TOP STORIES -- May 22-27
Threat of Strike Still Looms at United Airlines
The threat of a strike at United Airlines this week still loomed as the union for the airline’s 19,500 ground workers recessed contract talks for part of the Memorial Day weekend.
The International Assn. of Machinists -- which represents baggage handlers, reservation agents and airport-counter workers -- hopes to reach agreement and avoid a walkout, but the union is “making preparations for a possible strike,” said IAM spokesman Frank Larkin.
Union negotiators “are prepared to return and conclude a deal with United and plan to be back Monday at the latest,” he said. United spokeswoman Jean Medina likewise said the carrier was “continuing to exchange proposals and have discussions.”
United and the IAM are trying to reach an agreement before Tuesday, when a bankruptcy judge in Chicago is scheduled to rule on United’s request to cancel the workers’ contract.
Spitzer Accuses AIG of Making False Reports
American International Group Inc. deliberately underreported California workers’ compensation insurance premiums for years to save millions of dollars in taxes and state fees, according to a lawsuit filed by New York Atty. Gen. Eliot Spitzer.
The alleged misreporting of premiums was one of a series of fraudulent and deceptive accounting practices aimed at boosting New York-based AIG’s stock price by inflating the financial strength of its core insurance business, Spitzer claimed. The alleged deception was directed by AIG’s then-Chief Executive Maurice “Hank” Greenberg, according to the attorney general’s lawsuit, filed Thursday.
AIG in a statement said it had no comment on the lawsuit, other than to stress that the company was cooperating with the New York attorney general.
Buffett’s MidAmerican to Acquire PacifiCorp
Billionaire Warren E. Buffett placed his biggest wager yet on the utility industry when his MidAmerican Energy Holdings Co. agreed to buy Western electric-power supplier PacifiCorp for $5.1 billion in cash.
MidAmerican Energy is 80% owned by Buffett’s Omaha-based investment firm, Berkshire Hathaway Inc.
PacifiCorp, based in Portland, Ore., provides electricity to 1.6 million customers in six Western states, including about 43,300 in such Northern California cities as Yreka, Crescent City and Mt. Shasta. It is a unit of Glasgow, Scotland-based Scottish Power.
The deal, which includes the assumption of $4.3 billion in debt, is subject to federal and state regulatory approval.
Venture to Expand Lending to Latinos
Countrywide Financial Corp. announced a venture to expand mortgage lending to the Southland’s Latinos, amid criticism that it and other lenders aren’t adequately serving that fast-growing community.
The Calabasas company said it would provide home loans through a bank owned by TELACU, a nonprofit economic development corporation in East Los Angeles.
David Lizarraga, chief executive of TELACU, said owning a home and building equity were “the first critical steps in creating financial security.”
As growth in home sales and refinancings among white borrowers is expected to slow, large players such as Countrywide are seeking to expand market share and loan volume in so-called emerging markets -- immigrants and minority borrowers who often have a harder time qualifying for mortgages.
Teamsters Picket L.A. Coca-Cola Plants
Teamster drivers, packers and warehouse workers walked picket lines at all seven Coca-Cola Enterprises Inc. bottling plants in the L.A. area in a dispute over wages and rising health insurance costs.
The action involved 1,700 of 5,000 local employees, but executives said it had no effect on product deliveries. The company, 36%-owned by Coca-Cola Co., bottles and distributes 80% of Coke sold in the U.S.
The work disruption was announced as a strike, but union officials then described it as a lockout, which could entitle workers to unemployment benefits. Company executives denied they had locked out anyone.
Both sides said they were talking. The Los Angeles contracts expired in April.
Scrushy Jury Ends
Week With No Verdict
Jurors in the corporate fraud trial of fired HealthSouth Corp. Chief Executive Richard Scrushy worked a short day Friday without reaching a verdict and plan to take a long weekend for Memorial Day.
The panel deliberated about four hours in its seventh day of talks, 1 1/2 hours less than its normal schedule.
