TOP 10 STORIES / August 21-25
1. Sweepstakes Settlement Reached: Giant magazine marketer Publishers Clearing House will reform its business practices and refund $16 million to customers under a settlement expected to fundamentally change the sweepstakes industry. The accord with attorneys general in California, 22 other states and the District of Columbia settles allegations that the company, known for its “You are a Winner” campaigns, used deceptive sweepstakes promotions to get customers to buy magazines. Though several other sweepstakes marketers have settled complaints over deceptive practices, PCH is the first to agree to major revisions in the way it tells customers about their chances of winning. Days after the accord, Time Inc. said it will refund more than $4.9 million to about 6,000 customers under a pact with California, 46 other states and the District of Columbia.
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2. California Workers Win New Protections: The California Supreme Court sharply limited the kinds of mandatory arbitration agreements that companies can impose on employees. The ruling will force the rewriting or elimination of arbitration policies that companies have increasingly used as a way to avoid costly lawsuits. Workers still may be required to give up their right to sue over discriminatory firings or disciplinary actions, the justices said. But the deals must permit employees the chance to collect as much money as the law would allow in a jury trial, and the company must pay the costs of arbitration, the court held.
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3. Mitsubishi Admits Cover-Up: Japan’s fourth-largest auto maker admitted that for more than two decades it had been hiding customer complaints that could have led to embarrassing recalls. A report filed with the Japanese government said a committee of outsiders will be named to oversee recall-related issues. Mitsubishi Motor Corp. President Katsuhiko Kawasoe, who took over the company after a 1997 scandal involving payoffs to Japanese racketeers, said the recall cover-up was deliberate, systemic and widespread. In the U.S., Cypress-based Mitsubishi Motor Sales of America said it has always followed federal recall reporting rules, but it began a recall of 10,000 1995 and ’96 Galant sedans imported from Japan. U.S. officials said they will ask Mitsubishi to vouch for the safety of vehicles sold here. (John O’Dell)
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4. Disney Settles KLOS Bias Suit: Walt Disney Co. agreed to pay $2 million to a former employee to settle a racial discrimination lawsuit over a KLOS-FM radio promotion in which “Black Hoes”--black gardening tools--were given as gag prizes to listeners and advertisers. Disney, owner of KLOS, had vowed to fight the suit in court when it was filed a year ago, but strong community protests prompted the family entertainment conglomerate to negotiate a resolution. Disney rejected demands to fire personnel involved in the promotion held on the “Mark & Brian Show.” In her suit against Disney and ABC, Judy Goodwin alleged that she suffered workplace harassment and retaliation after complaining about the promotion. Two other African American women also have suits pending.
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5. Heat Is on Ford Over Recall: The U.S. government criticized Ford Motor Co. for not reporting problems with Firestone tires sooner, and a Senate committee set hearings for Sept. 6 on the massive tire recall. A House committee is sending investigators to Ford headquarters in preparation for its own hearings. Ford documents revealed in lawsuits showed the auto maker set tire pressure recommendations for its Explorer sport-utility lower than those specified by the tire maker in order to minimize the SUV’s rollover tendency. House investigators also will visit Firestone’s Japanese parent, Bridgestone/Firestone Inc. To speed replacements to consumers, Bridgestone began an airlift of tires to the U.S., and Ford planned to suspend truck production to free up more than 70,000 tires. (John O’Dell)
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6. Edwards Theatres in Bankruptcy: Southern California’s largest movie exhibitor, Edwards Theatres Circuit Inc., filed for Chapter 11 bankruptcy protection, becoming the latest exhibitor to stumble in an industry saddled with too much debt and too many screens after a five-year building binge. Carmike Cinemas Inc., the No. 3 chain, also filed for bankruptcy protection this month.
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7. Income Gap Widens in California: The middle-income California family fell behind economically during the 1990s, even as families elsewhere across the country progressed. The state also suffered from a growing gap between its poorest and wealthiest residents, while the situation in other states stabilized, according to a new study from the Federal Reserve Bank of San Francisco. Not all of the state’s news is bad, though. Economists say Californians took their financial lumps during the devastating recession of the early 1990s and that, since then, families at all income levels have benefited. (Stuart Silverstein)
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8. Energy Probe Launched: The Federal Energy Regulatory Commission on Wednesday ordered a formal investigation into California’s deregulated electricity market. Power shortages and rising costs of natural gas, the fuel of choice for many Western power generators, have caused electricity costs to skyrocket. Feeling the brunt are the 1.2 million customers in the San Diego Gas & Electric service area, the first to have higher wholesale costs passed through directly. But residents and businesses in the state’s other two investor-owned utilities, Southern California Edison and Pacific Gas & Electric, could be on the hook for unpaid costs once their rates are unfrozen in 2002. Under a plan also announced Wednesday by Gov. Gray Davis, SDG&E; customers in San Diego and Orange counties would pay no more than $68 monthly in electricity bills until 2003. Small-business bills would be capped at $220. (Chris Kraul)
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9. Bogus Emulex Release: Shares of Emulex Corp. lost more than 60% of their value for a time Friday after a bogus news release claimed that the networking equipment maker would restate its fourth-quarter earnings and that its chief executive was resigning. Shares of Costa Mesa-based Emulex tumbled to $43 from their previous close of $113.06 after the false news circulated. Trading was halted mid-morning at $55.54. When it resumed after the firm’s response, the stock shot back up to $105.75 to close down only $7.31, or 6.4%. (Associated Press)
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10. Fed Holds Rates Steady: Federal Reserve policymakers, as expected, decided Tuesday to keep short-term interest rates at 6.5% for a third month running, saying the nation’s economic growth is beginning to slow to a more sustainable pace. The decision was widely interpreted as signaling that the Fed will probably sit out the rest of the presidential election campaign and perhaps the remainder of the year.
