/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/010423.MBX C L A S S A C T I O N R E P O R T E R Monday, April 23, 2001, Vol. 3, No. 79 Headlines 2THEMART.COM: Fd Judge Rules Names of Chat Room Users Won't Be Revealed BEAR STEARNS: Ruling Rekindles Debate of Brokerage Responsibilities CREDIT CARD: Coast-to-Coast Headaches For ATM Reseller's Clients DATASTREAM SYSTEMS: Settlement Concludes Shareholders Suit in SC GENERAL MOTORS: Wants to Bar Trading on Truck Case Settlement Coupons INMATES LITIGATION: Ottawa Sun Reports on Suit v. Kingston Penitentiary LOCKFORMER CO: Parties Will Meet on Saturday about TCE Solvent Spill LUCENT TECHNOLOGIES: Will face 1 trial in Suits By 2 Shareholder Groups MICROFIELD GRAPHICS: Contests Securities Suit in N.Y. re 3M Agreement MICROSTRATEGY INCORPORATED: Issues Letter to Stockholders MOBILE PHONE: Angelos Wants Industry To Pay To Prevent Health Problems MOBILE PHONE: Ericsson, Motorola, Nokia Sued Over Alleged Health Risks PARTSBASE.COM, INC: Reports Shareholder Complaint re IPO PLANETRX.COM, INC: Wolf Haldenstein Commences Securities Suit in NY REGENCE/BLUE SHIELD: WA State Chiropractic Association Files Complaint STRIP SEARCH: Schenectady Policy Violated 4th Amendment, Fd Judge Ruled TAINTED WATER: DHH Finds More Probems With Plaquemine Plant's Water VOTING: Groups Sue for Accessibility & Ban on New Touch-Screen Machines WINSTAR COMMUNICATIONS: Wolf Haldenstein Commences Securities Suit in NY WITTER DEAN: Lawsuit v. Partnership re Fraud Still Pending in NY Sp Ct * Crisis Expert Sees Lawsuits in Wake of Dot-com Shakeout ********* 2THEMART.COM: Names of Chat Room Users Won't Be Revealed, Fd Judge Rules ------------------------------------------------------------------------ The names of 23 chat room users who were accused by a bankrupt Internet company of posting critical messages to try to drive its stock price down will not be revealed, a federal judge has ruled. The company, 2TheMart.com, sought the names of the users, saying it needed them to defend itself against a shareholder lawsuit that alleges it misled investors. The suit was filed in California after 2TheMart fell into bankruptcy soon after its stock rose more than 2,000 percent, to $50 per share in 1999. U.S. District Judge Thomas Zilly ruled on April 19 that evidence the company provided was not compelling enough to set aside the First Amendment rights of the chat room users. Users of such Internet services generally post their messages under nicknames. "The First Amendment clearly applies to the Internet," Zilly said. "The law says that a person has a right to speak anonymously." 2TheMart, an Irvine, Calif.-based company that hoped to compete with Internet auction giant eBay, faces a class-action suit in California for alleged securities fraud. 2TheMart claims that the anonymous chatters conspired to spread rumors to drive down the price of the company's stock so they could profit by selling the stock short. The company sought to have Infospace turn over the names of 23 people who chatted on a site maintained by Bellevue-based Infospace. Most of the critical messages were written from May to July 1999. 2TheMart wanted to see the names so it could prove that some of chat room posters - the ones it believes tried to manipulate the stock price - also are members of the class-action suit against the company, 2TheMart attorney Keith Bardellini said. One of the chat room participants, whose nickname was "No Guano" and was identified in court documents as "J. Doe," turned for help to the American Civil Liberties Union and the Electronic Frontier Foundation, an Internet privacy group. Zilly said he agreed with 2TheMart attorneys that "rights to speak anonymously are not unlimited." But he said the company's reasons for wanting the names were not sufficient to invade the users' privacy. Zilly said the firm made no direct claim against the users, except for "innuendo" they had manipulated the stock. Kelsey Joyce Hooke, an attorney for 2TheMart, said the company has not decided if it will appeal. Zilly's ruling was a significant victory for users of the Internet, ACLU attorney Aaron Caplan said. Infospace did not directly intervene in the case but said its customers rights should be respected. Infospace attorney Brent Snyder said the ruling is important because it gives guidance to Internet companies, which receive subpoenas without knowing the merits of a legal dispute. (The Associated Press State & Local Wire, April 20, 2001) BEAR STEARNS: Ruling Rekindles Debate of Brokerage Responsibilities ------------------------------------------------------------------- A US federal court ruling has rekindled debate on the duties a brokerage should have in monitoring fraudulent activities of hedge funds and other clients whose trades it processes. US District Judge Denise Cote last Wednesday April 18 dismissed a class action lawsuit against Bear Stearns, the US investment bank, brought by former investors in the Manhattan Capital Management hedge fund. The fund falsely reported investment gains, while in fact bleeding money and ultimately cost investors more than Dollars 400m (Pounds 280m). The investors claimed Bear Stearns was partly responsible because it was aware of the losses and yet continued to extend money to Manhattan to continue trading. Plaintiffs' lawyers also accused Bear Stearns of using this information to tip off certain investors so that they could withdraw money without suffering losses. But in dismissing the suit Judge Cote ruled: "While the (MCM) ponzi (pyramid) scheme may only have been possible because of Bear Stearns' actions, or inactions, Bear Stearns' conduct was not the proximate cause of the ponzi scheme." The decision surprised observers because the brokerage did not deny in the proceedings that it was aware of the fraud. It came as a setback for those who argued that clearing firms such as Bear Stearns should be held liable for the intimate knowledge they possess of the companies they clear trades and lend money to. That broader view of clearing responsibilities was set in a 1999 case, also involving Bear Stearns, in which the company agreed to pay Dollars 42m in fines and restitution in the case of a defunct brokerage it did business with. It is a question that is likely to receive more scrutiny in the future as the unregulated investment funds continue to multiply, and a slew of Wall Street banks try to wrestle a share of the lucrative prime brokerage business from Bear Stearns, Morgan Stanley and Goldman Sachs. "It's a very important decision for clearing firms," said Daniel Kramer, partner at Schulte, Roth & Zabel, the New York law firm that represented Bear Stearns. "The decision reaffirms the principle that clearing firms will not be held liable for aiding and abetting fraud or breach of fiduciary duty merely because they provided margin and clearing services to their customers." Bear Stearns originally cast itself as the hero of the Manhattan affair, saying it alerted the Securities and Exchange Commission to the fund in December 1999 after questions were raised by investors. That seemed in question, however, after testimony provided to the SEC later showed that Bear Stearns officials had become suspicious about the fund and called its regulators in Bermuda to express concern almost a year before its collapse. (Financial Times (London), April 20, 2001) CREDIT CARD: Coast-to-Coast Headaches For ATM Reseller's Clients ---------------------------------------------------------------- When Rick Northrop, the owner of Northrop Video of White City, Ore., signed a contract with Credit Card Center in September to lease an NCR Corp. automated teller machine, he thought he was getting a great deal. The ATM reseller guaranteed him $240 a month of advertising revenue against the $254 monthly lease for the life of the five-year contract. He also was to get 85% of the transaction fees. "The maximum this machine would ever cost me is $14 a month," he remembered thinking. But the next month his check from Credit Card Center bounced, and he became yet another dissatisfied customer of the Philadelphia company, which has since caused major financial problems for two of its suppliers, NCR and Tidel Technologies Inc. On top of the $42 million NCR says Credit Card Center owes it and the $26.7 million Tidel says it is owed, the independent sales organization -- one of the nation's largest -- has been defaulting on numerous merchant contracts, according to interviews with merchants, and is likely to face multiple lawsuits or a class action, say attorneys for the merchants. In his frustration, Mr. Northrop, who pays rent on the machine but has received none of the money promised by Credit Card Center, has hung an "out-of-service" sign on his ATM. He is not getting the advertising