TOP 10 STORIES / JUNE 4-8
Philip Morris Is Ordered to Pay Smoker $3 Billion
The tobacco industry suffered a pair of courtroom defeats last week, including a damage award in Los Angeles of more than $3 billion against Philip Morris Inc.--the largest verdict ever in a suit by an individual smoker.
Capping a trial of more than two months, jurors in Los Angeles Superior Court on Wednesday ordered the tobacco giant to pay $5.54 million in compensatory and $3 billion in punitive damages to Marlboro smoker Richard Boeken, 56, who suffers from lung cancer that has spread to his brain.
It was the first smoking and health case tried in Los Angeles County. Philip Morris, the world’s biggest tobacco firm, called the verdict outrageous and promised an appeal.
Earlier in the week, a federal jury in Brooklyn, N.Y., ordered Philip Morris and four other cigarette makers to pay $17.8 million in damages to Empire Blue Cross Blue Shield, the largest health insurer in New York, as compensation for smoking-related health-care costs. The insurance company had sought more than $2 billion in damages. Industry officials said they will appeal.
Myron Levin
California Job Growth Decelerates in May
Strong evidence that the state’s economic expansion has nearly stalled came in a report that California’s employment growth slowed abruptly last month, producing a scant 3,200 new jobs.
A particularly troubling signal in the report was the fact that the private sector lost 5,200 jobs in May. That reflected declines in such industries as retailing, services, manufacturing and construction, with the main damage apparently coming in the Bay Area. Strong government hiring, particularly at schools, accounted for the state’s small overall gain in jobs.
The figures also showed that California’s unemployment rate was 4.9% in May, unchanged from the month before. In Los Angeles County, the jobless rate held steady at 5.1%.
Stuart Silverstein
Supreme Court Broadens Some Job Bias Damages
The Supreme Court opened the door to larger verdicts against employers who are found guilty of job discrimination, ruling that they may be forced to pay a worker’s future salary as well as damages for their past misconduct. The unanimous ruling is a victory for workers, but employment lawyers described it as more of a clarification than a surprising change in the law.
The justices ruled that the $300,000 maximum in damages allowed in a 1991 law does not include payments to work bias victims while they look for a new, similar job. Workers have increasingly sought such “front pay” rather than reinstatement to the job where they suffered discrimination.
David G. Savage
Bush Calls for Inquiry Into Steel Imports
Under pressure to drum up support for his trade agenda in Congress, President Bush ordered the International Trade Commission to investigate charges that a surge in imports has devastated the domestic steel industry, contributing to widespread layoffs and the bankruptcies of at least 18 firms.
Critics argue that Bush’s move, if it leads to trade sanctions on steel-exporting nations, will anger foreign trading partners and prevent inefficient U.S. producers from restructuring. They also argue it could drive up domestic steel prices, hurting auto makers and other big consumers of steel.
Evelyn Iritani
Boeing Wins Contract for Long Beach Business
Boeing Co. won a $1.5-billion Air Force contract to modernize avionics on C-130 Hercules military cargo planes, beating out rival Lockheed Martin Corp. in a deal that is expected to be a boon to the company’s operations in Long Beach.
About $485 million of the contract is slated for engineering and manufacturing development of new cockpits and electronics, the bulk of which is expected to take place at Boeing’s aircraft and missile business in Long Beach. After years of retrenching, company executives in Long Beach said, the contract could mean several hundred new jobs.
Peter Pae
Intel and AMD Stand by Their Forecasts
Intel Corp. cheered investors by sticking to its revenue predictions for the second quarter, as executives said semiconductor sales were holding up with earlier forecasts. Rival Advanced Micro Devices Inc. reiterated its profit forecast of a small gain in revenue for the year.
Other news from the chip industry didn’t help investors determine whether the tough times are over.
Communications chip maker Broadcom Corp. warned that its sales would decline even further than anticipated, but indicated that order cancellations and delays appear to be abating.
National Semiconductor Corp. reported a fiscal fourth-quarter loss, with sales off by a third, and said revenue would fall further in the current quarter.
Meanwhile, the Semiconductor Industry Assn. said worldwide chip sales will fall 14% this year but will increase significantly next year.
Times Staff Writers
Ingram Micro to Cut Jobs as Demand Slows
Ingram Micro Inc., the world’s largest distributor of computer products, said it’s cutting 1,000 U.S. jobs, or about 6% of its work force, because of weak demand for computers and networking equipment.
The company is eliminating 430 positions at its 2,700-employee headquarters in Santa Ana and will close facilities in Santa Ana, Rancho Cucamonga and Newark, which will reduce its presence significantly in California. Operations at two Southland plants will be consolidated into a new automated facility in Pennsylvania. About 220 of the job cuts will be made at plants in New York and Florida.
Karen Alexander and Marc Ballon
Productivity Falls at 1.2% Rate in 1st Quarter
The productivity of U.S. workers, a significant source of economic growth in the late 1990s, decreased for the first time in six years, the Labor Department said. Productivity, a measure of how much employees produce for every hour they work, fell at a 1.2% annual rate in the first quarter.
Strong productivity growth stoked the economy by letting companies increase wages without raising the prices of their goods.
Economists said the drop is not worrisome at this point because the measure frequently recedes when the economy is weak.
Walter Hamilton
NetZero and Juno Plan $70.7-Million Merger
Rival Internet service providers NetZero and Juno Online Services agreed to merge in a $70.7-million stock deal, creating the nation’s second-largest ISP and raising their chances of turning free Net access into a viable business.
Analysts said the combined company--to be known as United Online--will be able to slash infrastructure costs by sharing a single telecommunications network and boost revenue by offering advertisers a larger audience. But they said the company also must convert more of its 7 million monthly users into paying customers.
The new company will maintain NetZero’s headquarters in Westlake Village.
Karen Kaplan
Ex-HP Chief Platt Leaves Kendall-Jackson Winery
Former Hewlett-Packard Co. chief Lew Platt left his “second career” at Kendall-Jackson Wine Estates after only 18 months on the job. Platt said he decided to leave the company after Kendall-Jackson founder Jess Jackson decided not to put the company up for sale.
Platt, who was chief executive of HP for seven years, was brought in to help the company further its global expansion plans with a public offering or sale to a large international company.
Company officials said the decision to remain independent won’t hurt these plans, but some analysts said it could slow the company down.
Melinda Fulmer
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Please see Monday’s Business section for a preview of the week’s events.
