files Securities Lawsuit in Texas
DRKOOP.COM: VA Medical Equipment and Health News Provider Offers Merger

EYEGLASS WORLD: Customer Sues, Alleging UV Charge Is Fraudulent
FEN-PHEN: $4.7B Not Enough to Settle AHP Claims; Drug Executive Promoted
HOLOCAUST VICTIMS: Canadian Survivors Soon to Get Compensation
JUNK FAXES: Class Certified for GA Action against Hooters of Augusta
LAWRENCE BERKELEY: Minority Workers Accuse of Bias in Genetic Tests

QUEBEC MEDICARE: Suit Launched for Rejection of Financed Sex Changes
REXALL SUNDOWN: FTC Sues to Seek Full Redund for Cellulite Pills
SPLASH TECHNOLOGY: Files 2nd Motion to Dismiss Securities Lawsuit
TOBACCO LITIGATION: County to Challenge Measure H on Settlement Money
VARI-L COMPANY: Milberg Weiss Extends Period for Securities Suit in CO

VISUAL NETWORKS: Lionel Z. Glancy Files Securities Lawsuit in Maryland
SOY MILK: Canadian Food Inspection Agency Warns on White Wave Product
WOODFORD MEMORIAL: Seven Laid-off Workers Add Litigation to Hospital
Y2K LITIGATION: Iowa Hospitals Denied Certification against Software Co
ZIFF-DAVIS INC: Securities Suit Not Dismissed for Question of Fact

* SEC Commissioner Sees Internet Trading Equality in Near Future


ANICOM INC: Milberg Weiss Announces Securities Suit in Illinois
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on July 20, 2000, on behalf of purchasers
of the securities of Anicom Inc. (NASDAQ: ANIC) between April 29, 1998,
and July 18, 2000 (the "Class period").

A copy of the complaint filed in this action is available from the Court,
or can be viewed on Milberg Weiss' website at:

The action, numbered 00C4402, is pending in the United States District
Court for the Northern District of Illinois, Eastern Division, located at
the Dirksen Bldg., 219 S. Dearborn, Chicago, IL, 60604, against
defendants Anicom, Carl E. Putnam (Chief Executive Officer), Donald C.
Welchko (Chief Financial Officer and Vice President), and Scott C.
Anixter (Chairman Emeritus). The Honorable Matthew F. Kennelly is the
Judge presiding over the case.

The complaint charges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder by issuing a series of material misrepresentations to the
market between April 29, 1998, and July 18, 2000. During the Class
Period, defendants issued financial statements and press releases
concerning Anicom's revenues, income, and earnings per share, which
reflected favorably on the Company's past operations and future
prospects. The statements and releases were materially false and
misleading because they materially overstated Anicom's revenues, income,
and earnings growth. On July, 18, 2000, the Company revealed that it is
investigating possible "accounting irregularities" which could result in
a revision of its 1998 and 1999 financial statements. Following the
announcement, trading in Anicom common stock was halted and has not
resumed trading.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP Steven G. Schulman or
Samuel H. Rudman (800) 320-5081 anicomcase@milbergNY.com

AUDIO VISUAL: Reaches Agreement in Principle to Settle Shareholder Suit
Audio Visual Services Corporation (formerly Caribiner International,
Inc.) (NYSE: CWC) announced on July 20 that it has reached an agreement
in principle to settle the purported shareholder class actions initially
filed in March, 1999 and May, 1999 against the Company and certain of its
former officers and one of its former directors in the U.S. District
Court for the Southern District of New York. The actions, which were
substantially identical to one another and were consolidated into a
single action in November, 1999 (which resulted in a consolidated amended
complaint being filed in January, 2000) alleged, among other things, that
the Company and the individual defendants misrepresented the Company's
ability to integrate various companies that it had acquired.

Under a memorandum of understanding entered into with counsel for the
plaintiffs, all claims against the Company and the individuals named as
defendants in the actions will be dismissed without presumption or
admission of any liability or wrongdoing. The principal terms of the
agreement call for the payment to the plaintiff class of the sum of $15.0
million, which was paid into an account to be administered by counsel for
the plaintiffs. The settlement amount was paid in its entirety by the
Company's insurance carrier. The terms of the settlement are subject to,
among other things, court approval and execution of definitive settlement

CENDANT CORP: 3rd Cir Says Shareholders of Failed Merger Target May Sue
The Third Circuit has ruled that the shareholder of American Bankers
Insurance Group may sue Cendant Corp. and its officers and directors for
allegedly making false statements regarding the prospects of a merger
between the two companies. The court concluded that as long as the
purported misrepresentations were material and publicly disseminated they
could be considered "in connection with" the purchase of ABI stock.
Semerenko v. Cendant Corp.

                 SEC Files Charges Against Seven
                 Former CUC and Cendant Officials

The Securities and Exchange Commission has brought civil and
administrative charges against seven former CUC International Inc. and
Cendant Corp. officials involved in the massive scheme that caused
billions of dollars in investor losses. The federal agency asserts that
the executives repeated manipulated the company's financial statements so
much over a 12-year period that they were divorced from reality.
(Securities Litigation & Regulation Reporter, July 6, 2000)

DR.KOOP.COM INC: Cauley & Geller Files Securities Lawsuit in Texas
The Law Firm of Cauley & Geller, LLP announced on July 20 that it has
filed a class action in the United States District Court for the Western
District of Texas, Austin Division on behalf of all individuals and
institutional investors that purchased the common stock of Dr.koop.com
Inc. (Nasdaq:KOOP) between June 8, 1999 and March 30, 2000, including all
persons who purchased the common stock of Dr.koop.com pursuant to or
traceable to the Company's initial public offering (the "IPO") on June 8,
1999, or subsequently in the open market (the "Class Period").

The complaint charges that the Company and certain of its officers and
directors violated the federal securities laws. Specifically, the
complaint alleges that the prospectus (the "Prospectus") issued in
connection with the IPO was materially false and misleading for several
reasons. For example, the complaint alleges that the Prospectus
highlighted the purported benefits the Company would derive from its
relationship with HealthMagic Inc., a provider of Internet technology to
health related businesses and that HealthMagic would continue to develop
the Company's Personal Medical Records ("PMR") product, among other
technologies. This statement was materially false and misleading, as
alleged in the complaint, because it failed to disclose that the PMR
product was in early stages of development and required extensive
reworking before it could be commercially deployed. On March 30, 2000,
the Company filed its Form 10-K for fiscal 1999 which revealed that the
Company's relationship with HealthMagic was unsatisfactory and would be
terminated, and that the Company's independent auditors raised
substantial doubt about Dr.koop.com's ability to continue as a going
concern. In response to these revelations, the price of Dr.koop.com
common stock plunged by 41%, falling from $6 1/4 per share to 3 11/16 per

Contact: Cauley & Geller, LLP Sue Null, Jackie Addison or Sharon Jackson
Toll Free: 1-888-551-9944 Email: cauleypa@aol.com

DRKOOP.COM: VA Medical Equipment and Health News Provider Offers Merger
A Virginia company that sells medical equipment and provides online
health news said last Friday July 21 it has offered to merge with ailing
drkoop.com Inc.