payments, and he asserts that the company has not made good on its promise to pick up the cost of the ATM's insurance. "To date, I still have no proof that this ATM is insured," he said. When Mr. Northrop started asking questions of other retailers, he discovered that numerous merchants in his county, Jackson, and around the country had had similar experiences. He has since organized 14 local merchants and contacted a lawyer. "Our objective is the removal of the ATMs and to dissolve both agreements with Credit Card Center and the lease companies," he said. He also discovered that he actually is leasing his machine from Advanta Leasing, a subsidiary of Advanta Corp. of Spring House, Pa. -- an arrangement, he said, that was not disclosed to him when he signed his deal with Credit Card Center. Mr. Northrop said his attorney has also contracted the Oregon attorney general's office, with an eye toward starting a class action against Credit Card Center -- or at least "putting pressure" on it to honor its contracts. Elsewhere, merchants who have had similar experiences with the company have also called lawyers and attorneys general. Credit Card Center has not declared bankruptcy and insists it will pay all its obligations. Andrew Kallok, the company president, did not return calls, but his lawyer, Scott L. Vernick, said it has recently obtained funding, though he would not say how much or from whom. "The proceeds of that new funding have begun to flow to Credit Card Center," said Mr. Vernick, a partner in the Philadelphia firm of Fox, Rothchild, O'Brien & Frankel. "That puts us in a position to honor our obligations, particularly to merchants." Some merchants have been paid recently out of those funds, he said. But some merchants say they are skeptical. "They're talking about the money I want to know where's my money?" said Tim Wallace, manager of the Daily Market in Lewes, Del. Mr. Wallace, who also has been organizing merchants who dealt with Credit Card Center, said the ISO owes him nearly $1,000. "It's the same story, every week or two," Mr. Northrop said. " 'Next week we'll have things straightened out, and you'll have it by such-and-such time,' and the dates come and go, and we never receive any money. No one is getting paid." Credit Card Center was opened in early 1996 and grew rapidly into the biggest reseller of ATMs in the country, largely by cutting deals with merchants like Mr. Northrop. According to the company, in its first four years it went from a two-person operation to one that employed more than 700. It reported $140 million of revenue for last year and has cited its rapid growth as a reason for its woes. Pete Fagerlin, vice president of QL Capital Inc., which still arranges funding for merchants that lease ATMs from Credit Card Center, said another problem was Advanta's decision in January to get out of the equipment leasing business. "That precipitated it," he said. "Credit Card Center had a commitment from Advanta to fund them through the first quarter. They installed the equipment in the merchants' stores, and Advanta said, 'No, we're not going to fund you.'" Mr. Fagerlin said his company has never had any problem with the ISO. "We have a two-year track record with Credit Card Center. They've lived up to their agreements with us." Catherine Reid, a spokeswoman for Advanta, said the decision to quit the equipment leasing business was made "after the evaluation of a number of strategic alternatives and related to all types of equipment leases, not just ATMs." She said ATM leasing is about 5% of the company's portfolio. Advanta has sued Credit Card Center, but Ms. Reid would not comment on it. Mr. Vernick said Credit Card Center is planning a counterclaim. But another source close to the ISO, who asked not to be named, said that Advanta's pulling out of deals with the reseller had nothing to do with its troubles. Credit Card Center works with numerous financing companies, the source said, and "Advanta only approved the creme de la creme of their leases." Mr. Fagerlin linked Credit Card Center's troubles to another factor, an exclusive-supplier deal with NCR under which the ISO had to buy a certain number of machines but has found itself with a full warehouse. "They've offered to ship them back to Tidel of course, don't want them back because they'd have to restate their financials," he said. (The American Banker, April 20, 2001) DATASTREAM SYSTEMS: Settlement Concludes Shareholders Suit in SC ---------------------------------------------------------------- On January 11, 1999, several shareholders filed a putative class action complaint in the United States District Court for the District of South Carolina, Greenville Division, naming as defendants, the Company, its Chief Executive Officer and its former Chief Financial Officer. Several substantially similar complaints were filed in the same court shortly thereafter. The complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Plaintiffs sought to represent a class of individuals who purchased the Company's common stock from April 1 to October 20, 1998. On June 25, 1999, the court ordered that the actions be consolidated and that a single consolidated complaint be filed. On August 13, 1999, the plaintiffs filed a consolidated amended class action complaint, which alleged that defendants artificially inflated Datastream's earnings and stock price by (i) taking certain one-time charges not in accordance with generally accepted accounting principles ("GAAP") in connection with Datastream's acquisitions of Insta Instandhaltung technischer Anlagen GmbH and Strategic Information Systems PTE Ltd and (ii) materially understating the Company's reserves for doubtful accounts in violation of GAAP. The plaintiffs sought compensatory damages and unspecified equitable relief. The court denied the defendants' motion to dismiss on January 27, 2000. The Company filed its answer to the consolidated class action complaint on February 24, 2000. During the third quarter of 2000, the parties, without any admission of liability by the Company or any of the other defendants, reached an agreement to settle the litigation, which was approved by the District Court on December 6, 2000. On that date, the court entered a final judgment dismissing the claims against the Company and the individual defendants, and the settlement is now effective. The principal financial terms of the agreement called for a payment to the plaintiffs, for the benefit of the class, of a total of $5.0 million in a combination of $3.75 million in cash and $1.25 million in shares of the Company's common stock, which was determined to be 132,571 shares. The cash portion of the settlement was paid in the fourth quarter of 2000, of which the Company's insurance carrier funded $2.4 million. Datastream issued the common stock portion of the settlement in the first quarter of 2001. The litigation is now concluded. GENERAL MOTORS: Wants to Bar Trading on Truck Case Settlement Coupons --------------------------------------------------------------------- General Motors Corp. wants a company legally barred from brokering coupons the automaker has sent to consumers to settle an 8-year-old lawsuit over fuel tanks in some older-model GM pickup trucks. GM planned to seek a Louisiana court's emergency ruling against Certificate Redemption Group, a Houston-based firm offering to pay $100 for the $1,000 coupons the world's largest automaker sent to nearly 6 million eligible consumers. GM argues that the firm - formed five years ago exclusively to buy and resell the coupons - looks to violate terms of GM's 1999 settlement of the class-action case over claims that some GM trucks built between 1973 and 1991 with gas tanks outside the frames were dangerous. The coupons have a face value of $1,000 toward the purchase of a new GM vehicle, though some conditions to their redemption could make them worth less, GM spokesman Jay Cooney said. The coupons are transferrable to relatives of recipients, though the settlement bars large re-sales of the coupons by middlemen, Cooney said. Viewing the coupons as a hot commodity, Certificate Redemption announced last Thursday April 19 it will buy them online or by telephone, then begin marketing them next month "in large quantities" to dealers, leasing companies and fleets. Cooney called that "a scheme outside the scope of the settlement," illegally looking to transfer the coupon's ownership rights. "Our view is this: If the certificates are not (redeemed) in accordance with the settlement agreement, we're not going to honor them. That's the bottom line," Cooney said. "We would have never agreed to settle under these conditions" if the coupons could be resold. "It's completely outside the bounds of fairness," he said. "From our standpoint, it's