CAR_Public/010417.MBX               C L A S S   A C T I O N   R E P O R T E R

               Tuesday, April 17, 2001, Vol. 3, No. 75

                             Headlines

BAUSCH & LOMB: Schoengold & Sporn Files Securities Lawsuit in New York
CCA: Experts Take Issue with Executive's Denial of Toxin in Lumber
CDnow INC: Cleared of Securities Suit; Ct Finds No Duty to Disclose
DONEGAL GROUP: Has Agreed to Settle Securities Suit Filed Mar 30, 2001
eBANKER USA: Ct Dismisses Investors Suit for Sufficient Cautionary Lang

FORMICA CORP: Laminate Makers Face Antitrust Suits at Early Stages
IBP,INC: Wolf Haldenstein Expands Period in Securities Complaint
KEITHLEY INSTRUMENTS: Spector, Roseman Files Securities Suit in Ohio
MICRO CIRCUITS: Wechsler Harwood Notifies of Securities Suit in CA
NATIONAL REAL: Appeals Filed in Suit re Partnership Vote Solicitation

NORDSTROM INC: Continues to Fight Lawsuit in CA re Cosmetics Prices
O'HARA REGIONAL: New Neglect Suits Filed Against Closed Nursing Home
PAINEWEBBER INC: Policyholders Lodging RICO Claims Lose Bid for Cert.
PAY PHONE: Ausley & McMullen Announces Filing of Securities Suit in FL
PAYDAY LENDERS: Easy Money Escapes Borrowers' Substantive RICO Claims

PHOENIX TELECOM: Ausley & McMullen Announces Securities Lawsuit in FL
PUBLIC SCHOOLS: Lawsuit Compels CT District To Restore ESY Services
RAYTHEON ENGINEERS: PA Suit over Employee Severance Benefits Amended
SOUTHWALL TECHNOLOGIES: Exptects Consolidation of CA Securities Suits
TOBACCO LITIGATION: Blue Cross Issues Statement on Settlement Plan

WIRELESS SPAM: Problem Can Grow Big; Regulatory Purview Draws Attention

                          *********

BAUSCH & LOMB: Schoengold & Sporn Files Securities Lawsuit in New York
----------------------------------------------------------------------
A lawsuit has been filed on behalf of all persons and entities that
purchased the publicly traded securities of Bausch & Lomb (NYSE: BOL)
during the period April 13, 2000 through August 24, 2000 (the "Time
Period").

The complaint alleges that during the Time Period, Bausch & Lomb was
suffering the effects of several critical, long-term problems associated
with its vision care and pharmaceutical segments, including a lack of
growth in new business and pricing pressures from competition. However,
instead of disclosing the true nature and extent of these problems,
Bausch & Lomb misrepresented that it was addressing certain short term
issues that were in the process of being fixed. When the true nature and
extent of the problems began to be disclosed, Bausch & Lomb's stock price
declined precipitously. The claims asserted arise under Sections 10 and
20 of the 1934 Act. Named as defendants in the suit are Bausch & Lomb and
William Carpenter, Bausch & Lomb's then Chairman and CEO.

The case is pending in the United States District Court for the Western
District of New York. Any subsequently filed cases seeking similar relief
and relating to the same facts as alleged herein are expected to be
consolidated into this case.

Under recent amendments to the securities laws, if you are a shareholder
of Bausch & Lomb and purchased your stock during the Time Period, you may
seek to be appointed as the person or group of persons which litigates
the case on behalf of the other similarly situated shareholders. The
deadline to seek such status expires June 12, 2001.

The Sporn firm was established in 1962 and has specialized in this type
of litigation for over 35 years. The firm was credited by the Wall Street
Journal for its work in the Wedtech Securities case, which was settled
for $77.5 million, as follows:

     "$77.5 million settlement ... reached in a securities fraud case
stemming from the Wedtech scandal ... The settlement with 29 defendants
... is believed to be one of the largest ever in a civil
... case ... 'This is a global settlement,' said Samuel Sporn, a
plaintiffs' attorney ... Mr. Sporn said the settlement represents
almost half of the more than $160 million in stocks and bonds that
Wedtech sold to the public between 1983 and 1986."

Contact: Ashley Kim, Esq., Schoengold & Sporn, P.C., 212-964-0046,
866-348-7700, or fax, 212-267-8137, shareholderrelations@spornlaw.com


CCA: Experts Take Issue with Executive's Denial of Toxin in Lumber
------------------------------------------------------------------
Experts take issue with a wood company executive's testimony that his
lumber doesn't contain the toxin, which can leach into the soil.

TALLAHASSEE - Under oath last June, an executive with one of the nation's
top pressure-treated wood companies testified that the lumber doesn't
have arsenic in it - even though the company's own documents say it does.

The statement is baffling to scientists and regulators who are
documenting how ordinary pressure-treated lumber is leaching arsenic into
soils in Florida and all over the world. The arsenic comes from chromated
copper arsenate, or CCA, a pesticide that's infused into the wood to make
it resistant to bugs.

The statement, by William J. Baldwin, a vice president of the
Georgia-based international wood-treatment giant Hickson Corp., now
called Arch Wood Treatment, adds a new wrinkle to the debate over
pressure-treated lumber.

Until now, no treated-wood industry officials have publicly denied that
the wood contains arsenic.

"Arsenic is a highly toxic, poisonous and deadly substance often used as
an insecticide or weed killer," says Baldwin's sworn statement, part of a
lawsuit filed in federal court in Atlanta. "Wolmanized pressure-treated
wood does not contain arsenic. Instead, Wolmanized pressure-treated wood
contains a preservative formulated by Hickson (Wolmanized In-Wood
Preservative.)"

But other company documents clearly list the Wolmanized wood preservative
as CCA, which contains arsenic.

It's sold in most home-improvement stores, including Lowe's and Home
Depot. Arch Wood Treatment's consumer information sheet also says that
the wood is treated with CCA, and "may present certain hazards." And the
company's "Material Safety Data Sheet," a federal requirement, lists an
arsenic compound as one of the hazardous ingredients in the Wolmanized
brand treated lumber. It also says: "One ounce of treated wood dust per
10 pounds of body weight ingested may cause acute arsenic intoxication."

Baldwin declined to explain his comment to the St. Petersburg Times. Arch
Wood Treatment spokesman Huck DeVenzio said "I'm not going to have a
comment, either." Baldwin's attorney also declined comment.

Florida's top environmental regulator, Department of Environmental
Protection Secretary David Struhs, was surprised to hear about Baldwin's
comment.

"He said it doesn't contain arsenic? The fact of the matter is, the end
result when it leaches out is you get arsenic in the soil," Struhs said.
"What we look for is the potential for human exposure, and that's
exposure to arsenic when it leaches out."

Baldwin's statement comes at a vulnerable time for the wood-treatment
industry. The industry is facing a public relations crisis as news
spreads that arsenic is leaching out of pressure-treated wood into soil
all over Florida and the United States, including state parks, back yards
and playgrounds with wooden playscapes.

In Miami, a team of lawyers has filed a class action lawsuit against the
wood-treatment industry, Home Depot and Lowe's. The lawsuit alleges that
people have been poisoned by the arsenic in the wood, and that the
industry showed a "negligent, reckless, and/or intentional disregard of
the harmful effects of the chemicals used in the treatment process."

One key issue in the case is how much the industry knew about the hazards
of CCA wood, and how much it told the public.

The U.S. Environmental Protection Agency banned most arsenic pesticides
years ago -except pressure-treated wood. The EPA reviewed CCA 19 years
ago, and recommended that the wood carry a warning label.

But the wood-treatment industry balked at the labeling requirement.
Instead, they persuaded the EPA to allow them to conduct a "Voluntary
Consumer Awareness Program."

Consumers are supposed to get a fact sheet that advises anyone working
with the wood to wear a dust mask, goggles and gloves. You're supposed to
collect the arsenic-laced sawdust and dispose of it. You're supposed to
work in a well-ventilated area and wash clothes covered in sawdust
separately. Burning the wood can be life-threatening.

Although the industry promised years ago that placards would be
"prominently displayed" in home improvement stores to tell consumers
about the information sheets, it never happened. And the EPA never
challenged the industry about it.

Pressure-treated lumber also has enough toxic chemicals in it to be
classified as a hazardous waste, but the industry got an exemption from
federal hazardous waste laws years ago. Florida regulators are now
challenging that exemption, and they traveled to Washington last week to
ask the EPA to take a new look at whether the wood should be
re-classified as a hazardous waste. Florida DEP officials are worried
that old wood dumps could leach arsenic into drinking water supplies.

The industry has alternative chemicals available to treat wood -
pesticides that don't contain arsenic. They market arsenic-free wood in
some countries that have banned or restricted CCA.

In fact, Baldwin's own company, Arch Wood Treatment, markets an
arsenic-free wood in New Zealand, calling it "a significant improvement
over traditional CCA treatment, as it substantially reduces reliance on
and exposure to the more toxic heavy metals such as chromium and arsenic.
. . . It is environmentally responsible to specify or use Copper Azole
treated lumber."

Baldwin made his sworn statement that the wood doesn't have arsenic in it
as part of an unusual set of lawsuits filed in federal court in Atlanta.

The legal story began last May, when a wood-treater named Pat Bischel
sent a fax to his customers. Bischel used to make CCA-treated wood at his
Northern Crossarm Co. in Wisconsin. But about seven years ago, worried
about arsenic in the wood, he switched to an arsenic-free treatment
called ACQ.

Bischel's fax to his customers said: "Ouch! During the last five weeks,
five major metropolitan news programs have done news segments warning the
public about the dangers of CCA-treated wood.

"In court depositions in 1998, Hickson representatives admitted to
knowing of at least a dozen instances of purported personal injuries
caused by exposure to Wolmanized pressure treated wood.

"Is it time for you to switch to a treated wood without arsenic?

"Call us for more information on ACQ Preserve."

Hickson sued Bischel, alleging deceptive trade practices. A judge issued
an injunction to prevent Bischel from making statements disparaging CCA
wood.

"I'm not supposed to tell you, for instance, that CCA treated wood
contains arsenic," Bischel said in a telephone interview.

