The cities of Los Angeles and Long Beach filed separate lawsuits accusing a coalition of gas companies of conspiring to eliminate competition, drive up natural gas prices and discourage the construction of electricity generating plants in California.
Officials from the two cities alleged that Southern California Gas Co., San Diego Gas & Electric and El Paso Natural Gas Co. violated the state’s antitrust law and engaged in unfair and fraudulent business practices that caused gas prices to skyrocket. They are seeking damages that could reach into the billions of dollars.
The lawsuits, filed in Los Angeles County Superior Court, accuse the companies of conspiring to manipulate the price of natural gas by agreeing to kill pipeline projects that would have brought ample supplies of cheaper natural gas to Southern California.
The gas companies strongly denied the allegations, saying California’s energy problems are the result of soaring demand for electricity and fluctuations in the price of natural gas.
The cities are the first California municipalities to take action against the gas companies, but several lawsuits around the state are targeting California’s natural gas suppliers. El Paso Corp., which owns the main pipeline transporting out-of-state gas to Southern California, has been targeted repeatedly by utility companies, state regulators and antitrust attorneys.
In recent months, natural gas prices have tripled across the nation for a number of reasons, including a shortage of supplies to meet demands for home heating. Prices have increased far more in California, where natural gas is a central factor in the state’s energy crisis. The state relies on the clean-burning fuel to generate half its electrical power.
Cadiz Settles Desert Dispute
Santa Monica-based Cadiz Inc. will receive $6 million and deed to an 11-square-mile swath of desert in a deal that settles a long-running dispute with trash giant Waste Management Inc.
The civil settlement resolves charges of corporate espionage that spawned civil and criminal court cases during the last several years. Without admitting any wrongdoing, Waste Management agreed to surrender the cash along with 7,000 acres of creosote flats in San Bernardino County, where the global refuse giant had planned the world’s biggest landfill, to receive trash from Los Angeles and Orange counties.
The site of the proposed project, which was abandoned more than four years ago, abuts a vast groundwater aquifer from which Cadiz hopes to sell water to the Metropolitan Water District.
Cadiz’s proposed contract with the MWD could be worth $1 billion over a period of 50 years. Under the deal, Cadiz would receive and store in its aquifer up to 150,000 acre-feet of water a year from the Colorado River. Water would be supplied to the MWD in times of drought.
Value Tumbles at CSC
El Segundo-based Computer Sciences Corp. slashed its profit forecast by 60 percent and warned of up to 900 layoffs as a result of sluggish demand for technology and computer services.
The announcement sent the company’s stock tumbling 40 percent last week, erasing more than $3.5 billion in market value.
The company’s clients range from the Internal Revenue Service to Nortel Networks Corp. CSC has helped the royal family of Saudi Arabia set up a computer system to track the millions of Muslims who make pilgrimages to Mecca every year.
To trim costs, CSC said it would cut its staff by 700 to 900 workers, about 1 percent of the company’s 68,000 employees worldwide. A CSC spokesman said the layoffs would be spread throughout the company, not concentrated at the company’s Southern California headquarters.
CSC earned $403 million on $9.4 billion in sales in its 2000 fiscal year.
Housing Agency Gets Power Aid
The federal government will give $50 million to public housing authorities in Los Angeles and nine other cities to help them pay utility bills that have soared because of rising power costs.
The emergency relief effort will also provide $55 million to help the nation’s other 3,100 public housing agencies pay utility bills that exceeded their budgets.
The Housing Authority of the city of Los Angeles is the only California agency to qualify as one of the nation’s 10 hardest-hit housing agencies, making it eligible for the additional federal assistance, said officials of the Department of Housing and Urban Development.
The Los Angeles City Housing Authority’s energy costs have been 24 percent higher than anticipated, HUD officials said.
The money will be used to pay for heating and other utility bills, and the size of the grants will be decided on a case-by-case basis after applications are received. It was not immediately known how much of the emergency funding Los Angeles could receive, HUD officials said.
DWP Buys Microturbines
The Los Angeles Department of Water and Power has decided to buy 141 microturbine power systems from Capstone California, a newly formed subsidiary of Chatsworth-based Capstone Turbine Corp.
Once installed at a variety of Los Angeles-area facilities, these distributed generation systems have the capacity to generate a total of more than four megawatts, enough electricity for about 4,000 homes.