clearly not over." In its statement, Certificate Redemption executive James Dawley suggested that without his company, GM stood to pay little if few of the coupons are redeemed. "Class-action settlements too often ignore the little guys, and they get nothing from these multimillion dollar settlements," said Dawley, the firm's chairman and chief executive. "If GM continues to try and prevent the operation of a secondary market, the class members may lose again. "In previous certificate settlements, typically no more than 10 percent of the class members have redeemed their certificates," he added. "Apparently, that is what GM is counting on to keep their exposure down in this lawsuit." Coupons have been used to settle consumer complaints in many class-action suits. In 1994, nine major airlines used a discount coupon to help settle a price-fixing suit, though many consumers and travel agents later complained the coupons were difficult to use. Even after the discount, they said the fares were higher than those available through regular purchases. GM did not admit liability in the settlement, which includes owners of a GM C- or K-series truck built from 1973-87 or a R- or V-series truck built from 1987-91. In the lawsuit, plaintiffs alleged the fuel tanks are prone to blow up in collisions, driving down the trucks' value. The owners did not claim to have suffered damages from explosions or fires. Similar settlements of two other suits were rejected by federal courts in Texas and Philadelphia before a Louisiana judge made the GM settlement final in 1999. GM paid 200 attorneys for the plaintiffs $27 million in legal fees. Five months after signing off on the settlement, State District Judge Jack Marionneaux in Baton Rouge, La., gave the plaintiffs' attorneys permission to include in mailed notices to truck owners that Certificate Redemption would pay them $100 for the certificates. When Marionneaux rejected GM's objection, the automaker last year argued the issue before a Louisiana appeals court. Cooney said, GM planned to seek a Marionneaux ruling that Certificate Redemption's plan violated the settlement's terms, thus forcing the company to halt its online and telephone pursuit of the coupons. The automaker also wants a court order that Dawley's firm send letters to consumers it already has contacted, retracting the offer, Cooney said. (The Associated Press State & Local Wire, April 20, 2001) INMATES LITIGATION: Ottawa Sun Reports on Suit v. Kingston Penitentiary ------------------------------------------------------------------------ Schoolgirl killer Paul Bernardo and some of Canada's most notorious criminals are launching a $400,000 class action lawsuit against Kingston Penitentiary for a Halloween night of terror fuelled by the inmates' own fires. Joseph Nixon, Bernardo's fellow inmate on the penitentiary's segregated "A" range, is seeking $13,500 in damages for each of the 30 inmates who "felt trapped and were put in fear of their lives by the reckless acts of the prison staff and officials" during the Oct. 31-Nov. 1, 1999, fire, court documents obtained by the Sun revealed. Bernardo isn't named, but is housed on the segregation unit with 29 others and is an eligible member of the class action suit, filed last April. The suit alleges that staff and officials "took excessive time to respond and to extinguish the fire while inmates were forced to breathe thick noxious smoke and fumes. Prison officials "refused to evacuate the inmates," said the inmates and plaintiffs' lawyer, John Hill. "Inmates were ringing the emergency panic buttons in their cells, which weren't working. These people thought they were going to die. "You go to prison for punishment, you don't go to prison to die. The prison owes a duty to the inmates to be safe." Hill said presumably some inmates started the fires and if they're found they "would be disentitled to any relief. "But the government is taking the position that this is like a class detention, that if one inmate is wrong, then everybody should suffer." The lawsuit is awaiting certification as a class action at a future, unknown date. This will be the first class-action lawsuit by inmates against Corrections Canada. "If it succeeds, you'll have a better chance of ensuring fairness and justice within the walls of a penitentiary," Hill said. Department of Justice lawyer Paul Evraire stated in his defence that "correctional officers extinguished each fire as soon as possible, but burning articles continued to be thrown from cells. EVERYONE SHOULD SUFFER "Officers attempting to extinguish the fires and defuse the situation were threatened by inmates, falling burning objects and had unidentified liquid thrown on them," the government's defence stated. The warden and deputy warden ultimately defused the situation by agreeing to address the inmates' concerns if the inmates stopped setting fires and uttering threats to guards. (The Ottawa Sun, April 20, 2001) LOCKFORMER CO: Parties Will Meet on Saturday about TCE Solvent Spill -------------------------------------------------------------------- In an effort to resolve questions about contamination from a solvent spill at Lockformer Co., local, county and state legislators and health experts have agreed to a Saturday morning meeting in Lisle. The solvent tricholorethene, or TCE, has been found in dozens of private wells south of Lockformer's Ogden Avenue plant. The metal fabricating company has acknowledged that the substance was spilled on its site, but it denies the TCE found in the wells is from its property. At the request of village staff, state Rep. Mary Lou Cowlishaw (R-Naperville) has helped to arrange the scheduled 10 a.m. meeting in Village Hall. "I recognized the fact that this was a critically important problem for the Village of Lisle," she said. "We all know how important the health and cost issues of this are to people of Lisle." A meeting to update residents is to be held at 11:30 a.m. Saturday, also in Village Hall. Scheduled to join Cowlishaw and village trustees are representatives of: other state and federal legislators and Gov. George Ryan's office; the DuPage County Board and Public Health Department; the Illinois Environmental Protection Agency; Illinois Atty. Gen. James Ryan; and neighboring suburban governments. The purpose of the meeting is to update officials on the status of the contamination and the related litigation. Three lawsuits have been filed since November against Lockformer, including one by Atty. Gen. Ryan and the DuPage County state's attorney's office; a class-action federal lawsuit by homeowners; and a recent suit by other homeowners that is only one to directly blame the company for a specific illness. For months, officials have tried to address the problem of well contamination. There have been numerous tests by the state EPA as well as plans by the county and village for installing water mains to the area. Earlier this year, the Village Board approved a special financial arrangement to help residents hook up to the town's water system. In March, the village began negotiating an intergovernmental agreement with the county to cover the installation of water mains in unincorporated areas and provide funds to help qualifying homeowners pay for plumbing costs to bring the water from the mains to their homes. But village officials especially want to investigate the possibility of getting funds from other sources such as the state or federal government. Board members also are eager to discuss a proposal that state environmental regulators be required to notify municipalities of chemical releases. Lockformer joined the agency's voluntary site remediation program in 1994, but the village learned of the spill in 1999. (Chicago Tribune, April 20, 2001) LUCENT TECHNOLOGIES: Will face 1 trial in Suits By 2 Shareholder Groups ----------------------------------------------------------------------- Lucent Technologies Inc. will face one trial, not two, over class-action lawsuits by two groups of shareholders who claim the stock lost billions in value due to company wrongdoing, a federal judge has ruled. The decision here by U.S. District Judge Alfred J. Lechner Jr. pleased the Murray Hill telecommunications giant, which has denied the shareholder charges. One group of shareholders, known as Lucent I, charges that Lucent misled investors about internal problems. The Lucent II stockholders claim accounting fraud by the company and wanted their case heard separately. Lucent lost about $80 billion in market value under former chairman and chief executive officer Richard McGinn, who was fired in October. The judge also named a second lead plaintiff, Parnassus Funds, two San Francisco mutual funds. The original lead plaintiff is Teamsters Locals 175 and 505 Pension Trust Funds, of West