MillenniumHealth Communications Inc., based in Reston, Va., would not
disclose details of its offer, and calls to drkoop.com offices in Austin
were not immediately returned. ''We are in negotiations,'' said
MillenniumHealth spokeswoman Alina Mesenbourg. ''We think they have a
great Web site. With restructured board and management, we can be a
refreshing voice for their company. We think we can go in there and turn
it around.''

Drkoop.com, a provider of online health information co-founded in 1997 by
former Surgeon General C. Everett Koop, has been limping along
financially. The stock, which sold as high as $45 shortly after its
initial public offering last July, has lately fallen to the $1 range.

Shares jumped 58 percent, or 59.4 cents, last Friday July 21 to $1.625.

Analysts questioned whether the proposed merger would provide the
necessary lifeline to keep drkoop.com alive. MilleniumHealth is a
low-profile company and not the kind analysts expected to scoop up
drkoop.com, said Rachel Terrace, health care analyst for the Internet
research firm Jupiter Communications. ''It's a marriage of a content site
and content site,'' Terrace said. ''It's not like they're getting a huge
cash infusion from a company like AOL. It's an infusion of money, but
whether it would work as a long-term strategy remains to be seen.''

The announcement came a day after a federal lawsuit, which seeks
class-action status on behalf of shareholders, was filed in Austin
alleging that drkoop.com issued a misleading prospectus before its
initial public offering of stock.

Drkoop.com has been seeking new financing since April, when it announced
it only had enough cash to survive until August. That came after the
company disclosed in March that its auditors had cast doubt on its
ability to remain in business.

Two top executives resigned as the company warned that it will post a
larger-than-expected loss for the second quarter. (AP Online, July 21,

EYEGLASS WORLD: Customer Sues, Alleging UV Charge Is Fraudulent
Edmund E. Cole might call it an optical illusion. Hes definitely calling
it fraud. In a law suit, the seasonal North Palm Beach resident says he
visited Eyeglass Worlds store in Lake Worth in March to replace his
high-index lenses, the thin kind people with really bad eyes buy to
eliminate the unsightly Coke-bottle look of regular glasses. He paid $
118 for the lenses, $ 18 for gray tinting and $ 20 for a coating to
filter the suns ultraviolet rays.

In the suit filed in Palm Beach Circuit Court, Cole alleges that Eyeglass
World violated the states Unfair Trade Practices Act by charging him for
UV protection the lenses already had. Cole says problems began when he
returned to Eyeglass World for an adjustment a few days later and a
manager broke the frames. Although Cole demanded replacement frames, the
suit alleges he was told he must buy a new pair; he acquiesced because he
couldnt see without his glasses.

While buying the new frames, Cole says, he heard from a sales associate
that high-index lenses come with built-in UV protection. He figured he
had paid $ 20 for nothing. So Cole, who makes his home in Osterville,
Mass., wrote the company in May demanding the $ 20 UV fee and $ 199.95
for the replacement frames. Eyeglass World, a nationwide chain of 19
stores headquartered in Lake Worth and operated by Musa Holdings Inc.,
ignored him.

In his letter, Cole threatened a class-action suit, and he took a step
toward making good on his promise by filing the claim against Eyeglass
World and Musa Holdings. Hes seeking to have the suit certified as a
class action and demands compensatory and punitive damages for himself
and all other Eyeglass World customers who bought high-index lenses and
paid extra for UV protection.

Musa Holdings president Marco Musa said he has not seen the suit but if
Cole paid $ 20 for UV protection, its a mistake and he should receive a
refund. Im unaware that it happened; our people are not perfect,
unfortunately, he added. But he denied any responsibility for replacing
Coles frames since they were not purchased from his company. Musa said
this policy is posted on a sign in their stores.

I hope we can make Eyeglass World see the errors in their ways, said
Lawrence M. Kopelman of Kopelman & Blankman of Fort Lauderdale, one of
Coles attorneys. Kopelman and Douglas A. Blankman are teaming up with the
consumer class-action firm Phillips & Garcia in North Dartmouth, Mass.

This is not the first time Eyeglass World has run into trouble. When
attorney Carlin Phillips began to investigate, he learned that Florida
Attorney General Bob Butterworth fined Eyeglass World $ 500,000 in
February following an examination of its sales practices.

Butterworths office alleged that Eyeglass World pressured the
optometrists who lease space at each store into pushing patients to buy
new glasses.

It also charged that Eyeglass World sold outdated, used and nonsterile
contact lenses; sold diagnostic lenses and solution starter kits provided
free by the manufacturer; misrepresented itself as an approved provider
for a certain health insurance plan; intentionally misquoted prices over
the phone; engaged in bait-and-switch tactics; and failed to have a
licensed optician on premises with proper equipment to perform tests
required by the Food and Drug Administration.

Eyeglass World denied the claims but agreed to a civil penalty. The
company also agreed to make restitution to consumers and to pay the costs
of the investigation. Eyeglass World also said it would revise its leases
with optometrists to ensure it does not exert improper influence over
their medical practices. (Broward Daily Business Review, July 20, 2000)

FEN-PHEN: $4.7B Not Enough to Settle AHP Claims; Drug Executive Promoted
American Home Products Corp. promoted its top drug executive to
president, but shares fell after the company said it would need more than
the $ 4.7 billion it set aside to settle claims related to its its
fen-phen diet drugs.

American Home named Robert Essner president and chief operating officer
of the company. Essner had been head of the company's global
pharmaceutical business.
Essner, 52, will now also oversee American Home's consumer products
division, which markets Advil, Centrum vitamins and Robitussin cough

American Home's chief executive, John Stafford, 62, gives up the title of
president. Stafford, who has run American Home since 1986, underwent
bypass surgery this year.

Wall Street analysts said the move may be a sign that Essner is emerging
as an heir apparent at the company, which has been a part of three failed
merger attempts since 1998.

But Daniel Hoffman, a West Chester pharmaceutical consultant, said it
appears to be an attempt to raise morale at American Home's
pharmaceutical subsidiary Wyeth-Ayerst Laboratories in St. Davids, where
he said some executives were to have been passed over in the most recent
proposed merger with Warner-Lambert Co. Warner-Lambert subsequently
merged with Pfizer Inc. "It indicates the company's effort to show
support for its current pharmaceutical managers," Hoffman said.

American Home also said it would need to pay out more than the $ 4.7
billion it set aside in 1999 for patients who have suffered heart damage
from its diet drugs. In 1997, Wyeth withdrew the drugs Redux and
Pondimin, which were used in the so-called fen-phen combination.

Shares in American Home closed down $ 1.69 on the New York Stock Exchange
to $ 53.56.

In a statement accompanying its second-quarter earnings report, American
Home said it did not know how much more the company will need to pay out
to settle legal claims. However, the company said the "substantial
majority" of its final liability will be covered by the amount already
put in reserve. It said $ 3.6 billion of the settlement reserve remains.

A U.S. District Judge in Philadelphia is considering whether to approve a
class action settlement. But even if that case is settled, American Home
could be open to other costs in cases filed by people who opted not to be
part of the settlement.

Last month, American Home lost a jury trial in Oregon and was ordered to
pay $ 29.2 million in compensatory and punitive damages to a man and his
mother who said they suffered heart damage because of the drugs.

