Supreme Court to consider punitive damages for Exxon Valdez oil spill…Bear Stearns agrees to pay $1 million to Enron creditors to settle lawsuit related to equity transactions…UAW members approve four-year contract with Chrysler…
The U.S. Supreme Court will have the last word in the battle over $2.5 billion in punitive damages ExxonMobil owes for the Exxon Valdez oil spill in 1989. A federal appeals court already cut in half a $5 billion award by a 1994 jury in Anchorage, Alaska. The justices say they’ll consider whether the Irving-based oil company should have to pay any punitive damages at all. Eleven million gallons of oil spilled into Alaska’s Prince William Sound when the supertanker ran aground on a reef in 1989. Exxon Mobil says it’s already paid $3.4 billion in clean-up costs and other penalties resulting from the oil spill. Lawyers for the plaintiffs say the damage award is “barely more than three weeks of Exxon’s net profits.” The plaintiffs still living include about 33,000 commercial fishermen, cannery workers, landowners, native Alaskans, local governments and businesses.
Bear Stearns has agreed to pay $1 million to Enron creditors to settle a lawsuit related to equity transactions, according to Reuters. Creditors will withdraw other claims against each other in exchange for the payment, according to a proposed settlement filed by the Enron Creditors Recovery Corporation in the U.S. bankruptcy court in Manhattan. Creditors had been seeking recovery of more than $25.9 million. Lawsuits remain against Citigroup and Deutsche Bank of helping prior management commit fraud.
Bear Stearns is reducing its workforce by about 300 workers, according to Dow Jones Newswires. The reductions are coming at all levels or the organization, according to a memo. The investment bank reported a 62 percent drop in third-quarter earnings last month on losses related to sub-prime mortgages and hedge funds.
United Auto Workers members have approved a four-year contract agreement with Chrysler despite significant dissent. The union says 56 percent of production workers and 51 percent of skilled trades workers voted for the pact. Clerical workers and engineers represented by the union had higher percentages voting in favor. Many workers opposed the agreement because it establishes lower wages for some noncore, non-assembly workers. The contract also doesn’t make as many promises for future work at U.S. plants. UAW and Chrysler bargainers reached the agreement earlier this month after a six-hour strike. The deal came the same day the union announced that General Motors workers had approved a similar deal. About 45,000 Chrysler workers are covered by the contract. Industry analysts have called it historic and say it should make the company more competitive with Japanese automakers.
The Tesoro Corporation board says it’ll carefully review Kirk Kerkorian’s offer to increase his firm’s stake in the San Antonio-based oil refiner. The board says it’ll take ten days to consider the unsolicited offer to sell about 16 percent of Tesoro’s common stock to the billionaire investor’s Tracinda Corporation. Tracinda already owns four percent of the company. On Friday, it offered to buy an additional 22 million shares for $64 per share. That’s a 12 percent premium to the stock’s Thursday closing price. Tesoro operates seven refineries in the western United States and more than 900 retail stations. Kerkorian is known for bold investments, often making unsolicited bids. The casino tycoon was listed by Forbes magazine as the nation’s seventh richest man.
The Federal Reserve is widely expected to cut interest rates this week. The central bank begins meeting on Tuesday and its announcement on rates is expected the following afternoon. Wachovia Corporation economist Mark Vitner says he thinks the Fed will cut rates by a-quarter of a point this time. It will be the first meeting since the Fed cut rates by a-half point on September 18th. Between the worsening housing market slowdown and ongoing credit crunch, the Fed is seen wanting to help avoid a recession. The final scheduled meeting of the year follows in mid-December.
It’s shaping up to be a busy week for economic news. Along with the Fed meeting, investors will be monitoring reports on consumer confidence, third-quarter growth, manufacturing and unemployment. The October jobs report is due Friday. Analysts look for only modest job growth and a steady unemployment rate at 4.7 percent.