Virginia. Lead plaintiffs represent the interests of all investors. Lechner said the institutional investors should lead the class because they have the largest claim, a combined loss of $3.7 million on their Lucent investment. (The Associated Press State & Local Wire, April 20, 2001) MICROFIELD GRAPHICS: Contests Securities Suit in N.Y. re 3M Agreement --------------------------------------------------------------------- During February 2000, the Company was named in a class action lawsuit, ADAIR V. MICROFIELD GRAPHICS, INC. ET ANO., 00 Civ. 0629 (MBM), United States District Court Southern District of New York. The complaint alleges that the Company and its Chief Executive Officer issued a series of false and misleading statements concerning, among other things, the Company's purchase agreement with 3M. The complaint alleges that, as a result of these allegedly material misstatements and omissions, the Company's stock price was artificially inflated during the period from July 23, 1998 through April 2, 1999 and requests that damages be determined at trial. The Company denies the allegations and intends to vigorously defend itself. However, the ultimate outcome of the litigation is presently undeterminable. MICROSTRATEGY INCORPORATED: Issues Letter to Stockholders --------------------------------------------------------- MicroStrategy(R) Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, announced on April 19 that it has sent the following letter to its stockholders: Dear MicroStrategy Stockholder: Let me begin by thanking you for your continued support of MicroStrategy. As a stockholder of MicroStrategy, you know that the last year has been a rocky one for all of us in the technology industry. However, as we announced earlier this month, we believe that we have set MicroStrategy upon a successful future course with the implementation of a number of initiatives. At the beginning of this month we announced a strategic restructuring that we think has considerable promise. Specifically, we announced that we would be focusing on the business intelligence software market, eliminating or downsizing our involvement in non-core technology initiatives, and instituting a number of changes designed to reduce our structural costs. The dual goals of this restructuring are to 1) focus the business on what we do best -- platform software sales; and 2) maximize our ability to achieve our previously stated goal of profitability in 2001. Thus, we have directed the entire firm towards our core offering -- the MicroStrategy Business Intelligence Platform. One core product -- MicroStrategy 7(TM). One core market -- The Business Intelligence Software Market. One core business model -- Enterprise Software. And one core message -- Best in Business Intelligence(TM). In connection with the corporate restructuring described above, we also successfully refinanced the $ 125 million in Series A Convertible Preferred Stock held by outside investors. This refinancing effectively removed significant uncertainty by converting a variable security that could have resulted in significant dilution to existing shareholders into a combination of common stock, cash, fixed rate securities and securities that carry a fixed rate until their three year maturity. We believe this refinancing is good for our existing shareholders and will make it easier for new investors to properly value and invest in our company. We also announced that the United States District Court for the Eastern District of Virginia has approved the previously announced settlement of the consolidated securities class action lawsuit filed against the company and certain of its officers and directors relating to the company's restatement of financial results for 1997, 1998 and 1999. The court recognized that the settlement is in the best interests of both the shareholders and the company and will allow us to focus on executing our strategic plans and building value for our shareholders. Thus, the last few months have been busy ones as we have worked hard to fulfill our promise of creating a leading software business with short and long-term value. I am happy to tell you that the entire MicroStrategy management team is fully committed to achieving this goal. We Would Like Your Help. However, there is something that you might be able to do to help us, and in the process, help yourself. As you know, like many stocks in the technology industry, MicroStrategy's has been recently trading at a low share price level. Although general market sentiments about technology stocks and our company have undoubtedly played a major role in the recent price of our stock, management believes that the current stock price is also attributable in part to heavy selling pressure from "short selling" in the marketplace. Therefore, let me take a minute to explain "short selling" and what we think you can do to help. Effect of Short Selling on a Company's Stock Price. In "short selling," traders sell stock they do not own by borrowing shares from a broker that need to be returned at a later date. If the stock price goes down, the short sellers buy stock in the market at a lower price, return the stock to the broker and make a profit. By selling first and buying later, short sellers benefit from stock prices going down instead of up. This makes their interest in our company directly opposite from what most of our stockholders want -- i.e., for the price of our stock to increase. If there is a lot of short selling, supply of our shares may exceed demand for our shares, causing the stock price to go down. In other words, short sellers can make money by selling enough stock short to artificially increase the volume of selling and drive down the market price. Short Sellers Borrow Stock From Stockholders Like You. Where do the traders get the stock to borrow? Ironically, whether you know it or not, they probably have been borrowing shares from stockholders like you. If your shares are registered in your broker's name instead of yours or are held in a margin account, your broker may have lent your MicroStrategy shares out to these "short sellers." In other words, if your MicroStrategy shares are registered in your broker's name or being held in a margin account, the brokers are free to lend your shares out to short sellers. So, while short sellers are borrowing your stock, they are actually working against your interest in seeing a higher MicroStrategy stock price. While many companies experience short selling in the marketplace, the amount of short selling compared to the trading volume in our stock has recently been unusually high. Our financial advisors believe this may be adding downward pressure on the price of our stock. Friedman Billings Ramsey, our financial advisor, has commented, "among other factors, a large short position, like that existing today in MicroStrategy stock, can significantly depress the price of a stock. Companies should take action to address the factors that lead to excessive short selling." How Stockholders Can Help Combat Short Selling. To arry out short sales, traders need to borrow stock from brokers that is registered in "street name" or held in a margin account. However, if enough stock is taken out of street name or margin accounts, short sellers will have difficulty maintaining the current volume of short sales. Therefore, we are asking all of our shareholders to do the following: Promptly call your brokers and have your MicroStrategy stock taken out of street name or put into a cash account. This only means that instead of your shares being registered in your broker's name or being held in a margin account, they would be registered in your name or placed in a cash account. You would still own the stock, and your ability to hold or sell the stock would not change. What would change? A short seller would not be able to borrow your stock for short sales without your permission. So long as the stock is registered in the broker's name, the broker is the legal owner of record, and can lend your stock to a short seller without your permission. Similarly, so long as you have your stock in a margin account, it is available for loan by your broker. If you have the stock registered in your own name or placed in a cash account, brokers will not be able to do this. Would there be any downside for stockholders in having shares registered in their own names or held in cash accounts? From an economic point of view, the answer is no -- nothing will have changed. The only difference would be administrative including some possible paperwork and expenses you may incur in re-registering or moving your shares. When you want to sell, you would have to send your broker instructions to move the stock back into street name or into a margin account, and the broker may