In his sworn statement, Baldwin, the Hickson executive, denied that
Hickson executives ever admitted to knowing of injuries caused by the
wood. And, he said, the wood doesn't contain arsenic.

"I have no idea under the sun what he's talking about," said Bischel's
attorney, David McRae of Indiana, who has filed several lawsuits against
the wood-treatment industry. "The wood absolutely contains arsenic."

Bischel, in turn, filed a countersuit accusing Hickson of defaming his
character. Both suits are pending in Atlanta. (St. Petersburg Times,
April 16, 2001)


CDnow INC: Cleared of Securities Suit; Ct Finds No Duty to Disclose
-------------------------------------------------------------------
Finding that investors in CDnow Inc. had no right to know in advance that
the company's proposed merger with Columbia House wasn't likely to go
through because that fact wasn't certain until the "drop dead" date, a
federal judge has dismissed a class-action securities fraud suit.

Senior U.S. District Judge Marvin Katz also ruled that CDnow didn't
deceive investors by allegedly failing to disclose that an independent
auditing firm was planning to release a report that questioned CDnow's
ability to remain a "going concern" for another year because that fact,
too, wasn't certain until the report was issued. Since neither fact was a
certainty, Katz ruled that the company had no "duty to disclose" them."

A corporation is not required to disclose a fact merely because a
reasonable investor would like to know that fact. Rather, an omission is
actionable under the securities law only when the corporation is subject
to a duty to disclose the omitted fact," Katz wrote in his 33-page
opinion in In Re: CDnow Inc. Securities Litigation. Katz also found that
"both of these omissions are immaterial because they concern speculative
and contingent events."

The ruling is a victory for attorneys Marc J. Sonnenfeld and Karen
Pieslak Pohlmann of Morgan Lewis & Bockius who also successfully argued
that the lawsuit failed to meet the heightened pleading standards of the
Private Securities Litigation Reform Act or the "specificity"
requirements for pleading fraud under Rule 9(b) of the Federal Rules of
Civil Procedure.

According to the suit, CDnow's proposed merger with Columbia House which
is equally owned by Sony and Time Warner would have formed a new company
owned 26 percent by CDnow shareholders, 37 percent by Sony, and 37
percent by Time Warner. Columbia House and CDnow were to become
wholly-owned subsidiaries of the new company. In July 1999, CDnow, Sony
and Time Warner jointly announced that they were considering the merger.

But in January 2000, the suits alleged, CDnow's independent auditor,
Arthur Andersen, expressed "serious doubt" about CDnow's ability to
remain a viable entity. Investors say CDnow failed to disclose the
auditor's concerns to the public and violated the merger agreement by
failing to disclose the fact to its would-be partners at Sony and Time
Warner. Instead, the suits allege, CDnow misled investors by stating only
that its fourth-quarter financial results for 1999 were the strongest
ever and by treating the proposed merger as if it were still going
smoothly.

On March 13, 2000 the "drop dead" date for the merger the public learned
some of the bad news when the three companies announced that the merger
was canceled. But investors said they still did not get the whole truth
since the explanation given at the time was that Columbia House was in
poor financial condition. In fact, the investors said, Columbia House's
financial condition was not the sole reason the merger was called off,
and CDnow was left in a precarious position in which it would be sold at
a "bargain basement" price in any later merger.

Now Katz has dismissed the entire case, finding that "as a matter of law,
defendants are not liable for failing to inform the public that the
merger would not go through." Katz found that the merger termination was
not certain until March 13 and that the defendants therefore "had no duty
to inform the public that the deal was dead prior to that date."

But plaintiffs' lawyers argued that CDnow's top officers knew that the
merger was going to fail prior to the public announcement. Katz
disagreed, saying the claim was based on "unsupported and conclusory
allegations." "In arguing that defendants' knowledge was certain, the
plaintiffs ignore that the success or failure of the merger was also
dependent on two other companies Sony and Time Warner making their own
evaluations of the transaction's desirability," Katz wrote. "Plaintiffs
do not suggest in their pleadings that the other parties to the
transaction viewed the deal as dead prior to March 13; the court,
therefore, does not accept plaintiffs' allegation that the merger's
termination was certain before the agreement's drop dead date," Katz
wrote. "The limited factual allegations in the complaint regarding the
role of Sony and Time Warner suggest that the likelihood of the merger's
success was not something that CDnow could independently ascertain or
publicize until the drop dead date."

The plaintiffs also claimed that once Andersen had completed its 1999
audit of CDnow, the company knew it could not survive and that Andersen
would issue the "going concern" qualification unless it merged with
another entity. By Feb. 13, 2000, the suit alleged, CDnow executives knew
the merger could not be consummated because Columbia House's cash flow,
combined with CDnow's true financial condition, could not support the
merged entity. Despite knowing that the merger would not occur and that
it had no available option that would avoid a "going concern"
qualification by Andersen the suit alleged that CDnow chose to keep its
financial crisis quiet while investors continued to pour money into CDnow
shares. And even after the merger was terminated, the suit said, CDnow
President and CEO Jason Olim and Vice President and CFO Joel Sussman made
materially misleading statements that "continued to mislead the public
into believing that the termination was beneficial to CDnow and that it
could survive in its existing financial condition."

But Katz found that investors already knew that CDnow was in financial
trouble as a result of its public release of 1999 financial statements on
Feb. 3, 2000. In a press release, the company reported a net loss of $
25.7 million for the fourth quarter of 1999 and $ 119.2 million net loss
for the year 1999. Figures for the preceding two years revealed that the
company had a working capital deficit of $ 32.7 million by the end of
December 1999; that over the past year, its cost of sales increased 161
percent, from $ 45.35 million in 1998 to $ 118 million in 1999; and that
its overall operating expenses nearly tripled, from over $ 57 million in
1998 to $ 150.7 million in 1999. "If nothing else," Katz wrote, "[the
figures] reveal to a reasonable investor that CDnow was in serious need
of positive cash flow. Thus, the investing public already had
information, independent of Olim's statements, that suggested that
CDnow's condition was such that it required a strong merger partner."

In July 1999, when the merger was announced, CDnow's stock price was $
22-1/4 per share. Its stock price on March 10, 2000 the last trading day
before the merger cancellation announcement was $ 9-7/16 per share. The
price had dropped to $ 6-31/32 per share by close of trading on March 14,
2000. The price dropped again to its 52-week low of $ 3-1/2 per share
closing price on March 29, 2000, the day after Andersen's going concern
qualification was filed with the SEC.

Katz found that CDnow also had no duty to disclose that it might receive
a "going concern qualification" prior to Andersen's issuing one."
Plaintiffs' assertion that the defendants knew that a going concern
qualification was inevitable prior to the date it was actually issued is
an unsupported allegation that ignores that the final decision regarding
the qualification rested with Andersen," Katz wrote.

But Katz also made clear that his ruling was limited to the facts before
him. "The court does not mean to suggest that there can never be an
instance where a company's financial prognosis is so grim that it becomes
clear that the company is unlikely to continue as a going concern before
the auditors have officially announced the death knell. In view of the
facts and circumstances alleged in this case, however, the court holds as
a matter of law that Andersen's going concern qualification was not
certain until the auditors issued their report," Katz wrote.

In an important final section of the opinion, Katz ruled that an
alternative ground for dismissing the entire case was its failure to meet
the heightened pleading standards of the PSLRA and Rule 9(b). For the
same reasons he had laid out in the first parts of the opinion, Katz
found that the suit also "lacks non-conclusory and supported allegations
that the merger was certain to terminate before March 13 and that
Andersen would inevitably decide to issue the going concern qualification
before March 16." He also found that the plaintiffs failed to plead
"scienter" adequately to meet the 3rd Circuit's test which calls for
"facts that constitute circumstantial evidence of either reckless or
conscious behavior" or "alleging facts establishing a motive and
opportunity to commit fraud."

Lead counsel for the plaintiffs was attorney Jill S. Abrams of Abbey
Gardy & Squitieri in New York, along with Lawrence Fenster of Ross &
Hardies, also in New York, and Deborah Gross of the Law Offices of
Bernard Gross as liaison counsel. (The Legal Intelligencer, April 16,
2001)


DONEGAL GROUP: Has Agreed to Settle Securities Suit Filed Mar 30, 2001
----------------------------------------------------------------------
On March 30, 2001, Barry Feldman filed an action in the Court of Chancery
of the State of Delaware against the Mutual Company, the Company and the
directors of the Company. The action was filed derivatively on behalf of
the Company and as a class action on behalf of the holders of the
Company's common stock other than the Company, the Company's directors,
the Mutual Company and their associates and affiliates.

The action challenges the compliance of the Amendment, the Reverse Split
and the Stock Dividend with certain provisions of the Delaware General
Corporation Law and asserts a violation of fiduciary duties by the Mutual
Company and the directors of the Company. The action also makes certain
allegations regarding the grant of stock options to certain persons and
the manner in which the Coordinating Committee of the Boards of Directors
of the Company and the Mutual Company operates.

The Company, the Mutual Company and the Company's Board of Directors deny
the allegations in the action, and believe the actions taken in
connection with the Amendment, the Reverse Split and the Stock Dividend
were appropriate and in the best interests of all of the Company's
stockholders.

However, rather than engage in protracted and extensive litigation, the
Company, the Mutual Company and the directors of the Company entered into
an agreement, which is subject to court approval, settling the
litigation. In addition to the changes previously outlined in this
supplement, the Company has agreed to: (i) clarify the role of the
Coordinating Committee; (ii) make independent legal counsel available to
the Company's members on the Coordinating Committee at their request and
at the Company's cost, (iii) not grant stock options or shares of
restricted stock under its 2001 Equity Incentive Plan, 2001 Equity
Incentive Plan for Directors or 2001 Employee Stock Purchase Plan to
directors or employees of the Mutual Company who are not also either
directors of the Company or of one of its subsidiaries or employees of
the Mutual Company whose services benefit the Company and (iv) distribute
a proxy statement supplement to the extent the Company believes it is
required or advisable to do so. Upon court approval of the settlement, it
is anticipated that the Company and the Mutual Company will be obligated
to pay certain legal fees to the plaintiff's counsel as determined by the
court.

                        DONEGAL GROUP INC.
                        -------------------
       NOTICE OF SUPPLEMENT DATED APRIL 11, 2001 TO PROXY STATEMENT
                        DATED MARCH 29, 2001
                        --------------------

To   the Stockholders of DONEGAL GROUP INC.:

    We mailed each of you a proxy statement dated March 29, 2001 relating
to our annual meeting of stockholders to be held at 10:00 a.m., local
time, on April 19, 2001, at our offices at 1195 River Road, Marietta,
Pennsylvania 17547. One of the items of business to be conducted at the
annual meeting will be to act upon the approval of an amendment to our
certificate of incorporation. Among other things, the amendment would
reclassify our existing common stock as Class B common stock and effect a
one-for-three reverse split of our Class B common stock. The amendment
would also authorize a new class of common stock with one-tenth of a vote
per share designated as Class A common stock. If approved by our
stockholders at the annual meeting, the amendment would become effective
at the close of business on April 19, 2001.

    On March 30, 2001, our board of directors declared, subject to
stockholder approval of the amendment, a dividend of two shares of Class
A common stock for each share of Class B common stock held of record at
the close of business on April 19, 2001. As a result of the reverse split
and the stock dividend, all stockholders will continue to own, except for
any fractional interests, the same number of our shares, two-thirds of
which will be Class A shares and one-third of which will be Class B
shares.

    Our board of directors has decided to make certain changes in the
implementation of the reverse split and the stock dividend as described
in our March 29, 2001 proxy statement. These changes are described in
detail in the accompanying supplement to our proxy statement, which you
should read carefully. A summary of the significant changes are as
follows:

   -- we will pay cash for any fractional interest in a share of Class B
common stock resulting from the reverse split based on the closing price
of our common stock for the ten trading days ending on the date of the
reverse split. This cash payment will be in lieu of rounding any such
fractional interest up to the next largest whole number;

   -- we will provide in the amendment to our certificate of
incorporation that dividends on our Class A common stock shall be at
least 10% greater than dividends on our Class B common stock;

   -- in connection with any public offering of our Class A common stock
during the next 18 months, Donegal Mutual Insurance Company (the "Mutual
Company") has agreed to limit its sales of Class A common stock to the
lesser of 20% of the shares of Class A common stock subject to such a
public offering or 20% of the shares of Class A common stock held by the
Mutual Company; and

   -- in order to prevent any confusion, we will ask the holders of our
existing common stock to return the certificates representing these
shares for cancellation as a prerequisite to receiving certificates
representing their new shares of Class A common stock and Class B common
stock.

    Again, we urge you to read carefully the accompanying supplement to
our March 29, 2001 proxy statement and the revised text of the proposed
amendment to our certificate of incorporation. The supplement also
describes a lawsuit brought by a stockholder of the Company, purportedly
on behalf of a class of holders of our existing common stock as well as
derivatively on behalf of the Company in the Delaware Court of Chancery
on March 30, 2001 against the Mutual Company, us and our board of
directors. The plaintiff alleged, among other matters, a breach of
fiduciary duty in connection with the amendment, the reverse split and
the stock dividend, and sought to enjoin the holding of our annual
meeting. Subject to court approval, that lawsuit was settled on April 10,
2001. In connection with the settlement, the Mutual Company, we and our
Board of Directors denied any breach of fiduciary duty or any other
actionable conduct. We believe that the Mutual Company, which has owned a
majority of our common stock at all times since our founding in 1986, has
acted in the best interest of all of our stockholders.

    We are not soliciting new proxies for the annual meeting because we
do not believe there has been a material change in our plan to implement
the amendment to our certificate of incorporation, the reverse split and
the stock dividend. Therefore, if you previously voted by proxy and do
not wish to change your vote, you need take no action. If, however, you
wish to revoke your proxy, which will have the effect of voting against
approval and adoption of the amendment, or receive a new proxy, you may
do so by calling the Secretary of the Company at 717-426-1931, by faxing
the Secretary of the Company at 717-426-7009 or by attending the annual
meeting and voting in person.

                                  Sincerely,

                                  Donald H. Nikolaus
                                  President and Chief Executive Officer

April 11, 2001


eBANKER USA: Ct Dismisses Investors Suit for Sufficient Cautionary Lang
-----------------------------------------------------------------------
Plaintiffs brought suit on behalf of four purported subclasses of
purchasers of securities from defendants. Plaintiffs' claims concerned
private placements of certain securities and related principally to three
private offering memoranda. The court granted defendants' motion to
dismiss the complaint. Plaintiffs' claim alleged, among other things,
that the first and second memoranda were misleading when they stated that
the company intended to register its securities with the Securities &
Exchange Commission, but failed to disclose that there were structural
problems that would make registration difficult. The court, however,
found that the placement memoranda contained more than sufficient
cautionary language to put purchasers on notice of the risk that the
securities would never be registered. Warnings were contained in more
than one place in each memorandum.

Judge Martin

HALPERIN v. eBANKER USA.COM, INC. -- Plaintiffs bring this action on
behalf of four purported subclasses of purchasers of securities from
Defendants. Plaintiffs' claims concern private placements of eBanker
USA.COM, Inc. ("eBanker") securities, and relate principally to three
private offering memoranda, dated May 26, 1998 ("First Memorandum"),
March 3, 1999 ("Second Memorandum"), and November 10, 1999 ("Third
Memorandum"). Defendants move to dismiss the complaint on various
grounds. For the reasons stated herein, the motion to dismiss is granted.

Plaintiffs' first claim alleges that the First Memorandum was false and
misleading because it stated that Defendant Fai Chan ("Chan") and a
company known as Fronteer Holdings would receive no compensation other
than a management fee of 10% of the profits, whereas shortly after the
offering, Chan and others received options to purchase significant
amounts of eBanker stock. Defendants move to dismiss this claim on the
ground that it is time-barred because suits for violations of Section
10b-5 must be brought within one year "after the discovery of the facts
constituting the violation...." Lampf, Pleva, Lipkind, Prupis & Petigrow
v. Gilbertson, 501 U.S. 350, 363, 111 S. Ct. 2773, 2782 (1991). While
they concede that the grant of the options was disclosed in the financial
statements of the company more than a year prior to the filing of the
complaint, Plaintiffs contend that Defendants have not established that
the lead plaintiff with respect to this claim actually received the
financial statements that contained the disclosure. However, Defendants
have produced two letters written by Plaintiff Michael Halperin
("Halperin") more than a year before the filing of the complaint, in
which he complains about the issuance of the options. (Cook Decl. Exs. 7,
8.) Because Halperin's correspondence establishes that he had notice of
the facts establishing his claim more than a year prior to the filing of
the complaint, this claim must be dismissed. See Rothman v. Gregor, 220
F.3d 81, 95 (2d Cir. 2000).

In their second claim, Plaintiffs allege that the First and Second
Memoranda were misleading when they stated that the company intended to
register its securities with the Securities & Exchange Commission
("SEC"), but failed to disclose that there were structural problems
within the company that would make registration difficult or that
registration was contingent on completion of an IPO. The problem with
Plaintiffs' argument is that the placement memoranda contained more than
sufficient cautionary language to put purchasers on notice of the risk
that the securities would never be registered. For example, the First
Memorandum stated:

[There] can be no assurance that the Company will file a registration
statement with the SEC or that the SEC will declare the registration
statement effective or that any listing on a national securities exchange
will occur at any time. See "Risk Factors." In addition, prior to 1933
Act and 1934 Act registration with the SEC, the Company must determine
whether its business activities will require it to register with the SEC
as an investment company under the 1940 Act."

(Schneider Decl. Ex. 2 at 26.) The Second Memorandum stated: "There can
be no assurance that the Company will attempt to register its securities
publicly, be successful in an endeavor to do so or be in a position to
offer such securities to persons who invest in this offering." (Schneider
Decl. Ex. 3 at 11.) Similar warnings were contained in more than one
place in each of the memoranda. This cautionary language put Plaintiffs
on notice that they could not reasonably rely on the securities ever
being registered with the SEC. See Olkey v. Hyperion 1999 Term Trust,
Inc., 98 F.3d 2 (2d Cir. 1996).

Plaintiffs' third claim asserts that the Second Memorandum did not
disclose that Fronteer Capital, Inc. ("Fronteer Capital"), a company
controlled by Chan, had retained 1,000,000 warrants to purchase the stock
of Global Med Technologies, Inc. ("Global Med") when it assigned a loan
from Global Med to eBanker. However, a reasonable person reading the
description of the transaction at issue in the placement memorandum
should have understood that eBanker was only receiving 5,000,000 of the
6,000,000 warrants that Global had committed to issue in connection with
the loan. The memorandum provided:

On April 14, 1998, Fronteer Capital and Heng Fung Finance committed to
provide to Global Med... lines of credit for up to $ 1,650,000 and $
1,500,000, respectively...

...

... Global has the right to draw the $ 1,650,000 from Fronteer Capital
after the total loan from Heng Fung Finance is drawn, and if the loan
provided by Fronteer Capital is drawn, Fronteer Capital will earn
warrants to purchase 6,000,000 shares of Global's common stock upon the
same terms and conditions as the warrants.... For issuing the commitment,
Fronteer Capital has earned warrants to purchase 1,000,000 of the
6,000,000 shares of Global's common stock.

...

On September 11, 1998, Fronteer Capital entered into an agreement...
whereby Fronteer Capital agreed to assign to [Fronteer Development
Finance Inc. ("FDFI")] its rights to and obligations in the loan
commitment to Global. Subsequent to September 30, 1998, Global drew $
1,200,000, and as a result, FDFI earned the additional 5,000,000 warrants
to purchase 5,000,000 shares of Global's common stock at $ 0.25 per
share.

(Schneider Decl. Ex. 4 at 73-74.)

Because the memorandum stated that Fronteer Capital had earned 1,000,000
warrants for the commitment prior to the assignment, and then stated that
when Global drew down on the loan, "FDFI [eBanker's predecessor] earned
the additional 5,000,000 warrants," it clearly conveyed to the reasonable
reader that Fronteer Capital had retained the 1,000,000 warrants that it
earned by making the commitment. Certainly, sophisticated investors could
not reasonably have assumed that the 1,000,000 warrants that Fronteer
Capital earned prior to the assignment of the loan were being transferred
to eBanker. See Brown v. E.F. Hutton Group, Inc., 991 F.2d 1020, 1032 (2d
Cir. 1993).

