Sewer Skewered

Before being hired at CityNet Telecommunications Inc. (www.citynettelecom.com), an up-and-coming company that offers a new technology to solve last-mile provisioning problems, Lauren Shapiro worked for 16 years at the prestigious Cable & Wireless PLC (www.cw.com), a high-tech telecommunications company in Vienna, Va.

Shapiro was C&W’s senior director of its Partner Program and assistant vice president of carrier sales. She eventually rose to the position of vice president of carrier sales. In 1999, Shapiro received more than $325,000 in salary and bonuses from C&W, and in 2000 her compensation topped $392,000.

She had a secure position making big bucks with a reputable company and worked from her home office in Scottsdale, Ariz. What more could she want?

Apparently nothing. But then life changed as she knew it. Blame it on a national economic slump that’s hit telecom particularly hard, the glass ceiling, Enron-phobia, or bureaucratic delays; whichever way this ball rolls, the resting spot likely won’t satisfy everyone.

In an $8 million lawsuit Shapiro has filed against CityNet, she charges that after becoming a CityNet employee in the fall of 2000, she learned the company fraudulently was misrepresenting its business prospects to employees, investors and the public. She also alleges the company discriminated against her because of her sex and then terminated her after she complained.

"Ms. Shapiro seeks redress for the significant economic harm caused her as a result of CityNet’s actions," says her attorney, Debra Katz, of the D.C. civil rights law firm Bernabei & Katz PLLC Bernabei & Katz PLLC (www.bernebeikatz.com). "She hopes to establish an important point — corporations like CityNet cannot sell their employees or their investors a false bill of goods without suffering the consequences."

CityNet, a Silver Spring, Md.-based company that bridges the "last mile" of fiber-optic lines to buildings by sending cable-laying robots through a city’s existing sewer systems, has raised $375 million in financing and inked deals with 13 U.S. cities to use its technology. However, CityNet has not closed a single customer to date.

CityNet says that’s because working with local governments isn’t an easy job and that gaining access rights to the sewers takes time. The domino effect is that CityNet’s sales and engineering processes are delayed. Add to this the current economic state of the telecom industry and CityNet officials say it’s understandable why product commercialization has been a challenge.

"There are not a lot of deals happening these days, but we are close to nailing down several," CityNet spokesman Lee Allentuck told PHONE+. "We have closed on our funding, we’re being prudent, and we’re trying to find ways to sell our product, which, by the way, has never been sold before, so there’s a lot of educating that needs to be accomplished."

For instance in Washington, D.C., CityNet has been in talks with the water and sewer commission for a year to bring the technology to the District. Educating the commission on the service takes time, Allentuck explains.

Shapiro doesn’t see it that way.

In August 2000, CityNet came calling with a recruitment offer for the position of vice president of sales. And apparently, the company wouldn’t take no for an answer.

Daryl Sullivan, CityNet’s senior vice president of sales at the time and a defendant in the lawsuit, said CityNet had plans to build dark fiber metro rings in 25 cities in 18 months, according to the suit. She also claims in her suit that he had told her the company likely would have an initial public offering of stock before the summer of 2001. Shapiro says that Sullivan informed her the position, for which she was hired, carried significant stock options and that she would receive the same salary, if not better, than she did at C&W.

In the lawsuit, Shapiro alleges that to induce her to take the vice president of sales position and leave a lucrative position with C&W, CityNet misrepresented that it had signed, or was on the verge of signing, agreements with a number of major cities for the rights to send its robots into their sewers. Without the agreements, CityNet has no capacity to lease fiber to telecommunications carriers seeking high-capacity connections into major office buildings.

Shapiro further alleges that CityNet officers misrepresented its business prospects to the company’s board of directors, investors, potential customers and the public in an effort to raise financing, and that such misrepresentations interfered with her ability to perform her job.

In her lawsuit, Shapiro also alleges that she was instructed by CityNet to "hire a man" for a job opening and that CityNet removed her from an account after telling her that it wanted to have only men on the account. When Shapiro complained that this was sexual discrimination, she alleges, CityNet fired her.

"There is no merit whatsoever to this case," Allentuck says. "The lawsuit runs completely counter to the culture of this company and what we stand for."

He said that 40 percent of CityNet’s workforce is female, with more than one-third of them working in upper management, including the CFO and head of real estate. Two of the three sales representatives also are women, he added, callingthe lawsuit "totally baseless."

CityNet currently is preparing a response to Shapiro’s lawsuit, which is filed in a U.S. District Court in Arizona U.S. District Court in Arizona (www.azd.uscourts.gov).

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