ask you to sign some transfer documents. We think this is a small price to pay for relieving the heavy short selling pressure on our stock. When can shares be taken out of street name or a margin account? You can seek to take shares out of street name or a margin account at any time. However, because of the heavy short selling pressure on our stock, we believe that your immediate help would be desirable. Accordingly, we are asking stockholders to call their brokers to have their shares promptly taken out of street name or a margin account. The company intends to work with its transfer agent and participating brokers to make the process of re-registering your shares or moving them into cash accounts now as quick and easy as practicable. If you have any questions about this process, please call Bill Chatterton at 703-744-3281, and he would be happy to assist you. As I set out above, the company has undertaken a number of recent steps to help better position us for the future. As a shareholder, you can help. We appreciate your consideration of this important matter and thank you for your continuing support of MicroStrategy. Very truly yours, Michael J. Saylor Chairman and CEO About MicroStrategy Incorporated MicroStrategy is a leading provider of business intelligence software for Global 5000 organizations. Since 1990, the company has specialized in helping businesses transform their extensive operational data into actionable information. MicroStrategy's business intelligence platform gives organizations solutions to all of their query, reporting, and advanced analytical needs, and distributes insight to users via Web, wireless, and voice. MicroStrategy 7(TM), the company's scalable business intelligence platform, is built specifically for the Internet era. Its pure-Web architecture provides Web reporting, security, and performance, and standards that are critical for deployment over the Web. Within intranets, the company's products provide employees with information to make better business decisions. In extranets, extended enterprises use MicroStrategy 7 to build stronger relationships by linking customers and suppliers via the Internet. MicroStrategy has approximately 1,100 enterprise-class customers including Lowe's Home Improvement Warehouse, AT&T Wireless Group, First Union Corporation and GlaxoSmithKline. MicroStrategy also has relationships with over 200 systems integrators, application development, and platform partners including IBM, PeopleSoft, Compaq, Informatica, and JD Edwards. MicroStrategy is listed on Nasdaq under the symbol MSTR. For more information on the company, or to purchase or demo MicroStrategy's software, please visit MicroStrategy's Web site at http://www.microstrategy.com. MicroStrategy, MicroStrategy 7 and Best in Business Intelligence are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners. This press release may include statements that may constitute "forward- looking statements," . . . Source: MicroStrategy Incorporated MOBILE PHONE: Angelos Wants Industry To Pay To Prevent Health Problems ---------------------------------------------------------------------- As reported in the CAR in December, 2000, a lawyer known for suing asbestos makers, lead paint manufacturers and the tobacco industry has set his sights on cellular phone companies. According to the Associated Press, Peter Angelos last Thursday April 19 filed class-action lawsuits in Maryland and three other states, seeking to force the wireless industry to cover the cost of headsets that he says would protect users from possible radiation hazards. The lawsuits allege that the companies have known about health risks for users of the phones but failed to warn them. "Use the earpiece, and you avoid the hazard," Angelos said. "And if we get that far, at least the public knows that the potential hazard exists, and they know a way to avoid that potential." Cell phone makers insist there is no scientific evidence that their product poses any health risks, but such claims have been raised in lawsuits across the country - including some in which Angelos' firm is involved. Federal agencies are studying the issue but have not ruled on cell phone safety. Companies named in Angelos' lawsuit include Motorola, Ericsson, Sprint PCS, Nextel, AT&T and Verizon. Two Baltimore-area residents named as plaintiffs in the Maryland case don't claim any health problems caused by cell phones but want the companies to pay for headsets. Angelos wants the lawsuit certified as a class action, which could include all current and future cell phone users in the case. He said he did not know how much it could cost the industry to provide headsets - which sell for $20 to $100 for every wireless phone user in the state. The lawsuit also seeks unspecified punitive damages. Besides the Maryland case, Angelos' firm was involved in preparing similar lawsuits filed April 19 in state courts in Pennsylvania, New York and New Jersey. (The Associated Press State & Local Wire, April 20, 2001) MOBILE PHONE: Ericsson, Motorola, Nokia Sued Over Alleged Health Risks ---------------------------------------------------------------------- Several mobile phone companies and equipment manufacturers have been named as defendants in two class-action lawsuits alleging links between cell phones and possible health risks, The Washington Post reported. The lawsuits name as defendants 25 of the largest companies in the industry from mobile telephone carriers such as Verizon Communications Inc, Sprint PCS Group and Reston-based Nextel Communications Inc to equipment and telephone manufacturers such as Motorola Inc, Nokia Corp and LM Ericsson AB. The alleged links include damage to basic brain function, genetic irregularities and increased vulnerability to toxins and infections, it wrote. In a pair of class-action lawsuits filed in state courts in Baltimore, New York and Philadelphia, lawyer Peter Angelos accused mobile telephone companies and equipment manufacturers of knowingly peddling dangerous products that have inflicted damaging radiation on their customers. The suits do not claim that anyone has actually suffered an illness. Rather, they seek money for headsets to mitigate exposure to radiation, plus unspecified punitive damages, the newspaper said. Industry representatives disputed claims of possible health risks linked to cell phones. Motorola's director of global strategic issues, Norman Sandler was quoted as saying: "There is absolutely no credible scientific evidence of any health risks associated with the use of wireless phones." Verizon spokeswoman Nancy Stark said: "The available scientific evidence doesn't demonstrate any adverse health effects." (AFX European Focus, April 20, 2001) PARTSBASE.COM, INC: Reports Shareholder Complaint re IPO -------------------------------------------------------- PartsBase.com Inc. (Nasdaq: PRTS) on April 19 reported that a complaint has been filed in a purported securities class action against the Company, certain of its current and former officers and directors, as well as against the Company's underwriters of its initial public offering. The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 an alleges the Company's March 2000 registration statement misrepresented and failed to disclose matters related to the Company's business operations and membership sales. The lawsuit seeks damages and certification of a class consisting of purchasers of the Company's common stock in the offering during the period from March 22, 2000, through April 25, 2000. The Company believes that the allegations are without merit and intends to vigorously defend this action. Nevertheless, an unfavorable resolution of this lawsuit could have a material adverse effect on the Company in one or more future periods. PLANETRX.COM, INC: Wolf Haldenstein Commences Securities Suit in NY ------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of PlanetRx.com, Inc. (NASDAQ: PLRX--news) securities during the period between October 6, 1999 and March 23, 2001, inclusive (the "Class Period"), against PlanetRx, William J. Razzouk (Chairman of the Board of Directors from September 1998 until the Company's third quarter 2000), David Beirne (a director of the Company), Michael Moritz (a director of the Company), Christos M. Cotsakos (a director of the Company), The Goldman Sachs Group (a lead underwriter of the PlanetRx IPO), BancBoston Robertson Stephens, Inc. (a lead underwriter of the PlanetRx IPO), Merrill Lynch, Pierce, Fenner & Smith (an underwriter involved in the PlanetRx IPO, but not a lead underwriter), and Salomon Smith Barney, Inc. (an underwriter involved in the PlanetRx IPO, but not a lead underwriter). The judge presiding over the case is the Honorable Denny Chin, and the case is numbered 01-CV-3274. If you would like to