American Home said worldwide pharmaceutical sales rose 17 percent in the
second quarter, due primarily to higher sales of its Effexor XR
antidepressant, Meningitec, a meningitis vaccine introduced in the United
Kingdom late last year, and Enbrel an arthritis medication Wyeth
co-markets with Immunex Corp. of Seattle. (The Philadelphia Inquirer,
July 21, 2000)

A press release says that American Home Products Corporation reports
strong sales and earnings from continuing operations for the 2000 second
quarter and first half. Significant highlights for the 2000 second
quarter and first half:

  -- Income from continuing operations rose 19% and 18%, respectively;
  -- Worldwide net sales increased 14% for both periods;
  -- Diluted earnings per share from continuing operations increased 19%
      and 20%, respectively;
  -- Liquidity strengthened as the Company received $3.8 billion from
      the sale of its Cyanamid Agricultural Products business and a $1.8
      billion merger termination fee during the 2000 first half;
  -- Three FDA approvals broaden the pharmaceutical product base,
      including new drug approvals for acute myeloid leukemia and gastric

      acid reflux disease, and enhanced labeling in rheumatoid arthritis.

HOLOCAUST VICTIMS: Canadian Survivors Soon to Get Compensation
Canadian survivors of Nazi slave-labour camps will find out within 60
days how to apply for compensation from a $7.5 billion German government
fund, the Canadian Jewish Congress says. Details are being finalized, CJC
President Moshe Ronen said. Compensation will be about $11,000 for
ex-slave labourers and $3,700 for forced labourers.  (The Toronto Star,
July 21, 2000)

JUNK FAXES: Class Certified for GA Action against Hooters of Augusta
Georgia residents and businesses got the green light to bring claims
against advertisers who send unsolicited faxes.

The Court of Appeals of Georgia upheld class certification of the state's
first class action involving junk faxes. An Augusta sole practitioner
brought the case against the restaurant chain Hooters of Augusta Inc.

In a broader sweep, the court established that a federal statute
regulating faxed ads and other telemarketing efforts creates a private
right of action and confers jurisdiction on state courts in Georgia.
Hooters of Augusta Inc. v. Nicholson No. A00A0429 (Ct. App. Ga. July 14,

Marc B. Hershovitz is an Atlanta attorney who represents plaintiffs in a
similar suit against Susquehanna Radio Corp., the owner of radio station
99X. "Hooters was a resounding affirmation that these cases can go
forward in Georgia," he says.

Hershovitz was waiting to proceed in his suit until Hooters resolved the
key issue of whether Georgia courts may hear cases under the Telephone
Consumer Protection Act.

                     Unsolicited Fax Ads Barred

TCPA (47 U.S.C. 227) is a 1991 law that prohibits advertisers from
sending unsolicited ads by fax. The law defines unsolicited as without
prior express invitation or permission. It allows plaintiffs to sue in
state court and imposes fines of $500 to $1,500 per violation.

Hooters is the first TCPA case in the nation to advance through an appeal
with class certification intact, say plaintiffs lawyers. It also is the
only reported TCPA case in Georgia.

The class is expected to comprise 2,500 to 3,000 people and businesses
that received unsolicited fax advertisements, according to Harry D.
Revell of Augusta's Burnside, Wall, Daniel, Ellison & Revell.

Revell represents plaintiff Sam Nicholson, who sued in Richmond County in
1995 after receiving an unsolicited fax containing a Hooters' lunch
coupon at his law office. The flyer was faxed by Value-Fax of Augusta.
Value-Fax was hired by Hooters and other businesses to distribute
advertisements to Augusta-area fax machines.

Hooters' appellate attorney Frank M. Lowrey IV of Atlanta's Bondurant,
Mixson & Elmore points out that the flyer contained six to eight ads from
other businesses. "It's fairly clear that they are not trying to stop
transmissions. They are trying to collect money from a solvent
defendant," Lowrey says.

                    No Private Right of Action?

A Richmond County judge certified the class in 1998. Hooters appealed,
arguing that the recipient of the fax had no private right of action in
Georgia and that TCPA cannot reach purely intrastate communications.
Hooters is not liable for the conduct of an independent contractor and
the class was improperly certified, the company argued.

The appeals court held in favor of the recipient on each issue. Judge
John J. Ellington delivered the majority opinion. Judges John H. Ruffin
Jr., Frank M. Eldridge, Anne E. Barnes and Charles B. Mikell Jr.
concurred. Presiding Judges Gary B. Andrews and G. Alan Blackburn

The parties had presented arguments in January to a three-judge panel,
which included Andrews and Ruffin and Ellington.

"We think it's significant that it's a full-court opinion. It's
significant that five of seven people who settled this en banc case
agreed right down the line with our position ," says Revell.

                       More Appeals Expected

Lowrey says Hooters will seek reconsideration in the appeals court, and,
if necessary, will seek certiorari from the Supreme Court of Georgia.

"The Georgia Supreme Court should and will take this case on certiorari
to consider the issues of first impression involving the interpretation
of the TCPA," says Lowrey.

The main issue Lowrey says Hooters will raise on appeal is whether a TCPA
cause of action exists in Georgia. Hooters argues TCPA is intended to
merely supplement state laws that restrict unsolicited telemarketing
within the state but cannot reach interstate marketing.

Because Georgia does not have a state law that explicitly provides a
private right of action for intrastate unsolicited fax ads, the recipient
of the fax cannot rely upon TCPA, Hooters contends.

                    Differences Over Interpretation

The recipient, however, argued that the statute's language-a person may
bring an action "if otherwise permitted by the laws of a state"-means
state courts may hear TCPA actions unless the state "opts out" by
enacting a law that expressly prohibits such private actions.

The trial court applied the opt-out analysis, and concluded that the
provision allows states to prohibit private TCPA actions, but does not
require "explicit enabling legislation," according to the opinion. The
Georgia appeals court upheld the trial court.

The dissent, however, interpreted the statute's language to require
states to opt in by explicitly providing for a private right of action in
state law. "The purpose of the statute was not to go beyond what the
state was already doing to regulate the telemarketers, but rather to
allow the states to reach those telemarketers who were evading state
jurisdiction by operating interstate," the dissent states.

Hooters' lawyer Lowrey agrees: "The statute reads 'if otherwise permitted
by state law.' It's our position that 'otherwise permitted' does not mean
'unless prohibited.' "

Lowrey says he is encouraged by the dissent in an unsettled area of law.
But others contend the decision is in accordance with most jurisdictions
and should withstand appeal. "Georgia is joining an overwhelming majority
of courts nationwide," says Hershovitz. Most courts have allowed
recipients of faxed advertisements to sue under federal law without a
state law that expressly gives them a private right of action, Hershovitz

He adds that, while Hooters is the first TCPA class action to go forward
in litigation, classes have settled. Additionally, individuals have
settled claims and won awards at trial. (Fulton County Daily Report, July
21, 2000)

LAWRENCE BERKELEY: Minority Workers Accuse of Bias in Genetic Tests
Genetic tests have delivered bad news to many, but Marya Norman-Bloodsaw
has the dubious distinction of being one of the first Americans to feel
truly and utterly violated by an analysis of her DNA.

Her employer, you see, screened her DNA for syphilis, pregnancy and
sickle-cell traits without her consent.