Plaintiffs' fourth claim alleges that the Third Memorandum was misleading
when it stated that the proceeds from the sale of preferred stock would
be used for "working capital," but failed to disclose that $ 2,000,000 of
the $ 15,000,000 would be used for what Plaintiffs contend was an
investment in "a speculative blind pool company." (P's Mem. Opp. D's M.
S.J. at 24.) Here again, the problem with Plaintiffs' argument is that
the language of the memorandum gave adequate notice that ultimately the
use of the proceeds would be left to the discretion of the Board of
Directors. The memorandum stated:

The amounts actually expended for each use are at the discretion of the
Board of Directors and may vary significantly depending upon a number of
factors. Further, if the Board of Directors believes that the proposed
use of proceeds are not in the best interests of the Company, the Board
of Directors will decide how the proceeds will be used.

(Schneider Decl. Ex. 5 at 19.)

Because the use of proceeds included "for working capital and general
corporate purposes," the use of $ 2,000,000 for an investment that
certain shareholders might consider speculative is not inconsistent with
the use-of-proceeds section of the placement memorandum. See Mercury Air
Grp., Inc. v. Jet USA Airlines, Inc., 97 Civ. 3473, 1998 WL 542291, at *4
(S.D.N.Y. Aug. 26, 1998), aff'd, 189 F.3d 461 (2d Cir. 1999) (unpublished
opinion).

Plaintiffs also allege pendent state law fraud claims based on the
allegations in the complaint. With respect to the claims based on the
second, third, and fourth set of facts described above, because the
statements at issue were found not to be misrepresentations, those claims
are dismissed on the merits.

As to the state law claim based on the compensation provision in the
First Memorandum, it is unclear from the parties' submissions how this
claim would be resolved under New York law. First, New York's statute of
limitations for this type of claim is six years from commission of the
fraud or two years from discovery, whichever is longer. Thus, Plaintiffs'
claims would not appear to be time-barred in New York. However, where the
plaintiff is not a New York state resident, New York courts invoke the
borrowing statute. This statute applies the shorter of the New York
statute of limitations or that of the plaintiff's residence. See In re
Prudential Secs. Inc. Ltd. Partnerships Litig., 930 F. Supp. 68, 82
(S.D.N.Y. 1996). It appears that Plaintiff Halperin may live in
California based on the letterhead contained in several exhibits, but the
complaint fails to specify his state of residence. Furthermore, New York
applies an interest analysis to determine which state's law applies to a
tort case. Again, the complaint fails to designate Halperin's residence
or where his accounts were located. The defendants appear to have
contacts mainly in Colorado and New York. Thus, it is impossible to
determine from the complaint where the relevant events occurred.

Even assuming that New York law applies to this action, it is uncertain
whether the allegations sufficiently state a claim for fraud. Under New
York law, a fraud plaintiff must plead with particularity: (1) a material
misrepresentation or omission of fact; (2) made with knowledge of its
falsity; (3) with an intent to defraud; and (4) reasonable reliance on
the part of the plaintiff; (5) that causes damage to the plaintiff. See
Johnson Elec. N. Am. Inc. v. Mabuchi Motor Am. Corp., 98 F. Supp. 2d 480,
488-89 (S.D.N.Y. 2000). "A complaint may give rise to a sufficient
inference of fraudulent intent in two ways: (1) by alleging a motive and
clear opportunity to commit fraud; and (2) where motive is not apparent,
by identifying circumstances 'indicating conscious behavior' by the
defendant." ABF Capital Mgmt. v. Askin Capital Mgmt., L.P., 957 F. Supp.
1308, 1326 (S.D.N.Y. 1997) (quoting Powers v. British Vita, P.L.C., 57
F.3d 176, 184 (2d Cir. 1995)). That a defendant stands to profit from the
alleged fraud is not enough to establish motive. See id. ("On a practical
level, were the opposite true, the executives of virtually every
corporation in the United States could be subject to fraud
allegations."). However, where the facts surrounding the fraud are within
the sole knowledge of the defendant, particularly in the case of offering
memoranda, New York courts will lower the stringent standard for pleading
scienter. See Friedman v. Arizona World Nurseries Ltd. P'ship, 730 F.
Supp. 521, 531 (S.D.N.Y. 1990), aff'd, 927 F.2d 594 (2d Cir. 1991);
Ambassador Factors v. Kandel & Co., 626 N.Y.S.2d 803, 806 (App Div.
1995).

The complaint alleges that six weeks after the First Memorandum closed,
eBanker passed the resolution to award the options, and that it did so
"with knowledge at the time at [sic] the First Offering that these steps
would be taken." Plaintiff relies on the temporal proximity between the
misstatement and the award of options, plus the benefit conferred on the
eBanker managers, as circumstantial evidence of scienter. Defendant
responds that Plaintiff has plead no facts to indicate that the statement
was false when made.

Because the complaint presents a close question regarding whether New
York courts would deem these allegations sufficient to state a fraud
claim, and because it remains unclear whether New York law should apply
at all, the Court will decline to exercise supplemental jurisdiction over
this remaining pendent claim, and it is hereby dismissed. (New York Law
Journal, April 5, 2001)


FORMICA CORP: Laminate Makers Face Antitrust Suits at Early Stages
------------------------------------------------------------------
Manufacturers of high-pressure laminate, including Formica Corporation,
have been named as defendants in purported class action complaints filed
in federal and certain state courts. The complaints, which all make
similar allegations, allege that high-pressure laminate manufacturers in
the United States engaged in a contract, combination or conspiracy in
restraint of trade in violation of state and federal antitrust laws and
seek damages of an unspecified amount. The actions remain in their early
stages. Formica Corporation intends to defend vigorously against the
allegations of the complaints.


IBP,INC: Wolf Haldenstein Expands Period in Securities Complaint
----------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP announces that in response to
further disclosures regarding IBP's accounting irregularities and alleged
GAAP violations in conjunction with IBP's acquisition of Corporate Brand
Foods America, Inc. and in the preparation of the financial reports for
IBP's DFG Foods, Inc. subsidiary, as well as IBP's disclosure that it
will take a $47 million pretax charge in its 2000 fiscal year, Wolf
Haldenstein Adler Freeman & Herz LLP intends to expand the Class Period
in this pending litigation. The extended class period will be March 25,
1999 through March 29, 2001.

The amended complaint will cover the recent announcement by IBP that it
will take a $47 million charge in its 2000 fiscal year in conjunction
with accounting irregularities in the Company's acquisition of Corporate
Brand Foods America, Inc. and in the preparation of the financial reports
for the Company's DFG Foods, Inc. subsidiary, as well as Tyson Foods'
termination of its proposed acquisition of IBP, based upon its assertion
that it "was inappropriately induced to enter into the merger agreement"
and accusing IBP of fraud in seeking to "lure" it into "vastly
overpaying" for IBP stock. The amended complaint will further allege that
the Company's financial statements issued during the Class Period were
materially false and misleading and in violation of Generally Accepted
Accounting Principles.

In January 2000, class action lawsuits were initiated in the United
States District Court for the District of Nebraska, on behalf of all
persons who purchased the common stock of IBP between March 25, 1999 and
January 12, 2000, inclusive. The complaints alleged, in part, that IBP
and individual defendants Robert Peterson and Larry Shipley, issued a
series of materially false and misleading statements concerning IBP's
compliance with numerous state and federal environmental regulations
without any basis to do so. In particular, defendants repeatedly
represented that IBP "believes it is in substantial compliance" with
applicable environmental regulations and guidelines. At the time that
defendants made those statements, however, IBP was, in fact, violating
numerous state and federal environmental laws at its Dakota City,
Nebraska and South Sioux City, Nebraska slaughterhouse, tannery, and
wastewater processing facilities. The action charges that by defendants'
wrongful course of conduct, they violated sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 (the "Exchange Act), 15 U.S.C. SS 78J(b)
and 78t(a) and Rule 10b-5, 17 C.F.R. S 240.10b-5, promulgated thereunder.

Contact: Gregory M. Nespole, Esq., George Peters, or Fred Taylor Isquith,
Esq., all of Wolf Haldenstein Adler Freeman & Herz LLP, 800-575-0735,
classmember@whafh.com


KEITHLEY INSTRUMENTS: Spector, Roseman Files Securities Suit in Ohio
--------------------------------------------------------------------
The law firm of Spector, Roseman & Kodroff, P.C. announces that a class
action lawsuit has been commenced in the United States District Court for
the Northern District of Ohio against defendants Keithley Instruments,
Inc. (NYSE: KEI), and Joseph P. Keithley, Chairman, President, and Chief
Executive Officer, on behalf of purchasers of the stock of Keithley
during the period from January 18, 2001 through March 9, 2001, inclusive,
(the "Class Period").

The complaint alleges 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 during the Class Period regarding the demand for the Company's
products and its expected revenues.

Specifically, defendants stated that they anticipated that second quarter
revenues would exceed those of the first quarter, in part, because of
strong demand for the Company's products and the Company's record
backlog. As alleged in the complaint, these statements were false and
misleading when made because defendants knew that Keithley was suffering
from reduced new equipment orders, delays in scheduled deliveries and,
with respect to semiconductor customers, canceled orders, all of which
would lead to reduced sales and earnings in the second quarter of 2001.

As further alleged in the complaint, defendants' statements that
Keithley's backlog was sufficiently large to overcome any softness in the
economy and would lead to increased sales and earnings for the second
quarter of 2001 were also materially false and misleading because
defendants knew but did not disclose that the backlog was not a true
measure of sales revenue because the backlog was subject to cancellation
or delayed shipment at the "buyer's" discretion.

Finally, on March 12, 2001, before the market opened for trading,
defendants issued a press release announcing that sales and earnings for
the first quarter of 2001 would be less than expected and 25% below the
sales levels of the first quarter of 2001. The market's reaction to this
announcement was immediate and punitive. Shares of Keithley stock closed
on Monday, March 12, 2001, at $14.95, from a previous close on Friday,
March 9, 2001, of $20.76, on reported volume of approximately 2.2 million
shares. Prior to this disclosure, defendant J. Keithley sold shares of
Keithley stock for proceeds of approximately $3.2 million, while other
insiders sold shares for proceeds in excess of $5 million.

Contact: Robert M. Roseman of Spector, Roseman & Kodroff, P.C.,
888-844-5862


MICRO CIRCUITS: Wechsler Harwood Notifies of Securities Suit in CA
------------------------------------------------------------------
The following statement was issued April 16 by the law firm of Wechsler
Harwood Halebian & Feffer LLP:

Notice is hereby given that Wechsler Harwood has been engaged to file a
class action lawsuit in the United States District Court for the Southern
District of California on behalf of all purchasers of the common stock of
Applied Micro Circuits Corporation (Nasdaq:AMCC) ("Applied Micro" or the
"Company") from November 30, 2000 through February 5, 2001, inclusive
(the "Class Period").

The complaint charges Applied Micro and certain of its officers and
directors with violations of the Securities Exchange Act of 1934. The
Complaint alleges that the defendants disseminated false and misleading
statements concerning the Company's operations and prospects, including
the following:

   -- Applied Micro Circuits was on track to achieve 16% to 20%
sequential growth for Q4 2001.

   -- Applied Micro Circuits had $133 million in backlog which was equal
to 77% of its forecast for its March quarter.

   -- The increase in its Q3 DSOs (days sales outstanding) was not
attributable to the financial problems many of Applied Micro Circuits'
customers were having but rather due to the MMC acquisition and back-end
loading due to foundry issues.

   -- The Company's $133 million of backlog was solid.

   -- MMC, Applied Micro's new subsidiary, had not been notified of any
material order cancellations.

   -- Applied Micro's demand was so strong that its only real restraint
on its future financial prospects was its ability to have enough supply.

   -- The Company would conservatively report Q4 EPS of $0.17 and fiscal
2001 EPS of $0.57.

   -- The Company would post growth of 16%-20% compared to the 13%
analysts had previously forecast, in spite of all the recent concerns
regarding telecom equipment slowdowns.

Taking advantage of the inflation in Applied Micro's stock caused by
their statements, the Applied Micro insiders sold almost $100 million
worth of their own Applied Micro stock at artificially inflated prices of
as much as $87 per share.

On February 5, 2001, after the close of the market, the truth concerning
Applied Micro's operations and the sudden filings by Applied Micro's
officers to sell their personal holdings in Applied Micro came under fire
from analysts as they questioned Applied Micro about its claimed unique
position in the optical space. Defendants were forced to disclose that in
fact Applied Micro was experiencing large order cancellations with its
OC-12, OC-48 and OC-192 products. This news sent Applied Micro's shares
plummeting from $70 where they had traded days before when defendants
were selling their own shares to as low as $53 on February 6, 2001.

Contact: Wechsler Harwood Halebian & Feffer LLP, New York Shareholder
Relations, 1-877-935-7400 pguiteau@whhf.com


NATIONAL REAL: Appeals Filed in Suit re Partnership Vote Solicitation
---------------------------------------------------------------------
According to the report to the SEC by National Real Estate Ltd
Partnership Income Properties, on May 25, 1999, the general partners, the
property management company (NRMI), and other entities and individuals
were named as defendants in a lawsuit (the "Vishnevsky Defendants"). The
Partnership (along with other partnerships, collectively the
"Partnerships") was not included in the original lawsuit but was later
added to the action as a nominal defendant. The plaintiffs sought to have
this action certified as a class action lawsuit. In the complaint, the
plaintiffs alleged wrongdoing against Vishnevsky Defendants in connection
with two basic areas. First, allegations involving various vote
solicitations alleged by the plaintiffs to be an effort to perpetuate the
Partnerships and avoid liquidation. Second, allegations involving the
taking and use of Partnership funds and property, including excessive
fees and unauthorized expenses.

On March 14, 2000, the parties to the litigation with the exception of
the defendant Wolf & Company entered into a Stipulation of Settlement.

Based upon the Stipulation, on April 27, 2000, the Circuit Court of
Waukesha County held a hearing which certified the case as a class action
and approved terms of a settlement. The more significant terms of the
Stipulation of Settlement are as follows:

An independent marketing agent (the "Partnerships' Representative") was
appointed to market and sell the Partnership investment property (the
"Property"). However, no offer to purchase the Property will be accepted
without first obtaining approval from a majority interest of the limited
partners. Final distributions of the net proceeds received from a sale of
the Property will be made in accordance with the terms of the
Partnership's limited partnership agreement and prospectus, and upon
providing 20-day notice to the plaintiff's attorney. Net proceeds will
first be applied to pay plaintiffs' counsel's legal fees, expenses and
costs, with interest thereon.

The Partnerships'  Representative is presently preparing an Offering
Memorandum for marketing the Property. Interim distributions to limited
partners will continue to be made in accordance with the limited
partnership agreement. However, upon final approval of the Settlement,
distributions were increased to the extent that sufficient reserves were
established to support normal partnership operations and the wind-up of
Partnership affairs upon the sale of the Property. Any such additional
distributions were made within 30 days of the final approval of the
Settlement.

NRMI and the general partners shall continue to provide management and
consulting services to the Partnership on the same terms and conditions
currently provided under existing contracts until the investment property
is sold and assets liquidated and the Partnership entity dissolved. NRMI
will also be the listing broker for the sale of the Properties.

The plaintiffs' claims made against NRMI, the general partners, and other
related parties for excessive charging of expenses to the Partnerships,
including the Partnership, will be settled through binding arbitration.
Any such expenses disallowed through arbitration shall be reimbursed to
the Partnerships.

At the April 27, 2000 hearing, the lawsuit was certified as a non-opt
outclass action, in which all limited partners of the Partnership other
than the Vishnevsky Defendants are required to be included in the
settlement of this litigation. Furthermore, the Court ruled that
plaintiffs' counsel's attorneys fees would be equal to one-third of the
difference between the secondary market value of the  Partnership
interests and the total funds available for distribution  to the limited
partners after payment of all Partnership obligations. The Court allowed
the Vishnevsky Defendants sixty days thereafter to present their evidence
regarding secondary market value.

On June 20, 2000, the Court entered a judgment based upon its April 27th
decision. Thereafter, on July 21, 2000, the Court held a hearing on the
plaintiffs Motion for Enforcement of the Court Approved Settlement and in
Support of Sanctions. The outcome of the hearing was that the Court
granted sanctions totaling $437,000.00 against the Vishnevsky Defendants
and their counsel for delaying the appointment of the Partnerships'
Representative and the arbitrators. The Court took under advisement the
remaining open issue regarding the secondary market value for computing
the plaintiffs' counsel's attorneys fees until the arbitration
proceedings are completed and the Partnerships' properties are sold. A
Motion for Reconsideration of the sanctions was filed with the Court and
was denied on September 25, 2000. The Vishnevsky Defendants filed a
motion with the Court to stay payment of the sanctions pending appeal.
That motion was also denied.

On August 2, 2000, the Vishnevsky Defendants filed an appeal from that
portion of the judgment determining the method for computing the
plaintiffs counsels' attorneys fees. On October 10, 2000 the Vishnevsky
Defendants and their counsel filed a second appeal from the order
granting the sanctions. A motion to consolidate the two appeals has been
granted.  The appellate court has temporarily stayed payment of the
sanctions pending receipt of briefs on the issue. The arbitration panel
has not been fully selected but discovery is proceeding. Based on the
events to date, it is not possible to determine the final outcome of the
litigation, or the amount of any potential monetary impact to the
Partnership. Therefore, no provision for any such financial impact
arising from the lawsuit has been made in these financial statements.


NORDSTROM INC: Continues to Fight Lawsuit in CA re Cosmetics Prices
-------------------------------------------------------------------
The Company was originally named as a defendant along with other
department store and specialty retailers in nine separate but virtually
identical class action lawsuits filed in various Superior Courts of the
State of California in May, June and July 1998 that have now been
consolidated in Marin County state court.

Plaintiffs' consolidated complaint alleged that the Company and other
retailers agreed to charge identical prices for cosmetics and fragrances,
not to discount such prices, and to urge manufacturers to refuse to sell
to retailers who sell cosmetics and fragrances at discount prices,
resulting in artificially-inflated retail prices paid by the class in
violation of California state law. Defendants, including the Company,
answered the consolidated complaint denying the allegations. The Company
and the other retail defendants have produced documents and responded to
plaintiffs' other discovery requests, including providing witnesses for
depositions.

Last year, plaintiffs filed an amended complaint naming a number of
manufacturers of cosmetics and fragrances and two other retailers as
additional defendants. Plaintiffs' amended complaint alleges that the
retail price of the "prestige" cosmetics sold in department and specialty
stores was collusively controlled by the retailer and manufacturer
defendants in violation of the Cartwright Act and the California Unfair
Competition Act by various means, including restricting the sale of
prestige cosmetics to department stores only; agreeing that all
department and specialty stores will sell such cosmetics at the
manufacturer's suggested retail price ("MSRP"); controlling the
advertising of cosmetics and Gift-With-Purchase programs; and the
manufacturer defendants guaranteeing the retailer defendants a gross
margin equal to 40% of MSRP and buying back any unsold cosmetics to
prevent discounting from MSRP.

Plaintiffs seek treble damages and restitution in an unspecified amount,
attorneys' fees and prejudgment interest, on behalf of a class of all
California residents who purchased cosmetics and fragrances for personal
use from any of the defendants during the period four years prior to the
filing of the amended complaint. Defendants, including the Company, have
answered the amended complaint denying the allegations. Plaintiffs have
submitted requests for production of documents to the manufacturer
defendants, who are in the process of responding to these and plaintiffs'
other discovery requests. Plaintiffs have not yet moved for class
certification.


O'HARA REGIONAL: New Neglect Suits Filed Against Closed Nursing Home
--------------------------------------------------------------------
An attorney has filed a lawsuit on the behalf of nine former patients
against a now-closed nursing home that already settled with 23 other
patients for $37 million.

Among the plaintiffs are three people who allegedly died from the O'Hara
Regional Center for Rehabilitation's abuse and neglect.

O'Hara attorney Rich Podoll said the new lawsuits had only been filed
because of the previous suits, calling them "opportunistic and
unfounded."

As in the previous cases, the plaintiffs were severely disabled, many
dependent on staff for eating, drinking, moving and even breathing. The
lawsuit says that because the home was chronically short-staffed, they
became dehydrated, malnourished, dirty and infected.

The lawsuit also accuses O'Hara owners of illegally self-insuring in 2000
by purchasing a policy with a massive deductible. With 11 claims in the
current case, the deductible would be $1.375 million on a $3 million
policy, said Jay Reinan, attorney for the patients.

Reinan's suit seeks damages personally from owners Hersch "Ari" Krausz
and David Sebbag because the corporation doesn't seem to have that kind
of money.

State inspectors had investigated complaints at O'Hara. The nursing home
decided to shut down last fall after having been threatened with closure
by state inspectors in 1998 and in August. Forty-one patients who were in
the nursing home have been moved to other facilities. (The Associated
Press State & Local Wire, April 14, 2001)


PAINEWEBBER INC: Policyholders Lodging RICO Claims Lose Bid for Cert.
---------------------------------------------------------------------
In a suit filed by two customers, who purchased life insurance policies
allegedly marketed as alternatives to Individual Retirement Accounts, a
District Court denied class certification because individual factual
questions predominated over common issues of fact and law. (Moore v.
Paine Webber Inc., et al., Nos. 96 CIV 6820 JFK, 97 CIV 4757 JFK
(S.D.N.Y. 3/7/01).)

Robert Moore and Jeannette Parry sued PaineWebber Inc. in the U.S.
District Court, Southern District for New York alleging common-law fraud
as a predicate for RICO Act violations. They claimed that PaineWebber
disguised a life insurance policy as an investment package similar to a
standard IRA. The package was called the "Provider." PaineWebber
allegedly represented the package would be a good replacement for the
plaintiffs' existing IRAs. They contended the sales pitch promoted by
PaineWebber indicated a life insurance policy was a component of the
provider. Moore and Parry purchased the Provider package.

The District Court found the policyholders adequately pled that Paine
Webber materially misrepresented the Provider as an IRA-substitute and
the policyholders detrimentally relied on the misrepresentation. However,
the court dismissed the policyholders' second amended complaint because
they could not demonstrate loss causation. The 2nd U.S. Circuit Court of
Appeals vacated the decision and remanded upon finding adequate causation
and a material misrepresentation (see Civil RICO Report, Sept. 29, 1999,
p.1).

After the remand, the policyholders moved for certification of a class of
all persons who purchased the PaineWebber Provider policy between Jan. 1,
1989, and the date of final judgment in their action. They also requested
the court to reconsider an amended affidavit of James W. Johnson, their
attorney. The affidavit contained two sales scripts allegedly used by
PaineWebber's brokers in promoting the Provider.

PaineWebber argued that individual factual questions predominated over
questions of fact or law common to the putative class. It contended
different representations during sales pitches were made to the 6,840
class members. To support this contention, PaineWebber submitted
affidavits from five of its brokers swearing they did not follow or use
the two scripts provided by the policyholders.

The policyholders relied on the two sales scripts attached to their
attorney's affidavit. The court observed the scripts described the
Provider as a retirement program similar to an IRA, but they contained
different language.

The District Court stated, "the parties have submitted three different
phone scripts and two solicitation letters. These variously describe the
Provider as a 'savings program,' as a 'retirement program,' as a
'retirement product' 'featuring a universal life insurance policy,' and
as, simply, a 'universal life insurance policy.'" The court noted the
materials all envisioned giving supplementary information to customers
before they made a purchase.

The District Court distinguished the decision in In re Prudential Ins.
Co. of Am. Sales Practices Litigation, 962 F.Supp. 450 (D.N.J. 1997),
where the court certified a class of insureds based on representations
that were made pursuant to a uniform written script. The court ruled
that, unlike the court in Prudential, the various representations made by
PaineWebber's brokers differed significantly among the class members.
"Instead, this case would require proof of each classmember's reliance on
misrepresentations by PaineWebber brokers, which could vary significantly
from conversation to conversation, meeting to meeting, and seminar to
seminar," the court said.

Accordingly, the District Court denied class certification.

Opinion by: Judge John F. Keenan.

Attorney for Policyholders: Joel Bernstein, James W. Johnson, Goodkind,
Labaton, Rudoff & Sucharow LLP, New York, Hanzman, Criden, Chaykin &
Rolnick, P.A., Miami, Keitel & Keitel, Palm Beach, Fla., Rodriguez &
Richards, LLC, Philadelphia, Hoffman & Edelson, Doylestown, Pa.

Attorney for PaineWebber: Steven M. Barna, Dhananjai Shivakumar, Hannah
Berkowitz, Jacqueline O. LiCalzi, Wachtell, Lipton, Rosen & Katz, New
York. (Civil RICO Report, April 11, 2001)


PAY PHONE: Ausley & McMullen Announces Filing of Securities Suit in FL
----------------------------------------------------------------------
The Ausley & McMullen Law Firm Announces Class Action Lawsuit has Been
Filed as a Result of the Sale of Payphone Investments to Investors in
Florida by Pay Phone Connection, Inc.

Steven P. Seymoe, Esq., with the Ausley & McMullen Law Firm, advises that
a class action lawsuit was filed on or about March 15, 2001 in the Middle
District Court of Florida, Tampa Division, asserting claims on behalf of
persons who were solicited and purchased payphone agreements from Pay
Phone Connection, Inc. in Florida or otherwise invested in Pay Phone
Connection, Inc. in Florida by purchasing payphone agreements by or
through the Defendants listed below within the applicable limitations
period and who were damaged thereby.

The complaint charges these Defendants with violating federal and state
securities laws by selling unregistered securities through unregistered
agents and making material statements of facts which were untrue, or
which omitted material facts which were necessary in order to make the
statements made not misleading in light of the circumstances under which
they were made.

All persons who invested in Pay Phone Connection, Inc. in Florida or
otherwise invested in Pay Phone Connection, Inc. in Florida by purchasing
payphone agreements by or through the Defendants listed below within the
applicable limitations period are included in the proposed class action
complaint, excepting Defendants, any of their affiliates, officers,
members of their immediate families, heirs and legal representatives.

The Defendants to the proposed class action lawsuit include: Pay Phone
Connection, Inc., Scott A. Sewall, Federal Financial Services Group,
Inc., Alan R. Nason, BFG/Marketing, LLC, L. Jack Bispo, Gary St. Laurent
d/b/a/ Atlantic Financial Group, and Maynard Weinberg.

Any person who desires to serve as lead plaintiff for the proposed class
action suit must file a request with the United States Middle District
Court of Florida, Tampa Division, by June 15, 2001.

Contact: Ausley & McMullen, Tallahassee Steven P. Seymoe, 850/425-5305


PAYDAY LENDERS: Easy Money Escapes Borrowers' Substantive RICO Claims
---------------------------------------------------------------------
Allegations of a payday lender's reinvestment of funds, derived from its
allegedly fraudulent lending scheme, back into its lending business
failed to meet the RICO Act "use" or investment" injury requirement.
(Bellizan, et al. v. Easy Money of Louisiana Inc., et al., No. Civ. A
00-2949 (E.D. La. 2/12/01).)

Sheila Bellizan and others obtained payday loans from Easy Money of
Louisiana Inc. Easy Money assessed a number of fees in processing the
loan applications. Bellizan filed a class action against Easy Money and
some of its employees in the U.S. District Court, Eastern District of
Louisiana. They alleged Easy Money's lending practices violated the RICO
Act, the Louisiana Deferred Presentment and Small Loan Law and the
Louisiana Consumer Credit Law by requiring borrowers to enter into split
transaction arrangements and by promoting a prohibited rollover scheme.

Easy Money allegedly loaned the borrowers no more than 201 per loan. This
amount was the lowest amount a lender could loan and still charge the
maximum origination fee allowed by Louisiana law. The borrowers had to
return for a second loan to obtain the full amount of the requested loan.
The borrowers, therefore, paid the 15 origination loan fee service. The
borrowers also contended this scheme constituted a de facto rollover
scheme prohibited by Louisiana law. (Civil RICO Report, April 11, 2001)


PHOENIX TELECOM: Ausley & McMullen Announces Securities Lawsuit in FL
---------------------------------------------------------------------
The Ausley & McMullen Law Firm Announces a class action lawsuit has been
filed as a result of the Sale of Payphone Investments to Investors in
Florida by Phoenix Telecom, LLC

Steven P. Seymoe, Esq., with the Ausley & McMullen Law Firm, advises that
a class action lawsuit was filed on or about March 30, 2001 in the Middle
District Court of Florida, Tampa Division, asserting claims on behalf of
persons who were solicited and purchased payphone agreements from Phoenix
Telecom, LLC or otherwise invested in Phoenix Telecom, LLC by purchasing
payphone agreements by or through the Defendants listed below within the
applicable limitations period and who were damaged thereby.

The complaint charges these Defendants with violating federal and state
securities laws by selling unregistered securities through unregistered
agents and making material statements of facts which were untrue, or
which omitted material facts which were necessary in order to make the
statements made not misleading in light of the circumstances under which
they were made.

All persons who invested in Phoenix Telecom, LLC or otherwise invested in
Phoenix Telecom, LLC by purchasing payphone agreements by or through the
Defendants listed below within the applicable limitations period are
included in the proposed class action complaint, excepting Defendants,
any of their affiliates, officers, members of their immediate families,
heirs and legal representatives.

The Defendants to the proposed class action lawsuit include: Phoenix
Telecom, LLC ("Phoenix" or "Phoenix Telecom"), Jerry D. Beacham, Jerold
B. Clawson, Suncoast Financial Services of Clearwater, Inc., Steven
Smith, Gilbert B. Swarts, Tri-Financial Group, Inc., David A. Nickerson,
Reliance Trust Company, Liberty Marketing Plan, Inc., Liberty Benefits
Company, John Lilja, Risdon & Co., Inc., Gregory A. Major, d/b/a Chuck H.
Forest & Assoc., Franklin Bank, N.A., Senior Education Center of America,
Inc., Tony Fargo, Marilyn Beinke-Fargo, Integrated Communications
Associates, Maynard Weinberg, and Tyskewicz & Associates, Robert Tripode,
and David P. McKinnon.

Any person who desires to serve as lead plaintiff for the proposed class
action suit must file a request with the United States Middle District
Court of Florida, Tampa Division, by June 15, 2001.

Contact: Ausley & McMullen, Tallahassee Steven P. Seymoe, 850/425-5305


PUBLIC SCHOOLS: Lawsuit Compels CT District To Restore ESY Services
-------------------------------------------------------------------
Responding to a class action complaint concerning the elimination of its
summer extended school year services, a district committed to continuing
the ESY program and providing compensatory education to those students
who missed needed services because of an ESY staff shortage. Greenwich
(CT) Pub. Schs., 34 IDELR 69 (OCR 2000).

The complaint alleged the district's elimination of the ESY program
option, which focused on social and communication skills, violated the
rights of students with autism and related disorders, students with
mental retardation and students with other severe disabilities.

The complaint expressed concern the elimination of an ESY option that
permitted parents to place their children in public or private camps,
would deny their children access to the model of an inclusive setting in
which they were educated during the regular school year. Up until the
time it eliminated the program, the district had been responsible for the
provision of special education instructors and related services at the
camps.

The district agreed to resolve the complaint by continuing to offer a
planned ESY program. The district addressed Section 504-eligibility
concerns for future ESY programs by consenting to submit to the OCR a
plan outlining eligibility criteria, parental notification and staff
availability.

Additionally, the district agreed to provide compensatory services to
students who either missed occupational therapy, physical therapy or
other needed services because of a shortage of staff during the summer of
2000.

Finally, the OCR was to receive from the district a list of the number
and demographics of students who participated in the ESY program and the
number and profile of the persons who provided special instruction and
related services. (The Special Educator, April 10, 2001)


RAYTHEON ENGINEERS: PA Suit over Employee Severance Benefits Amended
--------------------------------------------------------------------
This Notice is to inform former employees of Raytheon Engineers &
Constructors, Inc. ("RE&C") of the amendment of a previously filed
lawsuit brought as a class action.

The lawsuit has been pending in the United States District Court for the
Eastern District of Pennsylvania. It arises out of the sale of RE&C to
the Washington Group and seeks severance benefits on behalf of a Class of
employees alleged to have been terminated. It also seeks damages on
behalf of a Subclass of employees whose stock options were terminated
subsequent to the sale. The lawsuit was recently amended to add claims on
behalf of the Subclass for violations of the federal securities laws.

If you were an RE&C employee who received options to purchase Raytheon
stock in or about February 2000, and your options were terminated
subsequent to the sale of RE&C to the Washington Group, and if the Court
certifies the Subclass as defined in the amended complaint, you may be a
member of the proposed Subclass. As such, you need do nothing further at
this time. You also have the option of seeking to serve as a Lead
Plaintiff for the federal securities law claims asserted in the amended
complaint. Lead Plaintiffs are selected by the Court, and are responsible
for overseeing the prosecution of the Action and ensuring that the
interests of the Class are protected. Anyone wishing to serve as Lead
Plaintiff for the federal securities law claims must file a motion with
the Court by no later than 60 days from April 13, 2000. If you are
interested in learning more about the action, the role of a Lead
Plaintiff or in serving as a Lead Plaintiff for the securities claims
asserted in the amended complaint, you may contact Paul J. Scarlato,
Esq., toll free at 888-545-7201 or by e-mail at pscarlato@wksg.com, or
Bryan Lentz, Esq., at 215-735-3900 or by e-mail at brlentz@aol.com.

Contact: Paul J. Scarlato, Esq., 888-545-7201 or pscarlato@wksg.com, or
Bryan Lentz, Esq., 215-735-3900 or brlentz@aol.com


SOUTHWALL TECHNOLOGIES: Exptects Consolidation of CA Securities Suits
----------------------------------------------------------------------
In August 2000, the Company, its Chief Executive Officer, Thomas G. Hood,
and former Chief Financial Officer, Bill R. Finley, have been named as
defendants in seven lawsuits, all filed in the United States District
Court for the Northern District of California (Docket Nos: C-00-2792-MMC;
C-00-2795-BZ; C-00-2834-SC; C-00-20856-EAI; C-00-3007-EDL; C-00-3027-JCS;
and C-00-3079-MMC) (the "Actions") all alleging violations of the federal
securities laws. These lawsuits have been previously reported in the CAR.

Each of the plaintiffs in the Actions alleges that he purchased shares of
the Company's common stock and seeks to represent a class of shareholders
who purchased shares during the period April 26, 2000 through August 1,
2000, such dates constituting the period from the Company's release of
its financial results for the first quarter of FY 2000, to the date that
it issued its press release announcing that it would be restating its
financial statements for that quarter. The substantive allegations in
each of the Actions are essentially the same, i.e., that the defendants
knew, or were reckless in not knowing, that the Company's first quarter
financial statements were in error and violated Generally Accepted
Accounting Principles, and that as a result the putative class members
purchased stock at artificially inflated prices and were damaged.

It is anticipated that the Actions will be consolidated into a single
action by the filing of an Amended Consolidated Complaint. No pleading in
response to the Actions is yet due. The Company believes the Actions to
be wholly without merit and intends to defend them vigorously.


TOBACCO LITIGATION: Blue Cross Issues Statement on Settlement Plan
------------------------------------------------------------------
Blue Cross and Blue Shield of Minnesota (Blue Cross) remains optimistic
it can develop a plan for its $ 469 million tobacco settlement that is
mutually agreeable with its regulators, will meet its statutory
obligations and at the same time fulfill its health improvement
objectives, following a Minnesota Supreme Court ruling on April 12.

At the conclusion of its opinion, the Court said, "Our conclusion that
the deputy commissioner's decision was reasoned and sufficiently
supported by the evidence of record is based upon well established rules
relating to agency proceedings, but it does not reflect any particular
view as to the substance or merits of BCBSM's plan to reduce its excess
surplus."

"Our purpose in suing the tobacco industry was to hold the industry
accountable and to prevent a new generation of smokers, so investing in
health improvement is not only the best use of these monies, it's also
the right thing to do," said Mark Banks, M.D., Blue Cross president and
CEO. "We are optimistic that with our regulators we can develop a
mutually agreeable plan to meet our statutory obligations and help us
make Minnesota a healthier place to live and work."

Blue Cross has maintained a dialogue with the Department of Commerce and
will continue to work with the Department on a revised plan.

In 1994, Blue Cross and the state of Minnesota filed an unprecedented
lawsuit against cigarette manufacturers and their trade associations on
grounds the industry deceived consumers about the health risks of tobacco
products, which resulted in higher health care costs for Blue Cross and
the state. In 1998, Blue Cross also became the first health plan to
settle with the industry and recover damages.

In October 2000 the Minnesota Supreme Court heard oral arguments from
Blue Cross, the Department of Commerce and another intervenor on the
administrative process used for reviewing and approving the Blue Cross
plan for spending its tobacco settlement funds.

April 12's ruling addressed those issues and reversed a February 2000
Minnesota Court of Appeals decision ordering the Department of Commerce
to approve implementation of Blue Cross' original tobacco settlement
proceeds plan.

"Minnesotans understand the value of investing in good health," said
Banks. "For the past several months, Blue Cross has been hosting
Minnesota Decides -- a series of town hall meetings throughout the state
to talk about the kind of health system Minnesotans want. One of the most
recurring messages we have heard is the importance of preventive health
care. Our tobacco proceeds plan supports tobacco reduction and prevention
efforts."

Blue Cross and Blue Shield of Minnesota, with headquarters in the St.
Paul suburb of Eagan, was chartered in 1933 as Minnesota's first health
plan and continues to carry out its charter mission today: to promote a
wider, more economical and timely availability of health services for the
people of Minnesota. A not-for-profit, taxable organization, Blue Cross
is the largest health plan based in Minnesota, covering 2 million members
in Minnesota and nationally through its health plans or plans
administered by its affiliated companies. Blue Cross and Blue Shield of
Minnesota is an independent licensee of the Blue Cross and Blue Shield
Association, headquartered in Chicago.

Timeline: Blue Cross Tobacco Lawsuit and Settlement

   --Aug. 17, 1994   Blue Cross and Blue Shield of Minnesota and the
state of Minnesota file an unprecedented lawsuit against cigarette
manufacturers and their trade associations on grounds the industry
deceived consumers, resulting in higher health care costs for Blue Cross
and the state.

   -- July 1996  Minnesota Supreme Court upholds lower court decisions
that Blue Cross has standing in its own right to sue the tobacco
industry.

   -- January 1998  The historic tobacco trial begins.

   -- May 8, 1998   Blue Cross announces its landmark settlement with the
tobacco industry. Four days later, attorneys begin filing class-action
lawsuits claiming Blue Cross' settlement should be paid directly to
members.

   -- June 1998    As required by state law, Blue Cross begins creating a
plan for using the settlement funds to submit to its state regulator, the
Minnesota Commerce Department.

   -- September 1998 Blue Cross files a tobacco proceeds plan with the
Commerce Department. Then-Commerce Commissioner Dave Gruenes requests a
public hearing before an administrative law judge. The district court
dismisses class-action lawsuits seeking to have the tobacco settlement
paid directly to Blue Cross members.

   -- November 1998  HealthPartners files opposition to the Blue Cross
proceeds plan, but later withdraws its opposition after Blue Cross
addresses those concerns.

   -- December 1998  Commerce Commissioner Gruenes issues a consent order
allowing Blue Cross to pay taxes on the settlement income and transfer $
21 million to the Blue Cross Foundation.

   -- January 1999  A three-day public hearing is held in St. Paul.
Nearly all testimony and evidence submitted support the Blue Cross
proceeds plan.

   -- March 1999   The administrative law judge, after reviewing the
evidence and testimony regarding the Blue Cross proceeds plan, recommends
the plan in its entirety to the Commerce Department for approval. The
Minnesota Court of Appeals affirms district court decision to dismiss
class-action lawsuits seeking to have the tobacco settlement paid
directly to Blue Cross members.

   -- July 1999    Deputy Commerce Commissioner Gary LaVasseur issues an
order rejecting the Blue Cross tobacco proceeds plan. Blue Cross requests
reconsideration of the order, but LaVasseur denies that request. The
Minnesota Supreme Court refuses to hear appeal of class-action lawsuits
against Blue Cross for attorneys seeking to have the tobacco settlement
paid directly to Blue Cross members.

   -- August 1999   Blue Cross files an appeal to the Minnesota Court of
Appeals to overturn the Commerce Department's rejection of its tobacco
proceeds plan.

   -- February 2000  Minnesota Court of Appeals issues its ruling
reversing Commerce Department and orders the department to approve
implementation of Blue Cross' proceeds plan.

   -- March 2000   The Commerce Department petitions the Minnesota
Supreme Court to review the Court of Appeals Decision ordering the
department to approve implementation of the Blue Cross plan.

   -- Oct. 31, 2000  The Minnesota Supreme Court hears oral arguments
from the Commerce Department and Blue Cross.

   -- April 12, 2001 The Minnesota Supreme Court reverses the Court of
Appeals' decision. Blue Cross will continue to work with the Commerce
Department on a revised plan.

Source: Blue Cross and Blue Shield of Minnesota


WIRELESS SPAM: Problem Can Grow Big; Regulatory Purview Draws Attention
-----------------------------------------------------------------------
Regulatory authority over unwanted e-mails on wireless devices appears to
be murky, with industry groups and consumer advocates questioning whether
FTC or FCC potentially have mandate in that area and agencies themselves
saying they don't. Lack of clarity on regulatory purview is expected to
drive at least some attention in Congress this year on wireless spam.
While spamming incident involving short message service (SMS) on as many
as 170,000 mobile phones in Phoenix has drawn widespread attention in
recent weeks, analysts and industry representatives said problem still
was rare in industry searching for broader consumer use of wireless
Internet applications.

"SMS spam is not a huge problem today but the Phoenix example shows you
how big a problem it could be," said attorney Ray Everett-Church, counsel
to Coalition Against Unsolicited Commercial E-mail (CAUCE). "It shows how
wanton some of these spammers can be in terms of their knowledgeable
disregard for the problem." Without Congress's weighing in, several
industry observers told us wireless spam fell somewhere between 1991
Telephone Consumer Protection Act (TCPA), which would give FCC some
interest, and FTC Act, which may give that agency oversight in some
cases.

TCPA covers certain telemarketing practices and outlaws junk faxes, said
Everett-Church. "It's not at all clear in existing case law whether or
not the TCPA does extend to reach SMS in the cellular environment," he
said. "In the cellular environment, it seems like a logical extension of
that statute but certainly there are other logical extensions of that
statute that haven't been extended by the courts." Under TCPA, spam
victim who receives infringing communications has private right of action
to bring complaint against sender of message and includes provisions for
state agency to act on behalf of citizens in certain cases if there is
pattern of abuse, Everett-Church said. If state attorneys general pursues
action, they must notify FCC, which can intervene, he said.

Still, FCC jurisdiction isn't explicit since TCPA uses statutory term of
telephone number and doesn't mention e-mail. Phoenix resident Rodney
Joffe, a founder of Genuity, is taking steps that may culminate in
class-action lawsuit involving up to 170,000 mobile customers who were
spammed with SMS messages sent by local mortgage company. Litigation
efforts are hinging on TCPA's being applied to SMS. FCC spokeswoman said
agency didn't appear to have authority under TCPA for wireless spam. FTC
official said agency had authority to enforce Sec. 5 of FTC Act, which
prohibits deceptive and unfair practices. "Our enforcement work is
targeted largely to deceptive practices that cause economic harm," she
said. "We think of spam as unsolicited commercial e-mail. There is
nothing per se illegal about sending unsolicited commercial e-mail on the
Internet." FTC last year held first workshop on wireless data and privacy
issues, with participants stressing need for standards and technology
development although no consensus emerged on need for govt. intervention
(CD Dec 12 p2).

But federal agencies don't necessarily lack jurisdiction, CAUCE's
Everett-Church said. "One of the interesting issues here is that the FCC
has jurisdiction over these issues by virtue of things like the TCPA," he
said. But concerning spam and other telemarketing abuses, FCC "has
largely washed its hands of all but technical matters," with agencies
such as FTC having enforcement of activities that go across these
technologies, he said. Under FTC Act, agency can examine issues like
deceptive trade practices, Everett-Church said. But as FCC wrestles with
wireless location issues such as Enhanced 911, which potentially provides
marketers with information they can turn to their advantage, "that's
going to bring some of these privacy issues and fraud issues squarely
into the middle of the FCC's purview," he said. Lack of clarity is likely
to push federal legislation that would cover enforcement, he said. Based
on FCC enforcement of junk faxes and other telemarketing issues, "if it's
left solely to the FCC's enforcement... we will be waiting a long time
for a solution," Everett-Church said. "If we depend on FTC, we may see a
few high profile incidents litigated," he said, noting agency doesn't
have resources to pursue large volume of such cases.

"I haven't been delighted with the enforcement vigilance of either of
those agencies," said Jason Catlett, pres. of privacy group Junkbusters.
"The best result would be if the Telephone Consumer Protection Act were
found to be applicable," he said, noting courts may decide issue if
lawsuits such as that involving Phoenix wireless spam move forward. "It
may also be appropriate for new legislation to address some of the
specifics of cell phone spam," he said.

Wireless spam isn't receiving attention as particular problem now because
mobile commerce still is in its infancy, said Dataquest analyst Tole
Hart. "In the future, I suspect that wireless carriers will guard the
rights that people have to their handsets for the primary reason that
they don't want to anger people and give them unwanted messages," Hart
said. Typically, this will play out with wireless carriers incorporating
provisions into their agreement with content providers or e-commerce
companies that prohibit disclosure of that information to 3rd parties or
use of it for marketing purposes, Hart said.

Verizon Wireless spokesman said: "We do encourage our customers to let us
know when they believe their privacy has been abridged and that would
include potential spamming. We view our relationship with our customers
as sacrosanct." Spokesman said he wasn't aware of any spamming incidents
involving Verizon customers. If subscriber reported incident, Verizon
Wireless would go directly to its mobile Internet partners to investigate
claims, he said.

PCIA had expressed optimism late last month that Congress wouldn't
necessarily take action on wireless spam this year because industry model
is nascent and govt. action now could be premature. Whether FTC or FCC
ultimately has regulatory purview is "the $20 million question at this
point," said Leslie Kaplan, PCIA dir.-govt. affairs: "We are all very
interested in where things will end up or who will have that
jurisdiction."

Much attention has focused on self-regulatory efforts for putting
wireless privacy safeguards in place, including proposals covering spam.
In recent FCC comment period on wireless location privacy principles
submitted by CTIA, Wireless Location Industry Assn. (WLIA) outlined draft
privacy standards group plans to finalize later this year. WLIA said it
would provide forum for consumers to bring allegations of privacy abuses
if companies involved can't resolve complaints. Draft specifies that
members will not engage in wireless spam, defined as push advertising
sent by advertisers without confirmed "opt-in" decision by customer. This
would mean that customer would have to provide permission each time that
message is sent.

Meanwhile, Joffe said he had sent official demand letter to mortgage
company, citing 2 spamming incidents and TCPA requirements that $500 is
owed for each occurrence. Joffe said company sent unsolicited SMS
messages to blocks of AT&T Wireless, Verizon Wireless, Nextlink and
VoiceStream phones. Advertiser can discover one phone number in block of
10,000 and add wireless carrier's suffix to every other number in block
to send SMS, with identity of sender hidden if message originates on
Internet, because headers of SMS aren't displayed. Joffe said he doesn't
place blame on AT&T Wireless, which is his carrier, because nature of SMS
simply provides spammers with means of taking advantage of cell phone
number blocks. If letters are ignored, Joffe said he will file claim in
Ariz. Small Claims Court based on TCPA. Meanwhile, Joffe said he was
eyeing class action litigation based on estimated 170,000 Phoenix-area
residents that were hit in spamming incident. "We're pushing the envelope
over here because when the TCPA was formalized in 1991 no one really
understood... that cell phones would be able to receive digital
messages." As result, TCPA refers to voice messages, and area that
litigants are looking to stretch statute to is extent to which it covers
use of automated equipment to send messages.

Joffe cited legislation such as bill offered by Rep. Holt (D- N.J.)
earlier this year that would restrict wireless spam (HR- 113). "He is
spinning out in black and white what really at the moment is gray," he
said. -- Mary Greczyn Spam, 3G Spectrum Seen on Hill Agenda

Wireless spam is at intersection of popular issues for Hill this session.
Spam is expected to be first telecom or Internet topic to get serious
attention in Senate Commerce Committee soon after Congress returns April
23, several staffers told us. Panel has been kept busy with nontelecom
consumer protection matters and Chmn. McCain's (R-Ariz.) campaign finance
reform crusade, and has held just 2 hearings on Internet issues, neither
a legislative session. It's also possible related issue of privacy can
get hearing before Memorial Day recess, we're told, but that's far from
certain. Last year, McCain promised to hold privacy hearings by Jan., but
topic has kept slipping as non- Internet matters take priority.
Meanwhile, although telecom matters are even farther from agenda, we're
told, 2 wireless issues are being talked about -- privacy matters
pertaining to location technology and 3rd-generation spectrum allocation.

Sen. Burns (R-Mont.) introduced his spam bill (S-630) just over 2 weeks
ago, but subject isn't new to Committee. Last year, Burns and Sen. Wyden
(D-Ore.) tried in session's closing weeks to move through Committee
companion to House-approved bill (HR-3113) by Rep. Wilson (R-N.M.). New
version by Wilson (HR-718) has cleared House Commerce Committee, although
some antispam advocates no longer support it (or Burns bill) after
changes made at behest of direct marketers and other business
organizations. In House markups, Rep. Pickering (R-Miss.) and others
expressed desire to add wireless spam provisions, and Burns has said he
hopes to address wireless spam, although his bill so far doesn't. "It's
been years since the Senate had spam-related hearings, so they probably
need to freshen up the record" before senators would be comfortable going
to markup, one source said. Burns hopes to have hearing "the first week
we get back," his spokesman told us. Six other senators have joined Burns
and Wyden in sponsoring S-630, including most recently Sen. Allen
(R-Va.). Burns also is working on cellphone privacy bill in conjunction
with Wyden, so spam provisions could be wrapped into that measure. --
Sasha Samberg - Champion (Communications Daily, April 16, 2001)


                             *********


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  * * *