view a copy of the complaint filed in this action, please visit the Wolf Haldenstein web site located at http://www.whafh.com. The complaint alleges that defendants violated Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks to recover damages. Specifically, the complaint alleges that PlanetRx and Messrs. Razzouk, Beirne, Moritz, and Cotsakos violated the federal securities laws by issuing and selling PlanetRx common stock pursuant to the October 6, 1999 IPO without disclosing to investors that at least two of the lead underwriters and two of the other underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, lead underwriters The Goldman Sachs Group, Inc. and BancBoston Robertson Stephens, Inc., and underwriters Merrill Lynch, Pierce, Fenner & Smith, Inc. and Salomon Smith Barney, Inc. allocated PlanetRx shares to customers at the IPO price of $ 16 per share. To receive the allocations (i.e., the ability to purchase shares) at $16, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of PlanetRx stock rocketed upward (a practice known on Wall Street as "laddering") was intended to (and did) drive PlanetRx's share price up to artificially high levels. This artificial price inflation, the complaint further alleges, enabled both the underwriters and their customers to reap enormous profits by buying stock at the $16 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $36.50 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the defendant underwriters required their customers to "kick back" some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the PlanetRx IPO contained material misstatements regarding the commissions that the underwriters would derive from the IPO transaction and failed to disclose the additional commissions and "laddering" scheme discussed above. Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York Michael Miske, George Peters, Gregory M. Nespole, Esq., or Fred Taylor Isquith, Esq., 800/575-0735 classmember@whafh.com www.whafh.com REGENCE/BLUE SHIELD: WA State Chiropractic Association Files Complaint ----------------------------------------------------------------------- The Washington State Chiropractic Association (WSCA), the sole professional trade association for over 800 chiropractic doctors in the state, recently filed a formal complaint with the Office of the Insurance Commissioner (OIC) against Regence/Blue Shield. The complaint, filed April 10th, seeks relief for actions and contemplated actions by Regence/Blue Shield against chiropractors and other complementary and alternative care professionals (CAM). Regence/Blue Shield was part of a coalition of 14 insurance carriers that fought the implementation of RCW 48.43.045, the "any category of provider law," and lost at the U.S. Supreme Court level after years of litigation. This statute requires carriers and health plans to allow "any category of provider" into their plans' coverage. In addition, Regence/Blue Shield recently settled a class action dispute over coverage of services provided by CAM professionals arising under RCW 48.43.045 for approximately $ 30.5 million. (Hoffman vs. Regence). Regence/Blue Shield's latest actions follow closely on the loss of these actions, and the contemplated effective date of the new state-level Patient Bill of Rights. The Patient Bill of Rights allows patients to see their chiropractors without a prior physician referral, and requires disclosure of utilization management (UM) guidelines for healthcare providers, including chiropractic and alternative providers. "The WSCA wants nothing more than for Regence to accept and follow state insurance laws without resorting to tactics that will blunt the effect and purpose of these laws," stated John Peick, attorney for the WSCA. "The WSCA recognizes the need for patient care to be cost effective and appropriate," Peick added. "However, the WSCA does not believe this can be achieved by retaliatory or arbitrary attempts to limit patient access to necessary care promised by the health plans sold to consumers." The complaint focuses on the following issues: -- Lack of an adequate network of chiropractors if Regence/Blue Shield's actions to cut the network by 50% are achieved. Network adequacy can be a vague concept but it revolves around geographic considerations, and provider availability to patient needs. -- Violations and discrimination in the selection of chiropractors for Regence/Blue Shield networks. Regence/Blue Shield selects chiropractic doctors at a varying percentage from other CAM providers, and uses credentialing criteria which is not legally required or sustainable. -- Lack of reasonable utilization management guidelines and the failure to disclose the basis for any standard. The Patient Bill of Rights requires disclosure of utilization guidelines that are based on reasonable scientific evidence. Regence/Blue Shield and Complementary Healthcare Plans (CHcP) have yet to provide these guidelines. These guidelines will play a crucial role in determining whether contract benefits (e.g., the number of visits per year) are actually reduced in practice by guidelines that substantially reduce patient utilization of the provider for carrier reimbursement. If the carrier cuts off the patient, further care becomes the economic responsibility of the patient and they (or their employer) lose the benefit of their contract and premiums. -- Failure to disclose operational standards, guidelines, and payment information. Similar to utilization management (UM) guidelines in terms of assuring patient care, operational guidelines can hinder the delivery of care without coverage questions, claim filing problems, and other administrative hurdles that providers are forced to endure to obtain authorizations and payment. -- Use of vague provider grievance processes that violate statutes and OIC rules. Depending on the market area tested, there may be antitrust implications to Regence/Blue Shield's termination of providers and exclusionary practices. The contemplated outsourced network would not allow point of service access by patients, so patients would be deprived of choice. This issue relates to both patient and provider impacts due to the loss of qualified providers from the available pool of physicians and providers from whom patients can seek care. Peick explained that the WSCA believes these changes will have the following perceived impacts on patient care of projected contract: -- Perceived Impact on Patient Care: * Interrupt continuity of patient care because patients will need to transfer care to other panel providers. * Reduce patient choice by eliminating 50% of providers. * Increase the likelihood that patients will make an economic decision to forego care with diminished patient outcomes because they lose rapport with approved providers. * Reduce the availability of doctors for scheduling patient visits. * Overload doctors with demands for patient care, thereby risking decreased attention to patient needs and concerns. * Reduce provider independence as Regence/Blue Shield patient load begins to economically dominate the practice of selected providers, thereby subverting or degrading the doctor-patient decision-making relationship in favor of managed care personnel decision-making. * Managed care decisions will be made by out-of-state Preferred Physician Organizations (PPOs) which are not subject to regulation by the OIC, and consumer complaints may not be acted upon diligently. -- Impact on Providers * Regional or practice variables may soften the impact of losing panel membership, but for the deselected doctors with a sizeable Regence/Blue Shield patient base, the loss of patients and consequent economic loss may be substantial. * The risk that other carriers may opt to manage their CAM providers in a similar fashion, which will create serious anti-competitive forces for excluded providers and further detrimentally affect deselected providers. * Place managed care decisions in out-of-state PPOs that are not regulated by OIC, except indirectly through provider contracts, and through pressure on Regence/Blue Shield. STRIP SEARCH: Schenectady Policy Violated 4th Amendment, Fd Judge Ruled ----------------------------------------------------------------------- An upstate police department's policy of strip-searching all cell block detainees -- regardless of the crime charged and whether reasonable suspicion existed -- violates the Fourth Amendment's prohibition on unreasonable searches and seizures, a Northern District federal judge has ruled. U.S. District Judge Thomas J. McAvoy shot down a now-abandoned policy of the Schenectady Police Department. Judge McAvoy found that the blanket policy of strip-searching all suspects detained in the city's cell block cannot withstand constitutional scrutiny. In granting