When Norman-Bloodsaw, 45, started work as an accounting administrator at
the Lawrence Berkeley National Laboratory in California, she received a
physical exam and gave a blood sample. In 1995, while looking at her
medical records, her mother, a nurse, saw that she had been tested for
"RPR," syphilis.

After Norman-Bloodsaw shared her tale, some of her colleagues requested
their records. She and seven other workers eventually filed a class
action, alleging that blacks and Hispanics had been disproportionately
tested. Lab overseers explained that the tests had been ordered by the
Department of Energy to maintain employee health.

Doctors did tell plaintiff Mark Covington that he had high blood
pressure-but neglected to say that he had tested positive for sickle-cell
traits, as well. "It was just hurtful," says Norman-Bloodsaw. "My mother,
my brothers and sisters-all of them-it's an intrusion into all of their
lives, too."

In Norman-Bloodsaw v. Lawrence Berkeley Laboratory, 35 F.3d 1260, the 9th
U.S. Circuit Court of Appeals stingingly rebuked the lab last year, and
at a July 13 hearing, the lab said that it had agreed to restrictive
consent rules for use of genetic information, to the imposition of a
monitor and to a $4,050 payout to each plaintiff.

                      Senate Explores Issue

A complex and likely wrenching public debate about such cases is coming.
In the wake of the celebrated transcription of the human genome,
lawmakers are aiming to tackle the gene's cloudy side. First up: The
Senate's health committee held a hearing into genetics-based
discrimination. Gene testing is not just new and sexy. It's a fast-moving
gold rush, and hospitals, managed care companies, researchers, patients,
tissue banks, employers and a supply chain's worth of wide-eyed
entrepreneurs are all seeking roles.

Concerns about genetic privacy come on the heels of public worries about
another privacy issue: strangers' access to a person's "cookies"-a
computer record of which Web sites an Internet surfer has visited. People
are asking: Who will have information about me? With whom can they share
it? Will I be able to stop them from sharing it, selling it or using it
against me?

These aren't theoretical concerns. Already, Boston University health law
professor George Annas has met a woman who says that she was diagnosed
with diabetes and, three days later, received marketing materials for a
diabetics service in the mail. Georgetown health law professor Lawrence
Gostin has interviewed people who have had sensitive data about their
genetically caused diseases shared with insurers and landlords. A North
Carolina woman claims her self-insured employer-an insurance broker-fired
her last year after reviewing a genetic test showing she might contract
lung and liver disease.

Three questions are likely to frame the debate: Can existing laws
suffice, or will we need new laws? If potential victims need new laws,
will people be better served with a broad health information privacy
statute or one that addresses unique concerns about genetic data? If
people want genetics-specific legislation, what will it look like?
Federal protection against genetics-based bias already exists. In 1995,
the Equal Employment Opportunity Commission issued a guidance barring the
practice among employers. In 1996, the Health Insurance Portability and
Accountability Act outlawed it among insurers.

At the upcoming Senate hearing, EEOC Commissioner Paul Miller is expected
to testify that, although his agency can punish gene-based discriminators
under the Americans With Disabilities Act, it would welcome further
protection. Courts' increasingly narrow readings of the ADA are leaving
gaps in coverage.

                     Motley Assortment of Laws

Thirty-two states have laws purporting to provide such protection. Some
guard against misuse of the knowledge, some seek to manage dissemination
of the knowledge before it's misused, and a few grant the right to object
before a technician spins out a genetic profile in the first place. A new
federal law could simplify matters.

The best approach, argues Gostin, is to protect all medical records, not
just genetics-related ones. Why, he asks, should the records of a woman
who developed a breast cancer of genetic origin be given more protection
than those of a woman whose breast cancer arose from smoking?

Should Norman-Bloodsaw's files be protected if she has sickle-cell traits
but not if she has syphilis? Isn't the nongenetic condition the more

Gostin and his colleagues have drafted a model privacy act. They would
grant individuals the right to access, inspect and amend their health
information, learn how such information is used and disclosed, and
request a record of disclosures. The act would punish any data holder who
failed to de-identify personal data when possible or who disclosed
unnecessary information.

                      'Public Purpose' Rule

Gostin's approach would allow government agencies, investigators, health
authorities or others to acquire, analyze and divulge data if a careful
showing were made of a "substantial public health purpose." But the data
could not be released to employers, insurers, landlords, family or
friends without the person's permission. Gostin acknowledges that a broad
medical privacy plan like his isn't likely to be approved: "Legislators
want to be associated with the genetics revolution," he says.

At the same time, vote-sensitive lawmakers are likely to want to respond
to people's privacy fears. Politicians have heard warnings that stray
pieces of a person's virtual, coded identity could be judged out of
context, that direct marketers want to parse people's inclinations and
most soul-shaking vulnerabilities. And they've heard that a genetic
test's result can have a lifelong impact or alter reproductive decisions,
that it can reverberate throughout a family, echoing around a history of
racialist tracking, eugenic sorting and forced sterilization.

                       DNA Awareness Critical

Citizen and consumer advocates say the first realistic legislative goal
is DNA awareness. Norman-Bloodsaw has been traveling to community health
fairs around the San Francisco Bay Area, talking up the notion that a
person should have full ownership of her DNA. Three states-Florida,
Georgia and Colorado-give people exclusive property interests in their
DNA samples. But biotech lobbyists have fought this, and have won,

"We would give support and protection to the notion that a second person
could own this and that they have rights and protections, but we won't
recognize a property interest in the person who gave the sample," says
Patricia Roche, a public health professor at Boston University. "The
person should donate it to research, but once the researchers begin to
work with it, then we're going to protect and enforce researchers'
economic interest in it."

In February, the U.S. Health and Human Services Department proposed new
privacy regulations to balance the social good of research against the
personal expectation of privacy.

Under those rules, each hospital or health plan would have to intensify
its review of data releases. The biotechnology and research
representatives immediately warned that hospitals would grind to a halt,
research would be chilled and treatment progress would stagnate as
doctors shied away from mass databases.

                     Industry Wants Disclosure

Industry, ironically, is pushing not for data hoarding, but for data
sharing. "I think reality has shown that you cannot protect the privacy
of information," said Craig Venter, the president of Celera, the genomics
company, recently on "Meet the Press."

Sen. Pete Domenici, R-N.M., offered his colleagues a broad genetic
privacy act in 1997 and 1998. In the House, Rep. Louise Slaughter,
D-N.Y., pushed a medical records privacy bill, too. "It hadn't even been
marked up before a whole list of interests descended on the committee.
Before we ended up dropping it altogether, we scheduled 100 meetings,"
recalls one of Slaughter's staff.

For now, the half-dozen congressional bills on offer, including
Slaughter's, focus on expanding genetic discrimination laws for the
workplace and insurers.

Discrimination can result in economic harm too, of course.

But that seems a no-brainer policy goal for the future. Even so, to
create a genetics bill that satisfies everyone likely will require a
dazzling feat of compromise-almost as dazzling as managing to crack the
DNA code. (Fulton County Daily Report, July 21, 2000)

QUEBEC MEDICARE: Suit Launched for Rejection of Financed Sex Changes
Nurse Michelle Gauthier says she's launching a class-action lawsuit
against Quebec medicare for the cost of sex-change operations. Gauthier
said the suit is on behalf of one thousand Quebecers whose plans for
publicly financed sex-change operations were rejected by medicare. They
went instead to private clinics, where costs can run from $ 120,000 to $
450,000, compared with $ 950 paid to a surgical team working in a

Gauthier, a transsexual, said the Quebec Health Insurance Board paid the
cost of only five sex-change operations performed since last January in

Gauthier said the difference between the five accepted and those who were
refused lies in "the outside pressure applied to the board to get
satisfaction." She said some people went through all the therapeutical
stages only to be refused an operation "on the pretext that the board had
no doctor available or that it doesn't pay for this kind of operation."

Under a board directive, sex-change operations are insured provided that
they're recommended by a department head who is in charge of transsexual
medical services at two Montreal hospitals. (The Edmonton Sun, July 21,

REXALL SUNDOWN: FTC Sues to Seek Full Redund for Cellulite Pills
The U.S. Federal Trade Commission said last Thursday July 20 it will seek
full refunds for women in America who bought Cellasene to remove
cellulite from their thighs and buttocks -- and that could amount to $ 75
million or more.

The FTC filed suit against Cellasene distributor Rexall Sundown, accusing
the Boca Raton company of making false advertising claims that the
product works. The agency cited ads in newspapers, magazines and on the

Rexall Sundown, now a subsidiary of Royal Numico N.V. of The Netherlands,
denied the charges.

The FTC's suit, filed in U.S. District Court for the Southern District of
Florida, seeks an injunction to halt the advertising claims and asks the
court to order refunds to consumers. "Rexall made unsubstantiated claims
that Cellasene eliminates or substantially reduces cellulite," said
attorney Darren Bowie, assistant director of the FTC's division of
advertising practices. "The company also falsely represented that it had
clinical evidence showing the product worked."

Rexall Sundown pledged to "vigorously defend the suit," which could cost
the company $ 75 million or more based on sales and projected sales
through the end of this year. The dietary supplement was introduced
nationally in March 1999.

The case, assigned to U.S. District Judge Wilkie Ferguson in Fort
Lauderdale, promises to be a battle of expert witnesses if it goes to

"We have an outside expert prepared to testify, and it's likely we will
have more by the time we go to trial," Bowie said. He also said the FTC
plans to interview and possibly depose Dr. Brian Berman, a dermatologist
at the University of Miami whose recent clinical trial on Cellasene
produced no results because the participants did not comply with study

Rexall Sundown is expected to parade out its experts, including Dr. Enzo
Berardesca, an Italian researcher whose work with the supplement provided
an early foundation for efficacy claims. Cellasene is made by an Italian
company, Medestea International.

Another probable witness is Debbie DeSantis, a registered pharmacist,
daughter of Rexall Sundown founder Carl DeSantis and the company's senior
vice president for product development. Debbie DeSantis said in a
statement, "The commission's action completely ignores the sound
scientific research into the effectiveness of Cellasene," which "was
designed and formulated by one of the world's leading
herbal-pharmaceutical extract companies with foremost experience in
cellulite research."

DeSantis said the FTC rebuffed efforts to have Rexall Sundown experts
meet with investigators to answer questions and address the issues
involved. FTC attorney Bowie said he did not know of any such overtures.

According to the FTC and Rexall Sundown, women were advised to take three
Cellasene geltabs a day for eight weeks and then a maintenance dose of
one a day for the next eight weeks. The initial eight-week regimen cost
between $ 180 and $ 240, the FTC said.

If the FTC wins and the judge orders refunds, Bowie said, the FTC
probably would accept affidavits from women who did not keep packages of
Cellasene or proof of purchase.

The product is formulated from extract of grape seed, fish oil, soya
lecithin, sweet clover, borage seed oil and bladderwrack extract. It also
contains iodine, which can cause problems for those with thyroid
conditions and those taking blood thinners. The geltabs are supposed to
increase the body's metabolic rate and improve blood circulation, thereby
helping to eliminate fluids and trapped fat.

Rexall Sundown has said many women were not repeat customers because they
did not see results right away. The FTC claims many of them never would.

In another court filing, Dorothy Greenfield of Boca Raton filed suit
against Rexall Sundown in Palm Beach County Circuit Court on Thursday,
July 20, claiming the company deceived consumers by misrepresenting
Cellasene's ability to reduce cellulite. Greenfield is seeking
class-action status in the case. (Sun-Sentinel (Fort Lauderdale, FL),
July 21, 2000)

SPLASH TECHNOLOGY: Files 2nd Motion to Dismiss Securities Lawsuit
Media 100 Inc. relates in its report to the SEC that on January 13, 1999
and January 28, 1999, Digital Origin and one of its former directors,
Charles Berger, were named as defendants in two shareholder class action
lawsuits against Splash Technology Holdings, Inc., various directors and
executives of Splash and certain selling shareholders of Splash, as
previously reported in the CAR. The lawsuit alleges, among other things,
that the defendants made or were responsible for material misstatements,
and failed to disclose information concerning Splash's business, finances
and future business prospects in order to artificially inflate the price
of Splash common stock. The complaint does not identify any statements
alleged to have been made by Charles Berger or the Company. The complaint
further alleges that the Company engaged in a scheme to artificially
inflate the price of Splash common stock to reap an artificially large
return on the sale of the common stock in order to pay off its debt.
Digital Origin and the former director vigorously deny all allegations of
wrongdoing and intend to aggressively defend themselves in these matters.
Defendant's initial motion to dismiss the action was granted with leave
to amend, and plaintiffs have amended the complaint. Defendants have
filed their second motion to dismiss.

TOBACCO LITIGATION: County to Challenge Measure H on Settlement Money
The initiative seeks to reserve 80% of the county's share of the
cigarette industry settlement for health care. A controversial initiative
that would award the lion's share of money from a major tobacco
settlement to local health care concerns was placed on the November
ballot by a unanimous but reluctant Orange County Board of Supervisors
last Thursday July 20.

At the same time, though, supervisors revealed that the county plans to
file a lawsuit challenging the constitutionality of the initiative,
dubbed Measure H. "Our legal experts think it's unconstitutional on the
basis that it uses the initiative referendum procedure to determine how
the county government spends money from the general fund," board Chairman
Chuck Smith said. "That's never been done before."

Under the initiative process, however, the supervisors--despite their
opposition--have no alternative legally but to place the measure on the

The initiative, sponsored by a group of physicians and health care
concerns, came after a settlement of a class-action lawsuit by the
federal government against the tobacco industry. Orange County's share is
expected to be $ 30 million to $ 38 million annually over 25 years. The
controversial ballot initiative would allocate 80% of that money to local
health care and 20% to law enforcement.

"The tobacco money was intended to assist counties with health-related
issues, and this money needs to be invested in the community," said
Supervisor Todd Spitzer who, along with Supervisor Tom Wilson, has said
he favors Measure H and intends to campaign on its behalf. "We all win
when the residents of the county are in good health."

Smith is critical of the initiative, however, because it undermines what
he and some other board members consider a higher priority: paying off
remaining debt from the county's 1994 bankruptcy, which is costing a huge
amount in interest payments annually.

"This money would be ideal to pay off the bonds" from that debt, Smith
said. "It's a travesty for the money to go to doctors and hospitals with
a very minimum, if any, of new health programs. I will speak against it."

The vote came after supporters gathered 115,000 signatures, far more than
the 71,000 required, to put the measure on the ballot. Supervisors
earlier had failed to agree on various formulas that would have awarded
smaller portions of the money to health care.

Spitzer said he intends to work vigorously for Measure H. "I'm going to
campaign for this just as hard as I did for Measure F," he said,
referring to the March measure requiring two-thirds voter approval of an
El Toro airport. "I'm prepared. We're going to win. We're going to
convince the court of public opinion that this money should be spent on
health care." (Los Angeles Times, July 21, 2000)

VARI-L COMPANY: Milberg Weiss Extends Period for Securities Suit in CO
Milberg Weiss (http://www.milberg.com/vari/)announced on July 20 that a
class action has been commenced in the District Court of Colorado on
behalf of purchasers of VARI-L Company Inc. (NASDAQ:VARLE) publicly
traded securities during the period between December 17, 1997 and July 6,
2000 (the "Class Period").

The complaint charges VARI-L and certain of its officers and directors
with violations of the federal securities laws by making
misrepresentations about VARI-L's business, earnings growth and financial
statements and its ability to continue to achieve profitable growth. By
issuing these allegedly false and misleading statements, defendants
artificially inflated VARI-L's stock price from just $5 in 1998 to a
Class Period high of $36-7/16 on December 23, 1999, allowing VARI-L's top
insiders to sell or otherwise distribute 583,000 shares of their VARI-L
stock at as high as $27 per share, for over $10 million, before the true
facts about VARI-L's troubled operations, diminished profitability and
false financial statements were revealed and VARI-L's stock collapsed to
as low as $9-1/4 per share.

Contact: Milberg Weiss William Lerach 800/449-4900 wsl@mwbhl.com

VISUAL NETWORKS: Lionel Z. Glancy Files Securities Lawsuit in Maryland
Pursuant to Section 21(D)(A)(3)(a)(i) of the Securities Exchange Act of
1934, a Class Action has been commenced in the United States District
Court for the District of Maryland on behalf of a class consisting of all
persons who purchased the common stock of Visual Networks Inc.
(NASDAQ:VNWK) between Feb. 7, 2000, and July 5, 2000, inclusive (the
"Class Period").

The Complaint charges Visual Networks and its chief executive officer
with violations of federal securities laws. Among other things, plaintiff
claims that defendants' material omissions and the dissemination of
materially false and misleading statements regarding the integration of
the Avesta acquisition damaged Plaintiff and Class members.

Contact: The Law Offices of Lionel Z. Glancy, Los Angeles Michael
Goldberg, 310/201-9150 or 888/773-9224 info@glancylaw.com

SOY MILK: Canadian Food Inspection Agency Warns on White Wave Product
SOY MILK ALLERGY ALERT The Canadian Food Inspection Agency is warning
people with allergies to milk not to drink White Wave Silk brand
chocolate soy beverage in 946-millilitre boxes, dated July 26, because it
may contain milk that's not declared on the label. As of last Wednesday
night, July 19, there had been one reported illness. (The Toronto Star,
July 21, 2000)

WOODFORD MEMORIAL: Seven Laid-off Workers Add Litigation to Hospital
Seven former workers at the Woodford Memorial Hospital have filed a
lawsuit on behalf of 300 former employees, who allege they were not given
the federally mandated 60 days' notice before they were laid off.

The suit, filed last Wednesday July 19 in U.S. District Court, is the
latest in a string of litigation filed against the hospital. More than a
dozen lawsuits claim the hospital owes more than $1.6 million for unpaid
goods and services.

The suit filed doesn't contain a specific damages figure. The employees
have petitioned the court to consider the 300 former employees as part of
a class-action suit.

Nearly 200 employees lost their jobs in February when Woodford Hospital
closed because of growing financial problems.

The federal Worker Adjustment and Retraining Notification Act, or
"plant-closing act," as it is known, requires companies with 100 or more
employees to give workers 60 days' notice of plant closings. The law
forces violators to pay affected employees for each day for which
adequate notice was not given. Damages can amount to a maximum of 60
days' worth of pay and benefits.

"These employees have claims to which they are due legal relief in the
courts," said Lexington attorney Don Cetrulo. "I believe they have
legitimate claims."

The suit seeks 60 days' pay and benefits, including the cost of medical
expenses that would have been covered under the employee benefits plan.
It also seeks life insurance that would have been paid and severance pay,
as well as other costs connected to the employee benefits plan.

The suit also says the hospital violated the Employee Retirement Income
Security Act of 1974. The hospital "failed to appropriately and timely
deposit employee wage withholdings" for the employees' health services
retirement and thrift plan, the lawsuit says.

The suit claims the hospital permitted certain insurance coverage to
lapse, and employees suffered loss and denial of benefits, financial
injury and great emotional distress as a result.

The hospital also didn't notify employees of its failure to deposit the
employer's promised employer match to the retirement and thrift plan, the
suit says.

Only seven former employees are named as plaintiffs but the suit says the
size of the class numbers about 300 because it includes employees from as
far back as 1997 who were covered by the retirement and thrift plan.

The plaintiffs named in the suit are Wendy Wilhoit, Mary Ann Schentrup,
Rose Ann Wilson, Pearlene Eler, Gayle M. Foley and Ida R. Johnson, all of
Woodford County, and Dr. Paul Skinner of Lexington.

Most of the lawsuits against the hospital have not gotten far because its
records were seized by the state attorney general's office and the U.S.
Department of Labor, who are investigating the facility's financial woes.

Meanwhile, negotiations continue for the possible lease of the Woodford
Hospital to Georgetown Community Hospital, said Tom Samuel of the
hospital taxing district board. Georgetown officials said earlier this
year that they probably wouldn't reopen a full-scale hospital but would
operate the emergency room, some support services and outpatient surgery
services. (The Associated Press State & Local Wire, July 21, 2000)

Y2K LITIGATION: Iowa Hospitals Denied Certification against Software Co
Ruling that the plaintiffs were attempting to evade the provisions of the
Y2K Act by asserting jurisdiction through another federal statute, Judge
Michael J. Melloy of the U.S. District Court for the Northern District of
Iowa denied class certification to several hospitals in their lawsuit
against software company Keane Inc. Mineral Area Osteopathic Hospital et
al. v. Keane Inc., No. C99-50 MJM (N.D. Iowa, Cedar Rapids Div., May 25,
2000); see Computer & Online Industry LR, May 4, 1999, P. 8.

The plaintiffs --Mineral Area Osteopathic Hospital Inc. d/b/a Mineral
Area Regional Medical Center, Community Memorial Healthcare Inc. and
North Country Hospital Inc. --filed a complaint against Keane Inc. in
March 1999 and moved for class certification, alleging breach of contract
as a result of Keane's refusal to repair a defect in the MEDNET software
sold to the hospitals by its predecessor, Source Data Systems.

The Y2K Act, 15 U.S.C. @ 6601 et seq., was enacted several months after
the hospitals filed their lawsuit. As Judge Melloy explained, the purpose
of the Y2K Act was to curb insubstantial litigation and encourage parties
to resolve their disputes. He cited an express provision in the act, 15
U.S.C. @ 6614(c)(2)(D), which requires that not only must parties seeking
class certification comply with the Federal Rules of Civil Procedure, but
they must also be a class of at least 100 members. In the hospitals'
putative class action, the class numbered at most 81, which, in the
judge's words, was a "generous estimate."

