TOP STORIES -- June 20-25
Judge Expands Bias Suit Against Wal-Mart
A federal judge said he would allow a gender discrimination lawsuit to proceed against Wal-Mart Stores Inc. on behalf of more than 1.5 million women who have worked for the retailing giant.
The lawsuit, originally filed by six women, alleges that the world’s largest company pays female employees less than men for the same jobs, passes them over for promotions and retaliates against those who complain.
The ruling by U.S. District Judge Martin J. Jenkins in San Francisco broadens the suit to cover potentially all women who have worked at Wal-Mart’s stores in the United States since late 1998.
Bentonville, Ark.-based Wal-Mart said it would appeal.
The suit seeks unspecified back pay and lost wages for all women employed by Wal-Mart during the period covered by the suit. It also demands punitive damages and asks the court to impose changes on the way Wal-Mart trains and communicates with employees, gives raises and decides whom to promote.
Court Bars FCC Effort to Relax Media Rules
In a major setback to broadcasters and the government regulators that oversee them, a U.S. appeals court largely barred the Federal Communications Commission’s bid to relax media ownership rules.
The U.S. 3rd Circuit Court of Appeals in Philadelphia blocked implementation of FCC regulations that would have allowed companies to own more radio and television stations in the same market and directed the agency to rewrite the rules.
The decision was a victory for consumers and advocacy groups that believe that the changes in ownership limits would lead to further media consolidation.
It was also a defeat for FCC Chairman Michael K. Powell, who had championed the rules governing ownership of newspapers, radio and TV stations.
The FCC and the administration must decide whether to appeal the decision to the Supreme Court or undertake a lengthy rewrite of the rules.
Contract Talks Falter as Hotel Union Strategizes
High-stakes negotiations between Los Angeles-area hotels and the hotel workers union broke down, as national chains such as Hyatt and Sheraton resist the union’s plan to line up contract expiration dates across the country, opening the door to a national strike.
Union leaders, who want contracts in 10 major cities to expire in 2006, say that kind of clout would allow them to substantially drive up wages and benefits for housekeepers, bellboys and banquet servers.
The national strategy was mapped out by John Wilhelm, president of the Hotel Employees and Restaurant Employees International Union. The group advocates a national approach to negotiations.
Nine major Los Angeles-area hotels said they would start charging workers $10 a week for health insurance unless the union dropped demands for a two-year contract.
Chiron Alters Policy on Hepatitis C Patents
Chiron Corp. said it would change the licensing policy on its patents covering the genetic makeup of the hepatitis C virus, a move that could lead to the development of new drugs to fight the disease.
Emeryville, Calif.-based Chiron has more than 100 patents on the virus’ genome. The company has been accused of controlling its patents too tightly, stifling research that could lead to new treatments.
Chiron has consistently maintained that its defense of its patents, which expire in 2015 in the U.S., has been appropriate and fair. But Chief Executive Howard Pien said Chiron no longer would demand that licensors pay upfront fees and make annual payments to obtain rights to the hepatitis C patents. Pien said the company had heard complaints that the fees were too steep for small companies.
SBC Plans Investment in New Technologies
SBC Communications Inc. plans to invest as much as $6 billion in new technologies to compete with cable companies and Internet services threatening its traditional local calling business.
Chairman Edward Whitacre Jr. said the five-year project would enable the company to deliver digital television, super-fast Internet access and cheap phone service over fiber-optic lines to customers in its 13-state region, including California.
San Antonio-based SBC’s plan to upgrade its network was unveiled one week after the demise of federal phone competition rules that had required SBC and several other local phone companies to lease lines and gear to competitors at regulated wholesale rates.
To offer a range of new services in addition to plain old phone service requires first replacing the copper wires in thousands of neighborhoods with fiber-optic cable.
Former Vivendi Chief Detained in Probe
Former Vivendi Universal Chairman Jean-Marie Messier spent a night in a detention center in Paris, following a day of interrogations from France’s financial investigative brigade.
The man who once described himself as “master of the world” was detained for 36 hours as part of a probe into alleged fraud and share-price manipulation during his tenure at the media company. Messier maintains that he has done nothing wrong.
Messier’s reign at Vivendi Universal came to an abrupt end in 2002, when the board fired him for leading the company to the brink of bankruptcy.
Now, Messier faces the prospect of a criminal trial in France. French prosecutors last week disclosed that Messier was under investigation, the first formal step before charges could be filed against him. After a hearing before two judges, Messier was freed on $1.6-million bail.
SEC Says Fund Chiefs Must Be Independent
The Securities and Exchange Commission, seeking to head off another scandal in the mutual fund industry, ruled that fund chairmen can’t also work for the companies that run the funds.
The measure was approved 3 to 2 over the objections of leading mutual fund companies and the industry’s trade group.
Proponents, including Republican SEC Chairman William H. Donaldson, supported the measure as a way to ensure that mutual fund chairmen hold the interests of ordinary shareholders paramount.
The regulation mandates that three-fourths of directors on mutual fund boards be independent of the fund company.
Funds will have about 18 months to fully comply.
Gemstar Agrees to $10-Million Settlement
Gemstar-TV Guide International Inc. agreed to pay $10 million to settle allegations by federal regulators that it overstated revenue. The money will be distributed to shareholders hurt by the Los Angeles company’s questionable accounting, according to the Securities and Exchange Commission, which had accused Gemstar of inflating revenue from 1999 through 2002.
The settlement is the latest problem resolved by a new management team installed in late 2002 after founder Henry Yuen was ousted. The SEC acknowledged the cooperation of Gemstar under the new team, led by Chief Executive Jeff Shell.
Gemstar, which publishes TV Guide and produces electronics guide software, has restated its financials three times since Shell took charge in late 2002, reversing revenue by $377 million.
In settling with the SEC, the company did not acknowledge any wrongdoing.
Titan Passes Deadline on Deal With Lockheed
Lockheed Martin Corp.’s plan to buy San Diego defense contractor Titan Corp. for $1.66 billion appeared all but dead after it refused to extend a deadline for Titan to resolve a Justice Department investigation of bribery allegations.
Lockheed had made closing the deal contingent upon Titan’s reaching a plea agreement with federal officials by last Friday.
“We’ve extended the deadline for Titan twice previously,” Lockheed spokesman Jeff Adams said Thursday. “Titan asked again and we declined to do so. We’re not under any obligation to amend the terms again.”
The Justice Department has been investigating allegations that Titan consultants made unlawful payments to government officials in Asia, Saudi Arabia and the African nation of Benin in exchange for business.
Federal officials have declined to comment on the probe, or whether there could be charges or a settlement.
Garamendi Demands Anthem Contributions
California Insurance Commissioner John Garamendi said he would not support Anthem Inc.’s $16.5-billion bid for the parent of Blue Cross of California unless hundreds of millions of dollars were invested in healthcare programs for the state’s poor.
Garamendi said the investment should equal compensation that would go to executives of WellPoint Health Networks Inc., which runs Blue Cross. He said WellPoint brass could receive $600 million in severance payments and stock after Anthem acquires the company.
At a hearing on the merger in Los Angeles, Garamendi called the payments “reprehensible.”
Garamendi lacks the authority to block Anthem’s purchase of Thousand Oaks-based WellPoint, which runs Blue Cross. But he can deny Anthem’s takeover of Blue Cross Life and Health Insurance Co., a WellPoint unit.
For a preview of this week’s business news, please see Monday’s Business section.