summary judgment to one of three plaintiffs claiming civil rights violations predicated on alleged strip searches, Judge McAvoy found no way for the city to evade the thrust of the decision of the U.S. Court of Appeals for the Second Circuit in Weber v. Dell, 804 F2d 796 (1986). The Second Circuit panel in Weber held that a strip search of an arrestee violates the Fourth Amendment -- unless there is a reasonable suspicion that the suspect is concealing contraband or weapons. Judge McAvoy held that the same caveats apply to detainees. "The fact that the City did not search all arrestees, but only those to be held in the cell block awaiting court action, does not insulate their policy from the fact that they conducted blanket searches on such individuals without first considering, on an individual basis, whether they had reasonable suspicion to do so," Judge McAvoy wrote in Gonzalez v. Schenectady, 00-CV-0824. Judge McAvoy's ruling arises from summary judgment motions in a case where three detainees commenced civil rights actions under 42 U.S.C @ 1983 to challenge the city's strip search policy. Judge McAvoy found that Michael Fyvie, a college student who was arrested and charged with disorderly conduct after he was involved in a fight, is entitled to summary judgment. Summary judgment was denied in the case of Elizabeth Gonzalez, who was stopped for a traffic violation and then briefly detained because a person with the same name was wanted for theft and weapons charges in New York City. Judge McAvoy said a factual question remains as to whether she was strip-searched at all, let alone pursuant to an unconstitutional policy. A third plaintiff, Charles Frisbee, has yet to be deposed. Disorderly Conduct Mr. Fyvie was issued an appearance ticket at the police station and, while leaving, got into an argument with police. He was then returned to the booking area and searched before he was placed in a cell block. Mr. Fyvie was strip-searched under the city's policy for suspects detained in the cell block, as opposed to the holding "cage" where some arrestees are kept until police decide whether to detain them or release them on an appearance ticket. The search was captured on videotape. The policy was dropped in 1999. After Mr. Fyvie filed his complaint, and after a class action against New York City on behalf of roughly 60,000 arrestees raised similar issues, Schenectady abandoned its strip-search policy, according to Corporation Counsel Michael T. Brockbank. Earlier this year, New York City agreed to settle the claims of its arrestees for $ 50 million. Still, Schenectady attempted to draw a distinction between suspects who were detained in the holding area and were not strip-searched, and those who were held in the cell block area and subjected to the search. Even though confinement in the 24-cell area does not stem from an order of commitment, the city maintained that it in effect operates a jail where more stringent search policies are both appropriate and constitutional, Mr. Brockbank said. Mr. Brockbank said the policy had been endorsed by both the Schenectady County Sheriff's Department and the New York State Department of Corrections. The city argued that the Second Circuit's holding in Weber was inconsistent with the U.S. Supreme Court's last major ruling on the issue of strip searches versus Fourth Amendment protections, Bell v. Wolfish, 441 U.S. 520 (1979). In Bell, the U.S. Supreme Court held in a case involving the Metropolitan Correctional Center in New York City that arrestees retain their Fourth Amendment rights. The High Court attempted to establish a balancing test, and made clear that the rights of detainees are subordinate to the government's "legitimate security interests." But the attorneys for the plaintiffs, Kevin A. Luibrand and Adrienne Kerwin of Tobin and Dempf in Albany, argued that the Schenectady policy lacked a reasonable justification, and that Weber controlled. "They brought him in a room in the presence of four corrections officers, one of which was a woman... and forced him to [strip] and hold his genitals in his hand and then turn around and bend over, all in front of the female officer, " Mr. Luibrand said. "It was to show him that they were in charge." Judge McAvoy observed that Weber was decided after Bell, and it is apparent the Second Circuit fully considered the Supreme Court's precedent. Unanswered Questions Commentators have suggested, however, that Bell left as many questioned unanswered as it answered, leaving courts and legislatures to wrestle with the parameters of a legitimate search. "Because so many courts and statutes expressly limit the Fourth Amendment's protection to misdemeanants and minor offenders... it remains unclear that felony detainees have any constitutional protections against unreasonable strip search," Gabriel M. Helmer wrote in the February issue of the Boston University Law Review (81 B.L.U. Rev. 239). For example, Mr. Helmer wrote, in Dufrin v. Spreen 712 F2d 1084 (1984), the Sixth Circuit held that police may strip-search anyone arrested on a felony charge. On the other hand, the Ninth Circuit in Kennedy v. Los Angeles Police Department, 901 F2d 702, (1989), found no Fourth Amendment distinction between felonies and misdemeanors. In the Fyvie case, the arrestee was charged only with a violation, to which he ultimately received an adjournment in contemplation of dismissal. Judge McAvoy found nothing in Mr. Fyvie's behavior or the pending charge implicating a reasonable suspicion that he was concealing contraband. "This is particularly so in light of the fact that defendants did not initially strip search Fyvie upon placing him in the holding cell," Judge McAvoy wrote. "Defendants did not strip search him until after they had released him and decided to re-detain him. The fact that defendants chose 'to rescind the appearance ticket and take Fyvie back into custody' and make him await bail brings him precisely within the parameters of the unconstitutional strip search policy." (New York Law Journal, April 11, 2001) TAINTED WATER: DHH Finds More Probems With Plaquemine Plant's Water ------------------------------------------------------------------- State health officials have found more problems with drinking water at the Georgia Gulf chemical plant here. New inspections revealed more than a dozen problems, including poor labeling, corrosion and connecting potable and nonpotable water wells. The Department of Health and Hospitals inspected the plant's water system after admitting earlier this month that it discovered high arsenic levels in the plant's water more than three years ago, but never told anyone. The arsenic oversight at Georgia Gulf was discovered during a review of all Iberville Parish water records. The parishwide review began after officials discovered another oversight: the failure three years ago to report the discovery of vinyl chloride in a nearby trailer park's water system. A day after DHH announced the oversights, a group of attorneys filed a class-action lawsuit against the state. "We're responding to each alleged violation and the letter as a whole as quickly as possible. I don't know if any are more serious than another," plant spokesman Will Hinson said. "We continue to work with DHH closely on this. We want it resolved." Piping at the plant is not properly labeled, the DHH report said. Several wells are prone to taking on contaminants from outside because of excessive corrosion, proximity to a drainage ditch, sitting in standing water, a leak or other faults, the report says. Since the arsenic contamination was discovered earlier this month, all 550 Georgia Gulf employees and 150 to 200 contract workers are drinking bottled water and using bagged ice, Hinson said. The DHH tests found elevated arsenic levels at wellheads, but other tests found acceptable levels in the water system. (The Associated Press State & Local Wire, April 20, 2001) VOTING: Groups Sue for Accessibility & Ban on New Touch-Screen Machines ----------------------------------------------------------------------- Blind and disabled voters who already have trouble getting into polling places in the city also could have problems using new electronic touch-screen voting machines the city plans to buy, according to a federal lawsuit. The groups are seeking to block the city's planned $18.5 million purchase of new voting machines. "If something is accessible that means anybody can use it, and that includes people with low vision and blind people. They have dismissed us," said Fran Fulton, a visually impaired employee of the Liberty Resources social services organization. Jessie Jane Lewis, who has multiple sclerosis and uses a wheelchair, said only 46 of the city's 1,681 polling places are accessible to wheelchair users. "There