The hospitals nonetheless argued that the class action requirement of the
Y2K Act was not applicable to them because it only had to be met when the
act was being used as the means of asserting jurisdiction in federal
court. They were not relying on the Y2K Act, the plaintiffs asserted, but
were claiming diversity jurisdiction pursuant to 28 U.S.C. @ 1332. Judge
Melloy rejected their argument that the purpose of the Y2K Act was to
expand jurisdiction for Y2K actions, reasoning that it would allow many
plaintiffs to circumvent the statute altogether. The hospitals' logic, he
said, meant that if plaintiffs were allowed to establish some other form
of federal jurisdiction, they would not have to respect the requirements
of the Y2K Act, which would be contrary to its stated purposes.

Rejecting the hospitals' legal argument, and finding that they failed to
meet the numerosity requirement of the Y2K Act, Judge Melloy denied their
motion for class certification.

The plaintiffs are represented by Roger T. Stetson and Michael R. Reck of
Belin Lamson McCormick Zumbach Flynnin Des Moines, Iowa. The defendants
are represented by Scott E. McLeod of Lynch, Dallas, Smith & Harman in
Cedar Rapids, Iowa. (Computer & Online Industry Litigation Reporter, July
5, 2000)

ZIFF-DAVIS INC: Securities Suit Not Dismissed for Question of Fact
Plaintiffs brought a securities fraud class action against defendants.
Plaintiffs asserted that defendants' prospectus was materially false and
misleading because defendant company falsely attributed the decline in
its revenues, and failed to disclose the actual cause of revenue decline.
Plaintiffs alleged that the decline in revenue was a result of increased
competition and defendant company's loss of market share to those
competitors. Defendants moved to dismiss the action, contending that the
risk disclosures contained in the prospectus fully informed investors of
the effects of competition on defendant company's revenues. The court
disagreed with defendants, finding that whether these risk disclosures
fully informed investors of competition risks, was a question of fact
that could not be properly resolved in a motion to dismiss.

Judge Kram

Decision of Interest In Re Ziff-Davis Inc. QDS:02762646

In this consolidated class action alleging a violation of Section 11 of
the Securities Act of 1933 (the "Securities Act"), defendants Ziff-Davis,
Inc. ("Ziff-Davis"), Eric Hippeau, Timothy O'Brien and Masayoshi Son
(collectively, the "Defendants") move, pursuant to Federal Rule of Civil
Procedure 12(b)(6), to dismiss the consolidated class action complaint
(the "Complaint"). For the reasons set forth below, Defendants' motion is

On or about April 29, 1998, defendant Ziff-Davis, a Delaware corporation
in the business of providing integrated media and marketing services,
sold 25,800,000 shares of its common stock at a price of $ 15.50 per
share pursuant to a registration statement and a Prospectus contained
therein. Among other things, the Prospectus noted that Ziff-Davis
suffered a decline in advertising revenues for the first quarter of 1998
and attributed that decline to factors affecting the computer technology
industry generally.

Between April 29, 1998 and October 8, 1998, plaintiffs Ignatius Napoli,
Davis Abrams, Herbert Glotzer, Aldo Gomez, James J. Jorgensen and
Lissette Jorgensen, Neeraj Mkukhi, William J. O'Keefe, Mary Stawski and
Valarie E. Weinstein and Sheila R. London purchased Ziff-Davis stock. On
October 8, 1998, Ziff-Davis announced that "in light of continuing
pressure in the technology market," it would be conducting a
"company-wide restructuring" that would result in a one-time charge of $
50-60 million in the fourth quarter of 1998. Complaint P 29. On October
9, 1998, the price of Ziff-Davis common stock declined to $ 3 15/16.

On October 9, 1999, Ingatius Napoli v. Ziff-Davis Inc., et al., 98 Civ.
7158 (SWK), the first class action against Defendants in connection with
the April 29, 1998 stock offering was filed. Seven similar class actions
were filed subsequently. On January 28, 1999, pursuant to Federal Rule of
Civil Procedure 42(a), the Court ordered the eight class actions
consolidated. Order, dated Jan. 28, 1999. By the same Order, the Court
appointed the law firms of Stull, Stull & Brody and Milberg Weiss Bershad
Hynes & Lerach LLP as co-lead counsel for plaintiffs and the putative
class. Id. On March 15, 1999, plaintiffs filed a consolidated class
action complaint alleging that Defendants violated Section 11 of the
Securities Act by misrepresenting in the Prospectus the cause of the
decline in advertising revenues for the first quarter of 1998 and
omitting from the Prospectus the true cause of that decline. On May 21,
1999, Defendants moved, pursuant to Federal Rule of Civil Procedure
12(b)(6), to dismiss the Complaint.

                           Standard of Law

On a motion to dismiss, brought pursuant to Rule 12(b)(6), the Court must
accept the allegations in the complaint as true and construe them in the
light most favorable to the plaintiff. Easton v. Sundram, 947 F.2d 1011,
1014-15 (2d. Cir. 1991), cert. denied, 504 U.S. 911 (1992). A complaint
should not be dismissed "unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim that would
entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct.
99 (1957).

                    Section 11 of the Securities Act

Section 11 requires proof of "untrue or misleading statements or
omissions of material fact." In re Donald J. Trump Casino Sec. Litig.-Taj
Mahal Litig., 7 F.3d 357, 368 (3d Cir. 1993), cert. denied, 510 U.S. 1178
(1994). A misrepresentation of fact is material under Section 11 when an
investor would attach importance to it in making an investment decision.
Basic Inc. v. Levinson, 485 U.S. 224, 231, 108 S. Ct. 978, 983 (1988);
Kronfeld v. Trans World Airlines, Inc., 832 F.2d 726, 731 (2d Cir. 1987),
cert. denied, 485 U.S. 1007 (1988). An omission is material if there is
substantial likelihood that the "disclosure of the omitted fact would
have been viewed by the reasonable investor as having significantly
altered the 'total mix' of the information made available." TSC Indus. v.
Northway, Inc., 426 U.S. 438, 449, 96 S. Ct. 2126, 2132; Fisher v. Ross,
No. 93 Civ. 0275, 1996 WL 586345, at 89 (S.D.N.Y. Oct. 11, 1996).

A court should determine whether a statement was "material" by adopting
the perspective of an investor on the date the registration containing
the prospectus at issue became effective. Nelson v. Paramount
Communications, Inc., 872 F. Supp. 1242, 1246 (S.D.N.Y. 1994). However,
whether a statement or omission is material is usually a question for the
fact finder. Mendell v. Greenberg, 927 F.2d 667, 673 (2d Cir. 1990).