Scrushy’s trial began in January, and U.S. District Judge Karon Bowdre told jurors that she hoped a long weekend would refresh them. She also suggested they consider working longer hours after the holiday.
The jury has sent Bowdre notes saying they were deadlocked on a key conspiracy charge against Scrushy, but she told them it was all right to skip that count and move on to the other 35 charges against the former executive.
Judge Approves Lawsuit
Over Grocery Chain Pact
A federal judge ruled that a mutual-aid pact between three grocery chains in Southern California’s supermarket labor dispute could be challenged on federal antitrust grounds.
California Atty. Gen. Bill Lockyer had filed a lawsuit alleging that the pact, in which the chains shared $150 million to help one another weather the dispute, violated antitrust laws.
Safeway Inc., Kroger Co. and Albertsons Inc. sought to have the suit thrown out, saying the pact was protected under labor laws. But Judge George H. King in Los Angeles wrote in his decision that the mutual-aid deal was “not protected from potential antitrust liability.”
A Safeway spokesman said, “We disagree with the ruling.” A Kroger spokesman said the chain couldn’t comment because it hadn’t seen the ruling. A representative for Albertsons couldn’t be reached.
Fox Network Top Choice of Young Adult Viewers
“American Idol” helped give Fox Broadcasting, the 19-year-old network controlled by Rupert Murdoch’s News Corp., its first September-to-May victory among young adults.
The race in the crucial 18-to-49-year-old demographic was tight. According to figures released Thursday by Nielsen Media Research, Fox led with an average 4.1 rating. Each point represents 1.3 million viewers. CBS followed with a 4 rating. Third-place ABC (3.7), surged on hits such as “Desperate Housewives,” finishing ahead of NBC (3.5).
Among total viewers, CBS led with an average 12.9 million, trailed by ABC (10.1 million), Fox (10 million) and NBC (9.8 million).
NASD Rules Preempt State Law, Court Says
Arbitrators who resolve investor disputes with stockbrokers do not have to comply with California’s tough ethics rules governing disclosure of their ties to the industry and the grounds under which they may be disqualified, the California Supreme Court ruled.
In a unanimous decision, the high court said California instead should apply the narrower disclosure and disqualification rules set forth by the NASD, the brokerage industry’s national self-regulatory body.
The Securities and Exchange Commission oversees NASD arbitration rules. The court said the Securities Exchange Act and the NASD rules based on it took precedence over a 2001 California ethics law and resulting regulations.
Friendster CEO Quits
as Site Traffic Declines
Former NBC Entertainment President Scott Sassa resigned as chief executive of Friendster Inc., the innovative social-networking website that has slid further behind upstart rivals.
“I wasn’t the right person to go forward,” Sassa said. “I thought that where the company was, we wanted someone more versed in technology.”
The board hired Taek Kwon, an executive vice president in IAC/InterActiveCorp’s Citysearch unit, to succeed Sassa on June 13. The Mountain View, Calif., company also laid off five employees, leaving a staff of 50.
Friendster drew 703,000 visitors last month, down 15% from April 2004, according to Nielsen/NetRatings. The average visitor spent 14 minutes on the site, a 65% drop year over year.
Court Rejects Vintner’s Bid to Use ‘Napa’
The maker of the popular $1.99 Charles Shaw wine, widely known as “Two Buck Chuck,” has lost again in the courts.
A state appeals court in Sacramento rejected the arguments of Bronco Wine Co. in its fight to use the word “Napa” on wines that don’t always contain grapes grown in California’s Napa Valley wine region.
The 3rd District Court of Appeal rejected the winemaker’s claim that federal law prohibited a state from establishing stricter labeling regulations than the federal government for wine destined for interstate distribution.
Attorney Peter M. Brody said the wine company was studying the ruling “before we decide what to do.”
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From Times Staff and Wire Reports
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For a preview of this week’s business news, please see Monday’s Business section.