is no major city in America that has as many inaccessible polling places," said Jim Dickson of Washington, D.C., vice president of the National Organization on Disability, the lead plaintiff in the suit filed April 19 in U.S. District Court. City Procurement Commissioner Lou Applebaum said he had not seen the lawsuit and would not comment on its allegations. But he said none of the voting machines currently certified by the Pennsylvania Department of State features audio output. The city planned to buy Direct Recording Electronic voting machines from Danaher Corp., of Washington, D.C., that were recommended by a city task force named in 1995. The city is contracting with Danaher for machines, printers, tabulators and training to replace aging, 900-pound mechanical-lever voting machines that are no longer manufactured, are becoming difficult to maintain and were blamed for problems in the last election. The federal Americans with Disabilities Act requires new equipment to be accessible and independently usable by people with disabilities, the lawsuit said. "We are seeking injunctive relief ordering the city to provide accessible polling places and order voting machines with audio output," said Thomas H. Earle, an attorney for the groups. According to the lawsuit, an estimated 184,500 city residents are unable to see or have difficulty seeing words and letters, or are unable to climb stairs. The voting machines the city plans to buy can be operated by people in wheelchairs, said Ed Schulgen, a deputy city commissioner and a member of Mayor John F. Street's Disabled Polling Place Accessibility Task Force. But they could not be used by visually impaired or blind voters. Schulgen said blind voters still can vote by absentee ballot or have someone assist them at the voting machine. Those filing the lawsuit didn't approve of either option. Even using an absentee ballot, Fulton said, "I still have to have somebody sit there and fill it out." "I want to be able to show up like my neighbors," said Lewis. "I don't want them to buy voting machines that are inaccessible to the blind. "If you told any other minority group the only way you can vote is by absentee ballot, it wouldn't wash," Lewis said. (The Associated Press State & Local Wire, April 20, 2001) WINSTAR COMMUNICATIONS: Wolf Haldenstein Commences Securities Suit in NY ------------------------------------------------------------------------Wolf Haldenstein Adler Freeman & Herz LLP commenced a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all purchasers of Winstar Communications, Inc. (NASDAQ: WCII--news) securities during the period between August 2, 2000 and April 2, 2001, inclusive (the "Class Period"), against Winstar, William J. Rouhana, Jr. (Chief Executive Officer and Chairman of the Board of Directors), Richard J. Uhl (Chief Financial Officer), and Nathan Kantor (President and Chief Operating Officer). The judge presiding over the case is the Honorable Miriam Goldman Cedarbaum, and the case is numbered 01-CV-3276. If you would like to view a copy of the complaint filed in this action, please visit the Wolf Haldenstein web site located at http://www.whafh.com. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Winstar securities. Specifically, the complaint alleges that the defendants made material misrepresentations and omissions of material facts concerning the company's business performance during throughout the Class Period. According to the complaint, throughout the Class Period defendants repeatedly assured investors that the company was performing well, that the company was enjoying strong growth, and that it was well-funded to follow its growth-oriented business plan through the first quarter of 2002. At the same time, however, the complaint alleges that the defendants knew or recklessly disregarded that Winstar was overstating its revenues and assets. On April 5, 2001, contrary to prior representations, Winstar announced that it was halting its expansion plans and laying off 2,000 employees (representing about 50% of the Company's workforce). On April 2, 2001, the Company disclosed that it would be filing its annual Report on Form 10-K late. The decline in the value of Winstar common stock has been extraordinary, with the stock closing at $0.40 per share on April 6, 2001. The stock traded as high as $32.00 per share during the Class Period. Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York Michael Miske, George Peters, Gregory M. Nespole, Esq., or Fred Taylor Isquith, Esq., 800/575-0735 classmember@whafh.com WITTER DEAN: Lawsuit v. Partnership re Fraud Still Pending in NY Sp Ct ---------------------------------------------------------------------- As revealed in the report to the SEC by Witter Dean Diversified Futures Fund LP, on September 18 and 20, 1996, purported class actions were filed in the Supreme Court of the State of New York, New York County, on behalf of all purchasers of interests in limited partnership commodity pools sold by DWR. Named defendants include DWR, Demeter, DWFCM, MSDW, the Partnership, certain limited partnership commodity pools of which Demeter is the general partner and certain trading managers to those pools. A consolidated and amended complaint in the action pending in the Supreme Court of the State of New York was filed on August 13, 1997, alleging that the defendants committed fraud, breach of fiduciary duty, and negligent misrepresentation in the sale and operation of the various limited partnership commodity pools. The complaints sought unspecified amounts of compensatory and punitive damages and other relief. The New York Supreme Court dismissed the New York action in November 1998, but granted plaintiffs leave to file an amended complaint, which they did in early December 1998. The defendants filed a motion to dismiss the amended complaint with prejudice on February 1, 1999. By decision dated December 21, 1999, the New York Supreme Court dismissed the case with prejudice. However, on March 3, 2000, plaintiffs appealed the trial court's dismissal of their case. * Crisis Expert Sees Lawsuits in Wake of Dot-com Shakeout --------------------------------------------------------- Justice Department inquiries are a likely outcome of mounting dot-com failures, and securities industry broker/dealers will be the primary target, says crisis consultant Jeffrey Tucker, CEO of Tucker/Hall, a national crisis management company with offices in Tampa Bay and San Jose, Calif. In remarks to a business group, Tucker said several industries will likely face on-going crises this year, including medical equipment manufacturers, the securities industry and computer software developers. "The medical industry has been a target of mounting frustration with regulators and the public for several years now," Tucker said, "but we will also likely see a surge in class action lawsuits in the securities industry and among computer software manufacturers in coming months." "The huge losses among institutional and individual investors this year have been brought on by the failure of so many young dot-com companies and the collapse of Wall Street's market for new issues. I think both the Securities & Exchange Commission and the Justice Department will likely launch inquiries to see how much due diligence was paid by market makers recommending those stocks to the general public," Tucker said. "The securities industry collected fees in the hundreds of millions of dollars when they brought the dot-coms public. Some of those stocks are now bankrupt or are trading at less than 25-cents a share. "I expect regulators are already poring over the carnage to see if broker- dealers recklessly disregarded due diligence in the race for fees and commissions," Tucker said. Tucker said the computer software industry may also see consumer actions escalate against industry leaders, such as Microsoft and others, who may be bringing new programs to market without ironing out all the glitches. "The national industry trade publications are already pointing fingers at some of these companies, and I think there is growing outrage among consumers who are experiencing imperfections in products, like Microsoft's Windows 2000 and Microsoft NT, which may have come to market too fast," Tucker said. Tucker, who works with companies nationally on crisis prevention and crisis management, made his remarks before business leaders attending a Tampa Chamber of Commerce forum on crisis prevention and containment. Tucker said the Institute of Crisis Management in Louisville, Ky., has reported that the number of class action lawsuits increased 122% in 2000 over The largest percentages of those were consumer actions against management and whistle-blower cases by disgruntled workers. ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *