TOP STORIES -- June 6-11

Supreme Court Ruling Lets in Mexican Trucks

The Supreme Court cleared the way for thousands of Mexican trucks and buses to begin delivering goods and passengers throughout the U.S., ending a decade-long dispute that had pitted environmentalists against NAFTA and became a sore point in relations with Mexico.

Siding with President Bush in their 9-0 ruling, the justices threw out a court order that had blocked the free flow of Mexican trucks on the grounds that the often older diesel-burning vehicles would further pollute areas of California and the Southwest.

Last year, the U.S. 9th Circuit Court of Appeals in California said pollution laws required U.S. officials to study environmental effects before opening the border to trucks from Mexico. But the Supreme Court said the president had the power to enforce the North American Free Trade Agreement.

The ruling is a victory for U.S. and Mexican businesses, which expect to benefit from lower shipping costs. But the ruling was criticized by environmentalists and by truckers on both sides of the border, wary of new competition.

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Martha Stewart Asks Judge for New Trial

Martha Stewart asked for a new trial, saying her March 5 conviction was tainted by a witness’ lies. Court papers filed by Stewart’s lawyers contend that testimony by a Secret Service lab director who was indicted on perjury charges was “the capstone” of the government’s effort to show that Stewart and her former stockbroker, Peter Bacanovic, lied to cover up the circumstances of her sale of stock in a biotechnology company.

Judge Miriam Goldman Cedarbaum postponed sentencing for three weeks, to July 8. Stewart, 62, and Bacanovic, 42, each face 10 to 16 months in prison for their convictions on felony counts of conspiracy, obstruction of justice and lying to the government.

Prosecutors contend that although lab director Larry F. Stewart (no relation to Martha) lied under oath, the underlying evidence was sound and the convictions should stand.

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Bush Sides With Bells on Competition Rules

The Bush administration and federal regulators sided with the Baby Bells and refused to seek Supreme Court review of telephone competition rules.

AT&T; Corp. and MCI Inc. said they still would appeal the court decision that threw out rules requiring the Bells to lease local phone lines and gear to rivals at regulated wholesale rates. Critics accused the administration of favoring Bell companies like SBC Communications Inc. over relative newcomers.

A White House spokeswoman said the decision was “consistent with the administration’s policy of ending the cycle of litigation and moving to regulatory stability” after eight years of court challenges to rules implementing the act, aimed at opening the phone business to competition.

The Bells have been in talks with companies that have been leasing lines and equipment at the wholesale rates. The Bells have long argued that rates should be set in the marketplace, not by regulators.

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Mandalay Bay Rejects MGM Mirage Bid

A deal that would have created the nation’s largest casino company broke apart after Mandalay Bay Group rejected a $4.4-billion bid by MGM Mirage.

Mandalay balked because MGM Mirage at the last minute became unwilling to shoulder the risk that regulators would force the merged company to sell off some casinos because of antitrust concerns.

“This became a different deal than the one we started talking about a week ago,” said Glenn Schaeffer, Mandalay Bay Group president and chief financial officer.

MGM Mirage amended its original proposal by asking for a 15-month period during which it could walk away from the deal if divestures required by federal and state regulators became too odious in its view. Mandalay would have received a breakup fee of $100 million, according to a source familiar with the talks.

The combined company would have controlled about half of the hotel rooms and casino space along the famed Strip of Las Vegas.

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Disney Agrees to Help Bail Out European Unit

Walt Disney Co. and three French banks agreed to a financial bailout of Euro Disney, which is grappling with heavy debt and slow ticket sales.

About $2.9 billion in debt would be refinanced, and Euro Disney would issue an unspecified amount of stock to raise cash and help pay for new theme park attractions. The publicly traded company is 39%-owned by Disney and operates the Disneyland Paris resort and its sister park, Walt Disney Studios.

Disney could purchase as much as $120 million of the new stock in Euro Disney, said a source familiar with the deal.