                 The Misrepresentation and Omission

Plaintiffs assert that the Prospectus was materially false and misleading
because Ziff-Davis (1) falsely attributed the decline in revenues for the
first quarter of 1998 to factors affecting the computer technology
industry generally and (2) failed to disclose the actual cause of the
revenue decline. Plaintiffs' Memorandum of Law In Opposition to Motion To
Dismiss the Consolidated Amended Class Action Complaint ("Pl.'s Memo.")
at 3-4; Complaint PP 26, 27. Plaintiffs allege that the decline in
revenue was a result of increased competition and Ziff-Davis's loss of
market share to those competitors. Pl.'s Memo. at 4; Complaint P 27.
Plaintiffs point to the following passage of the Prospectus specifically:

For the first quarter of 1998, the Company [Ziff-Davis] will report
revenue of $ 228.1 million compared to $ 224.9 million for the first
quarter of 1997. Revenue from publishing operations will decline
approximately 4.1% primarily due to the absence of $ 14.8 million of
revenue from Macuser and MacWeek magazines, which were transferred in
October 1997 to a 50/50 joint venture with another publishing company and
are no longer consolidated in the Company's results. The publishing
segment will also report lower advertising revenues from its business
publications principally as a result of factors affecting the computer
technology industry generally, including slowing demand for computer
products, fewer new product launches, pricing pressures, vendor market
share shifts and excess PC inventories in distribution channels.

Defendants argue, inter alia, that the risk disclosures contained in the
Prospectus fully informed investors of "the effects of competition on the
Company's advertising revenues." Ziff-Davis's Memo. at 13.

[The Prospectus] disclosed to prospective investors that: (a) advertising
revenues were a significant factor in Ziff-Davis's overall performance,
(b) advertising revenues could fluctuate from period to period for
various reasons including competition, (c) competition was significant
and likely to increase, (d) Ziff-Davis had suffered advertising revenue
declines during the first quarter, and (e) there were no assurances that
such declines would not continue.

Defendants contend that in light of these risk disclosures, plaintiffs
cannot sustain a claim under Section 11 of the Securities Act.

Whether the decline in advertising revenues that Ziff-Davis admittedly
suffered during the first quarter of 1998 was the result of increased
competition and a loss of market share as opposed to factors affecting
the computer technology industry generally is not a distinction "so
obviously unimportant to a reasonable investor" that it is immaterial as
a matter of law. Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985).
In other words, whether the alleged misrepresentation and omission are
material is a question of fact not properly resolved in a motion to

Likewise, whether the risk disclosures fully informed investors of "the
effects of competition on the Company's advertising revenues[,]"
Ziff-Davis's Memo. at 13, is a question of fact. See, e.g., Schnell v.
Abedon-Butwin Oil Co., No. 89 Civ. 8435, 1993 WL 437766, *1 (S.D.N.Y.
Oct. 22, 1993). Indeed, it is reasonable to read the risk disclosures as
not addressing at all plaintiffs' allegations of misrepresentation and
omission. Accordingly, the Court declines to find that plaintiffs'
allegations are immaterial as a matter of law.

                 Federal Rule of Civil Procedure 9(b)

Defendants also argue that the pleading requirements of Federal Rule of
Civil Procedure 9(b) apply to plaintiffs' claims in this case. Rule 9(b)
requires that "in all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with particularity. Malice,
intent, knowledge, and other condition of mind of a person may be averred
generally." Fed. R. Civ. P. 9(b).

The Second Circuit has not addressed whether the pleading standards of
Rule 9(b) apply to claims brought pursuant to Section 11 of the
Securities Act and there is some disagreement within the Southern
District about this issue. See, e.g., Griffin v. Painwebber, Inc., 84 F.
Supp.2d 508, 513 (S.D.N.Y. 2000) ("Griffin") (collecting cases). However,
the Griffin court pointed out that "the courts which have held that 9(b)
can be applicable,... have so held in cases where there were actual
allegations of fraud in the complaint." Id. (citations omitted). In the
instant case, plaintiffs have not alleged fraud. Indeed, fraud need not
be proven for plaintiffs to succeed on their Section 11 claim. Therefore,
the Court finds that the heightened pleading requirements Rule 9(b) are
not applicable in this case and that the Complaint complies with the
"short and plain statement" requirement of Rule 8(a). Accordingly,
Defendants' motion to dismiss is denied.


For the reasons set forth above, Defendants' motion, pursuant to Federal
Rule of Civil Procedure 12(b)(6), to dismiss the complaint is denied. The
parties shall appear on July 19, 2000 at 10:30 a.m. in Room 906, 40
Centre Street, New York, New York for a pre-trial conference. (New York
Law Journal, July 10, 2000)

* SEC Commissioner Sees Internet Trading Equality in Near Future
Securities and Exchange Commissioner Laura Unger sees a securities
trading future in which all investors have equal access to information
along with equal opportunity to profit from it and she believes that the
SEC's proposed Regulation FD can help the future get here sooner .
Internet Securities Regulation Seminar (New York, June 27-28, 2000).

Unger told attendees at the American Conference Institute's Internet
Securities Regulation seminar in New York that it is her job, as the
commission's Internet trading specialist, to see that Regulation FD
levels the e-trading playing field by, among other things, giving small
investors live access to the once exclusive analysts' "road shows" and

Unger said the end of "selective disclosure" by companies is high on the
commission's to-do list and the SEC has been routinely checking the
accuracy of corporate Web sites any time stock is offered for sale.

The SEC also keeps a wary eye on company Web sites that lead investors to
third-party sites -- such as analysts' reports -- via a one-click
hyperlink, without telling them that the information there does not have
the company's blessing, warned Mark Borges, an attorney advisor to the
SEC's Division of Corporate Finance. Although the SEC is still
fine-tuning its position on the issue, even a non-active Web address
embedded in a corporate document could get a company in trouble if it led
investors to information that appeared to be part of the company's
presentation, he noted.

Joseph McLaughlin, an Internet trading specialist attorney for Brown &
Wood LLP in New York, responded that in light of the common use of
hyperlinks to very marginally related sites, the SEC's rule may not be

"The SEC site links to the Milberg Weiss site Milberg Weiss Bershad Hynes
& Lerach, a well known securities class action plaintiff attorney firm
and I don't think the SEC is endorsing all the information there," he

Borges said hyperlinks do not automatically mean adoption of the third
party's information; instead, the commission looks at whether the link:

-- leads the investor to assume the issuer company endorses the

-- includes disclaimers to minimize confusion; and

-- is representative of the company, i.e., is the link only active when
    it leads to good news.

The faculty examined some of the ways in which the Internet continues to
revolutionize securities trading:

-- The now-famous SEC Wit Capital no-action letter made it possible to
    sign up customers to buy into a conditional offer for stocks without
    running afoul of the commission's ban on "general solicitation,"
    explained Robert Mendelson, Wit's co-general counsel.

-- The direct public offering -- the "do-it-yourself securities sale"
    that needs no underwriter -- has allowed fledgling companies to use
    Internet solicitations to gather financing from worldwide "affinity
    groups" of special interest investors, noted Aegis Frumento, the
    managing partner of Singer Frumento in New York.

-- A program developed by Yahoo! enables small investors to instantly
    view the text and graphics of the corporate "road shows" directed at
    analysts and institutional investors, said the Atlanta company's
    managing director, Brad Hammond. Although the SEC's position on
    "continuous republication" ( i.e., when Web site information is
    deemed to be republished each day it stays on a Web site) is still
    in flux, officers and directors who want to avoid class action
    securities fraud suits will act as their own Web site police,
    advised Lisa Wager, a partner of Moran, Lewis & Bockius in New York.
    (Securities Litigation & Regulation Reporter, July 6, 2000)


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