California Inc.: Are smartphones too big for their own good?

Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.

I'm Business columnist David Lazarus, and here's a rundown of upcoming stories this week and the highlights of last week.



RICO law case: The U.S. Supreme Court will hear a case Monday testing whether companies can be tried under American racketeering laws for alleged crimes overseas. European Union countries accused RJR Nabisco of participating in an international money-laundering scheme to sell U.S.-made cigarettes through crime syndicates and terrorist groups. RJR's lawyers have argued that the Racketeering Influenced and Corrupt Organizations Act doesn't apply outside the country.

iPhone security: Apple and the federal government will face off in a Riverside court Tuesday over the FBI's demand that Apple help uninstall security measures on an iPhone 5c used by a gunman in December's terrorist attack in San Bernardino. The case has set off a fierce debate over privacy and security. The dispute isn't just about one phone: Investigators have acknowledged they want that kind of access to potentially hundreds of phones with similar safeguards that were used by other offenders and suspects.

Emissions scandal: Volkswagen faces a deadline Thursday to present a federal judge with a plan to fix almost 600,000 diesel vehicles in the United States that are emitting tailpipe pollutants at higher levels than allowed under U.S. air quality rules because of VW's illegal software. U.S. District Judge Charles R. Breyer of San Francisco wants to know about available technical solutions to fix the cars and the status of negotiations on a potential settlement with vehicle owners. Volkswagen potentially faces more than $20 billion in fines from state and federal regulators.

Grocery stores: German discount grocer Aldi will open eight stores on Thursday in Southern California, the first of 45 stores in the region this year. The stores are clustered near the company's regional distribution center in Moreno Valley. They are in Palm Springs, San Bernardino, Yucaipa, Lake Elsinore, La Quinta, Fontana, Beaumont and Moreno Valley. After the initial batch of markets, 19 additional stores are scheduled to open from April to July. The locations include Covina, Inglewood, Simi Valley, South Gate and Bakersfield.


Monday's Business section looks at how smartphone makers, after placing an emphasis on bigger and bigger screens, may be starting to think small. Rumors have been swirling that today Apple will unveil a smaller, cheaper iPhone with a screen measuring just four inches diagonally. If the rest of the industry follows suit — and it usually does — get ready to break out your reading glasses.


Here are some of the other stories that ran in The Times Business section in recent days that we're continuing to follow:

Down Mexico way: Uber is offering a new way to visit Mexico. It's called Passport, offering one-way transportation from San Diego to the northern Baja California region, with destinations as far south as Ensenada and as far east as Mexicali. The program is designed to ease transportation for locals already commuting between the two nations. Roughly 50,000 people have taken an Uber ride from the San Diego area to the border. Passport riders can expect to pay a $20 convenience fee on top of per-mile and per-minute rates, in part to make the trek worthwhile for drivers. Fares can be split among up to four passengers.

No more orcas: SeaWorld will stop its orca breeding program after years of controversy over keeping the animals in captivity and discomfiting drops in attendance and the value of its stock. The 29 captive killer whales are to live out their lives in SeaWorld's enclosures, but they will not be replaced. The sweeping change to SeaWorld's business model will include ending theatrical shows nationwide and replacing them with exhibits that highlight the orcas' natural behaviors. That change will start in the San Diego park next year. For decades, SeaWorld has been beset by criticism from animal advocates, and it has never fully recovered from the 2013 documentary "Blackfish," which accused the company of neglecting and abusing the orcas.

Relativity bankruptcy: Ryan Kavanaugh's entertainment company, Relativity Media, is ready to emerge from bankruptcy protection. Judge Michael Wiles said at a bankruptcy court hearing in New York that he would confirm Relativity's plan to resume its business of making and releasing movies, seven months after the company filed for Chapter 11 protection. The company's film unit will be run by producer Dana Brunetti. Relativity previously said actor Kevin Spacey would join as the studio's chairman, but in a court filing this month, Spacey declined the offer, citing his busy schedule. Relativity filed for bankruptcy protection in July with $1.2 billion in liabilities after a string of box-office flops. After a failed auction, the company sold its TV production business to a group of lenders.

Hotel buyout: Starwood Hotels & Resorts Worldwide called off a $12.2-billion buyout agreement with Marriott International in favor of an offer from a group of investors led by Chinese insurance company Anbang Insurance Group. The decision came after Anbang upped its offer for Starwood by nearly $370 million, bringing the total to more than $14 billion. Starwood, which owns the Sheraton and Westin hotel brands, has to pay Marriott a $400-million breakup fee to end the deal. Marriott has until March 28 to make another offer. The Bethesda, Md., company said it still believes its agreement with Starwood is superior and is contemplating its next step.

Yamashiro purchase: A prime hillside plot in the Hollywood Hills featuring the landmark Yamashiro restaurant has been sold to a Beijing company for nearly $40 million, the latest in a wave of Chinese investments sweeping Los Angeles. The sale represents the first purchase in the United States for JE Group, a hotel operator known for refurbishing historic properties on its home turf. Kang Jianyi, chairman of JE, said there will be few changes to the site, except for sprucing up the aging buildings, including a small hotel, apartments and the restaurant, a replica of a palace near Kyoto, Japan. Kang added that his company is in negotiations with the current operators of Yamashiro and that it was possible there would be a new restaurant operator.




And some recent stories from other publications that caught our eye:

Don't pass go: There's been a lot of talk during the presidential campaign about "breaking up the banks." The Atlantic asks what that would look like and offers "a sensible approach to how it could work in practice."

Drink up: ESPN explores the world of AdvoCare, aka Advocates Who Care, and its national spokesman, New Orleans Saints quarterback Drew Brees. The organization peddles energy drinks, shakes and supplements. But is it just another pyramid scheme?

Weed so white: A racial divide on the pot front? BuzzFeed examines how black people, "having borne the brunt of the 'war on drugs,'" are now "largely missing out on the economic opportunities created by legalization."

Dorm party: The Wall Street Journal spots a new trend among venture capitalists. They're throwing money at start-ups providing what are basically dorm rooms for young people moving into pricey cities such as San Francisco and New York. Weren't things like this once called communes?

Your cheatin' heart: Bloomberg serves up a juicy yarn about tech investor Michael Goguen, who is being sued by a woman with whom he apparently had a long-term (and adulterous) relationship. She's been paid $10 million to keep quiet. She wants more.


We're all for having a little fun. But here's an important safety tip: If you're going to break a bunch of traffic laws, don't post a video of yourself doing it. Case in point: This guy tearing up the streets of San Diego in a souped-up Volkswagen.

For the latest money news, go to Until next time, I'll see you in the Business section.