TOP 10 STORIES / JUNE 25-29

Breakup of Microsoft Overturned on Appeal

A federal appeals court unanimously overturned the proposed breakup of software giant Microsoft Corp., again delaying the resolution of the closely watched three-year antitrust case. The seven-judge U.S. Court of Appeals for the District of Columbia upheld earlier findings that the company had maintained an illegal monopoly, but it roundly criticized Judge Thomas Penfield Jackson’s conduct in the earlier case.

Legal experts suggested that the decision, which produced no clear winner, could prompt both sides to revive previously unsuccessful settlement negotiations. The morning after the ruling, Microsoft Chairman Bill Gates said the company was willing to open settlement discussions, as long as they don’t focus on splitting up its operations.

The ruling presents the first clear test of how forcefully the Bush administration will move on antitrust matters.

Times Staff Writers

Justices Say States, Cities Can’t Limit Tobacco Ads

The Supreme Court handed the tobacco industry a major victory, ruling that states and localities may not ban outdoor advertising of cigarettes and other tobacco products at retail stores or near schools and playgrounds.

The 5-4 decision knocks down Massachusetts’ restrictions and apparently invalidates local ordinances in New York, Los Angeles and at least a dozen other California cities.

The court said the broad bans on advertising violate both the 1st Amendment’s guarantee of freedom of speech and the federal cigarette labeling act of the 1960s.

The free-speech aspect of the ruling is particularly significant because it potentially puts into jeopardy ordinances in Los Angeles and other big cities that restrict billboard ads for beer and liquor.

David G. Savage

High Court Supports Jury in Setback for Tobacco

In a landmark event in the legal assault on tobacco, the Supreme Court for the first time upheld a jury verdict in a damage suit brought by a smoker against a cigarette company.

The high court, without comment, declined to review a Florida Supreme Court decision upholding a $750,000 verdict rendered against Brown & Williamson Tobacco Corp. in 1996.

The case, filed in 1991 by a man who smoked for 44 years and lost a lung to cancer, was the first in which a plaintiff introduced highly damaging internal industry documents that had been stolen by a former Brown & Williamson paralegal.

Tobacco companies also are appealing three major verdicts against them in California, as well as a $144-billion verdict rendered by a Miami jury in a class-action case last summer.

Henry Weinstein

Fed Trims Key Rate a Quarter of a Point

The Federal Reserve shaved a quarter of a percentage point from its key federal funds rate to a seven-year low of 3.75% in an effort to keep a stubbornly sluggish economy from slipping into recession.

The central bank coupled the modest cut with a statement signaling that it’s ready to reduce rates further if economic troubles worsen, but it also highlighted some signs of strength in the economy.

The previous five rate cuts this year have been half a point, and some analysts said the smaller reduction might have been a compromise among policymakers. Fed Chairman Alan Greenspan was widely thought to be interested in continuing the central bank’s rapid-fire rate reductions, while others were concerned that too much cutting could rekindle inflation.

Peter G. Gosselin

UCLA Business Analysts Predict Recession in State

The widely followed UCLA Anderson Business Forecast predicted that the state will sink into recession this year, a downturn triggered by the national economic slump, plummeting technology spending and California’s electricity crisis.

UCLA became the first of California’s major forecasters to predict that the state’s growing problems would lead to a recession.

Forecasters said the recession would be concentrated in the Bay Area, beginning this summer or fall and lasting six months to one year. They said Southern California might escape with no more than a slowing rate of business growth because its economy is less dependent on technology and its largest city, Los Angeles, has a municipal utility that has insulated it from the power crisis.

A Times Staff Writer

Firestone to Shut Decatur Tire Plant

The slowing auto market and plummeting reputation of Firestone tires has forced Bridgestone/Firestone Inc. to close its oldest and least efficient factory in the U.S. to reduce capacity and concentrate production in its more modern plants.

The Decatur, Ill., factory was singled out last summer as making most of the defective tires that lost their treads at high speeds, contributing to hundreds of accidents involving Ford Explorer sport-utility vehicles that left at least 203 dead and more than 700 injured.

Bridgestone/Firestone said it corrected manufacturing techniques at Decatur that may have led to the tires’ failure, but insists that the Explorer is inherently unstable and contributed to the crashes. The tire maker said the decision to close the plant by Dec. 31 was based completely on supply and demand and not on quality or production processes.

Terril Yue Jones

L.A. City Council Widens ‘Living Wage’ Law

In a move that broadens Los Angeles’ use of its “living wage” law, the City Council required a family-owned noodle maker to comply with the measure even though city officials said the law did not apply in this case.

Wing Hing Noodle Co. was seeking approval for a major expansion that will be financed by a $4.3-million industrial development bond issued--but not funded--by the city. The living wage ordinance requires that city contractors or others receiving substantial city funding for economic development pay at least $8.97 in hourly wages.

Councilman Mike Hernandez had argued that the company should comply with the living wage provision because the bond program provides the company with public assistance, albeit in the form of a federal tax break.

Lee Romney

Labor Law Enforcement Has Dropped, Study Says

Labor law enforcement has declined markedly in California over the last two decades, despite acknowledged widespread violations in low-wage restaurant, janitorial and garment jobs, according to an analysis of staffing levels and inspections by the labor-backed nonprofit California Works Foundation.

The foundation found, for example, that inspections by the state’s health and safety department dropped by 47% over the last two decades. And the ratio of staff members to workers in the department that enforces wage and hour violations has dropped from a high of 41 per million in 1980 to 26 in 2000.

Nancy Cleeland

Morgan Stanley to Pay $23 Million in Bond Case

Morgan Stanley & Co. agreed to pay $23 million to settle claims that it contributed to the looting of trust funds that provided living expenses for more than 200 victims of auto wrecks, industrial accidents and botched medical procedures, according to documents filed in a Los Angeles class-action case. The investment giant did not admit liability.

Plaintiffs’ attorneys said the settlement assures a flow of income to their clients while the case against other blue-chip defendants continues.

Separately, the company that triggered the disaster by losing a fortune in bonds filed a petition for bankruptcy reorganization. The move will halt legal proceedings against the company, Stanwich Financial Services Corp. of Stamford, Conn.

Myron Levin

Gasoline Prices Poised to Drop After Holiday

Already falling because of growing supplies, retail prices of gasoline in California and nationwide are likely to drop further after the July 4 holiday, analysts say. The outlook for lower pump prices also is strengthened by sharp declines in market prices for gasoline and crude oil traded on commodities exchanges last week.

Gasoline futures contracts hit a 17-month low and crude oil futures suffered some of their biggest one-day declines in three months. Peak production at the nation’s refineries is making gasoline inventories more ample, driving down prices from the record highs of mid-May.

In California, some dealers now are selling self-serve regular for less than $1.80 a gallon, and warehouse chain Costco is charging less than $1.70 at some locations.

James F. Peltz

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These and additional stories from last week are available at www.latimes.com/business. Please see Monday’s Business section for a preview of the week’s events.