The bailout agreement is subject to approval by Euro Disney’s other creditors as well as investors, including Prince Alwaleed bin Talal, a Saudi billionaire, who owns 16% of Euro Disney.

One of the resort’s principal creditors is state-owned bank Caisse des Depots et Consignations, which is also one of three lenders involved in the financial bailout. The two others are French banks Credit Agricole and BNP Paribas.

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Tenet in Broad Talks to Resolve Claims

Tenet Healthcare Corp. is in broad settlement talks to pay more than $1 billion to resolve hundreds of claims of unnecessary heart surgeries, as well as most of the federal investigations into the hospital chain’s business practices, sources said.

The discussions are preliminary, and no final agreements have been reached. If negotiations fail, the Santa Barbara-based company faces the prospect of civil and criminal trials across the country.

The nation’s second-largest hospital chain has been rocked with bad news since late 2002, when it was revealed that Tenet used a questionable scheme to boost Medicare billings for its sickest patients. About the same time, allegations of unnecessary heart surgeries at Tenet’s hospital in Redding came to light.

Tenet is also in discussions with government lawyers to resolve a number of federal probes for as much as $1.5 billion, sources said.

A spokesman said Tenet did not expect to reach any settlements in the near future.

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Garamendi Questions Anthem-WellPoint Deal

State Insurance Commissioner John Garamendi said an acquisition that would affect millions of Blue Cross of California customers “is not in the best interest” of the state and indicated he might withhold his approval.

Garamendi does not have the ability to block the proposed $15.5-billion purchase by Anthem Inc. of WellPoint Health Networks Inc., which runs Blue Cross of California. But he could deny Anthem’s request to buy Blue Cross Life & Health Insurance Co., a unit of Thousand Oaks-based WellPoint.

Garamendi said he was concerned that the combined company could weed out severely ill customers, bleed Blue Cross of $1 billion in assets and damage the bottom line by paying top executives hundreds of millions of dollars in stock and cash.

Anthem and WellPoint said that customers would not see higher premiums and that executive compensation, estimated at $356 million if 293 WellPoint executives are forced out within three years, would be paid by Anthem.

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PUC Approves Plan for San Diego Power Plant

The California Public Utilities Commission approved a utility’s ambitious plan to sharply boost the supply of electricity in the rapidly growing San Diego area.

But the plan by San Diego Gas & Electric Co., designed to help avoid another energy crisis like the one that swept the state in 2000-01, faces a legal challenge from a San Francisco consumer group. Energy analysts said the legal challenge might slow the plan but was unlikely to derail it.

SDG&E;, a Sempra Energy unit, serves San Diego County and parts of southern Orange County. Approval of its plan is part of the commission’s effort to get power plants built, both by utilities and independent power producers, to avoid shortages in a projected tight market in the state between now and 2007.

Led by PUC President Michael R. Peevey, the commission voted 3 to 2 to allow SDG&E; to buy the unfinished Palomar power plant in Escondido.

The Utility Reform Network contends that Peevey was biased in favor of the SDG&E; plan.

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Clear Channel Settles Indecency Complaints

Clear Channel Communications Inc. agreed to pay a record $1.75 million to settle federal complaints that it aired indecent comments by Howard Stern and other disc jockeys.

The fine, announced by the Federal Communications Commission, is the largest for a television or radio company accused of indecency violations. The penalty exceeds the $1.7 million paid by Viacom Inc.’s Infinity Broadcasting for remarks by Stern in 1995.

“We didn’t agree that all the complaints were legally indecent, but some clearly crossed the line, and for those we have taken full responsibility,” Clear Channel Executive Vice President Andrew Levin said.

The settlement comes as the FCC’s chairman, Michael K. Powell, and Washington lawmakers have been taking a harder line against what they see as indecent material on radio and television.

Clear Channel in February dropped Stern’s show from the six of its 1,200 stations that carried it.

From Times Staff

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For a preview of this week’s business news, please see Monday’s Business section.