The Capstone Model 330 creates 30 kilowatts of power from a variety of fuels, including natural gas, propane, diesel, kerosene and methane-based gases from sources such as landfills, oilfields and wastewater treatment plants.
The units will be delivered to the DWP starting immediately and continuing through May, officials said.
Guitar Center Buys Music Retailer
Musical instrument retailer Guitar Center Inc. said it would be establishing a presence in the school-band business through the $33 million acquisition of American Music Group Ltd.
Syracuse, N.Y.-based American Music has a small slice of the $1 billion domestic band market, having generated about $30 million in revenues last year. Officials at Agoura Hills-based Guitar Center said the company plans to expand the American Music chain business rapidly. The band-instrument market is fragmented, dominated by hundreds of mom-and-pop and single-owner stores, with no major national chains.
Guitar Center has agreed to pay $14.4 million in cash, $2.5 million in stock and assume $16 million in debt to gain control of American Music. The 12-store chain and catalog business would operate as a standalone division.
The value of Guitar Center shares has risen by 41 percent this year, bucking the sell-off of retailing shares in the recent bear market. The company’s resiliency has come from continued growth in profit and sales.
Title Company Penalized
The state Department of Insurance issued an $8.8 million penalty against Burbank-based Southland Title Corp. and its two Southern California subsidiaries for allegedly providing illegal kickbacks to area real estate agents and mortgage and escrow companies.
The department said the company violated a law that prohibits gifts in exchange for business brought to a firm. The complaint alleges that Southland Title spent at least $1.7 million over three years on fishing trips to Mexico, trips to the Del Mar Racetrack and on concert tickets, among other items, for real estate agents and others in the industry.
The department started investigating the firm in 1998 after receiving numerous complaints about the title company from consumers, officials said.
Feds Close Software Marketer
Agents from the Federal Trade Commission have shut down a Van Nuys company for allegedly making false claims about a software kit it marketed that is designed to help people open a medical billing business.
The FTC also froze the assets of Medicor LLC and said it will seek redress on behalf of consumers who purchased the package for $359. The federal complaint, filed in U.S. District Court, says the company and its manager, Andrew Rubin, promised customers they could earn up to $1,500 a week using their home computers to process medical bills, a figure that did not match the reality.
An attorney for Medicor denied any wrongdoing by the company.
Officials said the action was part of the FTC’s Project Homework, which is aimed at scams targeting non-English speakers, the physically disabled and stay-home parents.
Imports Down at Ports
The amount of imported cargo handled by the area’s ports dropped significantly in February, suggesting that the slowing U.S. economy is causing retailers and others to import fewer consumer goods from Asia.
Imports handled by the Port of Los Angeles dropped 8 percent in February, which was the first decrease in year-over-year inbound cargo shipments in nearly two years. Meanwhile, the neighboring Port of Long Beach saw imports drop 13 percent, the third monthly decline in six months.
Exports, meanwhile, were up nearly 5 percent at the Los Angeles harbor in February while they fell at Long Beach by roughly 8 percent, the fourth decline in as many months.
KLAC Switching Formats
A new era in Southern California talk radio begins April 2 as KLAC-AM’s (570) pop standards format gives way to The Buzz.
A source familiar with the transition said the rational behind the changes was to create a talk format that would be attractive to men 18-to-49 who tune into the station in large numbers to listen to the Los Angeles Lakers and Anaheim Angels.
Don Barrett, executive editor of LARadio.com, which tracks the performance of local stations, expects Phil Hendrie, currently on KFI-AM (640) weekday afternoons, will be the station’s signature voice as he moves to morning drive, working from 5 a.m. to 9 a.m.
Jim Rome, currently on Fox Sports KXTA-AM (1150), will take over the 9.a.m-to-noon slot. KFI’s Tim & Neil will move to the high-profile afternoon slot at KLAC.
On the weekends, Wayne Resnick moves to KLAC from KFI, where he has worked since 1988. Additionally, there will be three new local weekend hosts, according to Barrett.
The station is under contract with a number of paid infomercials that will continue to run, mostly on Sunday mornings.
Glendale Acquisition
A downtown Glendale property that includes a six-story office building has been purchased by Cimm’s Inc., a major Burger King and Tony Roma’s franchisee.
