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Court Sends ‘Twiggy’ Back for Trial, Lets ‘Lisa’ Go

September 26, 1989

SAN FRANCISCO (AP) _ A federal appeals court ruled Monday that Apple Computer Inc. and its top officers must go to trial on the question of whether its optimistic statements about a novel new office computer disc-drive dubbed ″Twiggy″ misled investors.

The Cupertino-based company was sued by a group of investors claiming fraud in connection with the promotion of a computer called ″Lisa″ and a compatible disc-drive, ″Twiggy,″ in 1982 and 1983. Both proved commercially unsuccessful and Apple replaced Twiggy with another system before beginning actual sales of Lisa, which later was discontinued.

The investors contend they bought Apple stock at an artificially high price based on Apple’s misrepresentations. They said they suffered severely when the products failed and Apple stock plunged 75 percent.

The 9th U.S. Circuit Court of Appeals ruled 3-0 that unlike information about the market risks of Lisa, problems linked to Twiggy ″were not made known to the market by the press or by anyone else,″ although internal tests indicated the mechanism’s information processing ability was slow and unreliable.

Appeals Judge Jerome Farris said the appeals court couldn’t determine if Apple’s ″failure to disclose Twiggy’s technical problems had no misleading effect on market price.″ So the court said the matter should be decided by a lower court jury.

The court said that ″any overall impression created by Apple’s optimism was adequately counterbalanced by the press’ documentation of Lisa’s risks.″

It upheld a grant of summary judgment to Apple involving the Lisa lawsuit.

Apple spokeswoman Carleen LeVassur said company officials were pleased by the ruling, which she called a ″very significant decision″ that shows Apple acted properly in promoting the products and did not violate any securities laws.

As far as Twiggy, LeVassur said authorities are confident the matter will be resolved in Apple’s favor.

Lisa, designed for medium- to large-sized corporations, had several technological innovations that proved commercially viable when incorporated into Apple’s Macintosh computer.

Lisa pioneered use of the ″mouse,″ a hand-held device that allows communication with the computer without using the keyboard, and ″icons,″ graphic displays of the computer’s functions.

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