TOP STORIES -- Feb. 22-27
Union, Supermarkets Reach Deal to End Strike
Negotiators reached a deal that could end the California supermarket strike and lockout, a bitter fight that highlighted the national debate over how much companies should pay for workers’ healthcare coverage.
After 16 straight days of bargaining, the deal was struck in a conference room at a hotel in Orange County. Neither side would provide details.
People close to the talks said the supermarkets scored victories in their bid to cut spending on wages and health benefits -- in large part through a two-tier system under which new hires would earn less per hour and receive skimpier health benefits than veterans -- but the United Food and Commercial Workers Union said the proposed contract “preserves affordable healthcare” and job security for its members.
The pact must be ratified by the tens of thousands of UFCW members who until last October had worked at Safeway Inc.'s Vons and Pavilions, Kroger Co.'s Ralphs and Albertson Inc. stores in Central and Southern California. UFCW leaders have agreed to recommend that the contract be ratified, and approval is expected, the supermarkets said in a statement.
California Employers Add Jobs in January
The pace of job growth in California quickened last month, the latest sign that the state’s economic comeback is gaining momentum. But new hiring is still far weaker than in past recoveries, and did not slow the increase in long-term joblessness.
Statewide, employers added 22,200 nonfarm jobs in January. The gains were the most since October and spread through most industries. The government’s jobs report also showed that the job market in the second half of 2003 was stronger than previously thought, especially in Southern California.
The unemployment rate shrank to 6.1% from 6.5%, but economists saw much of the decline as a statistical quirk. Employers in the state remain stubbornly skittish about adding new workers. More than two years after the official end of the national recession, the rate of hiring is far below past recoveries.
Eisner Loses Backing of Big Pension Funds
Two major California pension funds and a major shareholder advisory firm recommended that investors oppose Walt Disney Co. Chairman Michael Eisner’s reelection at Wednesday’s annual meeting.
The California Public Employees’ Retirement System and the California State Teachers’ Retirement System, two of Disney’s largest shareholders, blamed Eisner for the company’s poor financial performance. Advisory firm Glass Lewis & Co., whose clients own more than 15% of Disney shares, recommended that its clients withhold votes for two other directors.
Also, representatives for pension plans in New York state, New Jersey, Connecticut, Massachusetts and Virginia said they had lost confidence in Eisner’s leadership. State pension funds in Ohio and North Carolina also plan to withhold votes for Eisner. However, New York City pension funds said they would vote to re-elect Eisner.
Fraud Charge Thrown Out in Stewart Trial
The judge in Martha Stewart’s trial Friday threw out the most serious charge against her, saying the government had failed to prove that she intended to commit securities fraud.
“No reasonable juror can conclude beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her company,” U.S. District Judge Miriam Goldman Cedarbaum said.
Stewart, 62, and co-defendant Peter E. Bacanovic, 41, her former stockbroker, still face four felony counts each. They face charges of conspiracy, obstruction of justice and lying to the government in connection with an alleged cover-up that followed Stewart’s Dec. 27, 2001, sale of $228,000 of ImClone Systems Inc. stock.
Stewart’s defense rested after calling one witness. Closing arguments are expected Monday and Tuesday.
Disney Focuses on Trash in Winnie the Pooh Case
At a hearing in the battle over millions of dollars in Winnie the Pooh royalties, attorneys for Walt Disney Co. focused on the question of whether confidential documents were stolen.
Disney’s legal team alleged that an unlicensed investigator broke into Disney’s offices about a decade ago and stole hundreds of pages of company papers from desks and filing cabinets as part of an effort to bolster the royalties case against Disney.
Disney’s lead attorney, Daniel Petrocelli, argued that the alleged misconduct warrants the dismissal of the 13-year-old lawsuit.
If the case isn’t dismissed, a trial could start in January 2005.
The hearing dealt mostly not with the substance of the documents, but rather with how they landed in the hands of Shirley Slesinger Lasswell and her daughter, Patricia Slesinger, who sued Disney in 1991.
Lawyers for the Slesingers contend that their clients searched through Disney’s trash legally.
SEC Proposes Fee to Target Market Timing
The Securities and Exchange Commission took aim at abusive market-timing strategies that have figured at the center of the mutual fund scandals, proposing a 2% fee to discourage rapid-fire trading that boosts costs for other shareholders.
The mandatory charge, called a redemption fee, would be imposed on sales of mutual fund shares that investors had held for five days or less.
Commissioners voted 4 to 1 to solicit public comment on the proposal, a first step toward implementation.
Even so, two Republican commissioners expressed deep reservations and Republican Chairman William H. Donaldson, a proponent, conceded that the measure raised thorny questions.
Nonetheless, Donaldson and other regulators agreed it was necessary to move forward with the proposed reform.
Under the SEC proposal, the fees that investors must pay to redeem briefly held shares would go back into the funds, in effect compensating longer-term shareholders for such in-and-out transactions.
Genentech Cancer Drug Receives Approval
Genentech Inc. won U.S. approval from the Food and Drug Administration to sell its eagerly anticipated colon cancer drug, a new kind of treatment that works by starving the tumor of blood.
Avastin was approved as a first-line treatment for colon cancer in patients whose disease has spread to other parts of the body.
The approval for Avastin marks the first OK of therapy that chokes off the supply of blood to tumors -- a mechanism known as anti-angiogenesis.
Analysts estimate that Avastin, which Genentech said it could begin shipping in three days, could become the world’s No. 1 cancer drug with sales topping $2 billion a year.
Genentech is counting on the colon cancer medicine to boost company sales over the next five years.
IBM Found Not Liable for Ex-Workers’ Cancers
IBM Corp. was cleared of responsibility for the cancers that developed in two former workers who built hard-disk drives in its San Jose factory. The computer giant said it would go after the plaintiffs for legal costs.
After a four-month trial, a Santa Clara Superior Court jury returned with a unanimous verdict of not liable. Alida Hernandez and James Moore failed to convince the jury that they had been systemically poisoned by chemicals at the plant.
Hernandez, 73, said she often was splashed with chemicals at the IBM plant, where she worked for more than a dozen years. She was diagnosed with breast cancer in 1993. Moore, 62, was diagnosed with non-Hodgkin’s lymphoma after working in the same plant for more than 20 years.
IBM’s lawyer said the jury’s swift decision would discourage further lawsuits.
Richard Alexander, the attorney for Hernandez and Moore, said he would press on with lawsuits on behalf of former IBM employees in other states.
United Launches Low-Fare Carrier Ted
Ted, the newest low-fare carrier, arrived at Ontario International Airport offering daily flights to Denver. The airline plans to start service between Los Angeles and Las Vegas on Saturday.
Ted is UAL Corp.'s gambit to go nose-to-nose in the region’s lucrative low-fare air travel market dominated by Southwest Airlines, JetBlue Airways and Alaska Airlines, among others.
By the end of 2004, Ted -- the name is short for United -- hopes to operate a fleet of 45 Airbus A320 jetliners, which is less than 10% of the entire United fleet.
Flights will take off out of hubs in Denver and another in Washington’s Dulles Airport where planes will make daily round trips to Ft. Lauderdale, Orlando and Tampa, Fla., and Las Vegas.
For a preview of this week’s business news, please see Monday’s Business section.