Cimm’s affiliate Adelphia Properties paid a Washington Mutual affiliate $7.25 million for the 1.5-acre site at 620 N. Brand Blvd., including the six-story building, an adjacent single-story building and a 204-stall parking garage.
Cimm’s, which also has real estate and construction operations, will relocate from its longtime Glendale headquarters. Washington Mutual has agreed to lease back its 6,810-square-foot bank branch for 10 years in a transaction valued at $1.9 million.
Ancier Back to WB
Former NBC and WB entertainment executive Garth Ancier, who was fired by the peacock last year, has been pegged for the newly created position of executive vice president of programming for the Turner Networks.
Ancier, 43, who jumped to NBC in 1999 after delivering strong results as head of programming at the WB, will return to the Time Warner fold.
Turner’s outlets include the WB broadcast network and cable channels TBS, TNT and the Cartoon Network.
Ancier will be spending half his time in Atlanta, where Turner Broadcasting is based, and half his time in Los Angeles, headquarters of the WB, company officials said.
Homes Sales Dip
The region’s housing market paused in February, as home sales in Los Angeles and Orange counties declined from year-earlier levels.
But prices of all kinds of homes grew robustly and most viewed the drop-off in sales 7 percent in Los Angeles County as a one-month blip partly attributed to low inventories.
The report showed that the median price of homes sold in Los Angeles County last month rose 8 percent to $206,000 from a year earlier. Meanwhile, the latest figures show a 5.2-month supply of previously owned homes on the market in Los Angeles County, down from a 5.8-month supply a year earlier, according to the California Association of Realtors.
In Los Angeles County, 6,532 homes were sold last month, vs. 6,986 a year earlier.
Financier Investigated
California securities regulators said they are investigating Los Angeles entrepreneur Craig N. Kirt, who sold shares in a company that promised to incubate dozens of Internet-related start-up businesses.
Kirt’s venture, which has gone by three different names in the past year DirectNet Inc., Incubanks Inc. and most recently 2M Labs solicited money from investors in 1999 and 2000 via a high-risk private placement offering.
Kirt allegedly failed to disclose that he had been suspended several years ago from selling unrelated securities in Pennsylvania.
Disney Settles With Workers
Disneyland is paying more than $1.7 million to about 10,000 former and current workers to settle complaints that some employees had to stay to change out of costumes while others were allowed to go home early in their uniforms.
The Anaheim park mailed checks for the total amount this week to settle charges that some workers spent more time in locker rooms and costume windows than others who were paid the same, Disneyland management sources and state labor regulators said.
Additional payments will be made later this year until all hourly workers at the park are phased into a program allowing uniforms to be worn home, according to the state’s Department of Industrial Relations.
The settlement payments range from as little as $1 to more than $1,000 per worker.
In settling, Disneyland didn’t admit liability.
Warner Prevails in ‘Pinocchio’ Suit
In a major victory for Warner Bros., the California Court of Appeals has reversed a ruling that required the studio to pay $20 million in compensatory damages to filmmaker Francis Ford Coppola as a result of a disagreement over the development of a “Pinocchio” film.
A Los Angeles Superior Court jury ruled in 1998 that Warner Bros. falsely claimed to have a “Pinocchio” deal with Coppola, which prevented him from making the movie with Columbia Pictures. The jury also awarded Coppola $60 million in punitive damages, a decision that was later thrown out by a Superior Court judge.
Under the latest ruling, Coppola will receive no compensation. His only recourse is to ask the appeals court for a rehearing or to the California Supreme Court.
New Chief at Boeing Satellite
Boeing Co. has named former NASA manager Randy Brinkley as president of its satellite-making unit in El Segundo.
The appointment comes less than two weeks after two top executives of Boeing Satellite Systems abruptly resigned in the first major shake-up since Boeing acquired the business for $3.75 billion six months ago.
Brinkley, 56, had been named acting president at the time, replacing Tig H. Krekel
After several years of disappointing earnings, Boeing Satellite Systems ended 2000 with a backlog of 34 satellites valued at $6 billion.
A former Marine Corps pilot, Brinkley joined the former Hughes Space and Communications Co., which was renamed Boeing Satellite Systems, in May 1999 as senior vice president of programs. Previously, he was the NASA program manager for the International Space Station and he directed the successful repair of the Hubble Space Telescope.
Boeing Satellite Systems is the world’s largest maker of commercial satellites and employs nearly 9,000 workers in El Segundo.
