TOP 10 STORIES / WEEK OF JUNE 18-22

U.S. to Seek Settlement of Big Tobacco Suit

The U.S. tobacco industry may be about to shed one of its biggest legal worries: a multibillion-dollar racketeering suit by the Justice Department. Aides to Atty. Gen. John Ashcroft said department lawyers will seek a settlement with the industry. Analysts said that in settlement talks, tobacco companies will be dealing from a position of strength.

President Bush, who received generous campaign support from cigarette makers, had criticized the suit, which was launched during the Clinton administration. The Bush administration recently agreed to provide only $1.8 million this year to continue work on the case, a fraction of what lawyers at Justice said they needed.

Industry officials said they expect to win in court and will not make major concessions to be rid of the suit. Anti-smoking groups blasted the move as a sellout to tobacco interests.

Myron Levin

Montero SUV Given Dismal Rollover Rating

For only the third time in the 13 years it has been testing automobiles, Consumer Reports issued a “not acceptable” rating, saying a Mitsubishi Motors sport-utility vehicle showed a dangerous tendency to roll over during tight curves.

Two 2001 Mitsubishi Montero Limiteds failed the magazine’s test, in which drivers swerve one way and then another to avoid obstacles in the road. The Montero Limiteds lifted two wheels off the ground in nearly every test, prompting Consumer Reports to call on Mitsubishi to recall the vehicles.

Mitsubishi defended its vehicles as safe and assailed the tests as unrealistic and unscientific.

Terril Yue Jones

Suit Accuses Wal-Mart0 of Discrimination

An ambitious federal lawsuit filed in San Francisco charged Wal-Mart Stores Inc., the nation’s largest private employer, with bias against women in promotions, pay and job assignments.

The six current and former employees who brought the suit are seeking class-action status to represent as many as 500,000 women who work or have worked in the company’s stores in the last two years.

In addition to individual complaints, the suit charges a pattern of discrimination. It seeks unspecified damages.

A Wal-Mart spokesman said the company condemns discrimination and denies any systematic bias.

Separately, the U.S. Equal Employment Opportunity Commission filed two more lawsuits against Wal-Mart, one that claims it unlawfully fired a disabled employee and another that claims a supervisor at one of its Sam’s Club stores discriminated against a British employee.

Lisa Girion

Appeals Court Returns Licenses to NextWave

In a surprise decision, an appeals court revoked the government’s sale of $17 billion in mobile phone licenses to 22 phone carriers and ordered them returned to bankrupt NextWave Telecom Inc.

The ruling is a blow to the Federal Communications Commission, which had fought a high-stakes battle against NextWave for more than three years, and is expected to propel the two into settlement talks.

The billions that the government stands to lose would make a dent even in a multibillion-dollar surplus and act as a damper on government spending.

Times Staff Writers

Mexican President Says Country Is in Recession

Mexican President Vicente Fox finally uttered the “R-word,” saying publicly for the first time what economists have known for weeks: Mexico is in a recession brought about by U.S. economic woes.

Fox’s statement came as the government revised its economic growth target downward by a half percentage point to between 2% and 2.5%, down from about 5% at the beginning of the year.

Fox was understandably reluctant to say the word since a prolonged recession will create political problems. At the beginning of this year, he promised the economy would generate 1.3 million jobs , but so far there has been a net loss of 400,000 jobs.

Chris Kraul

Disney Studio Head Quits to Return to Broadway

Peter Schneider resigned as Walt Disney Co.’s studio chairman after a tumultuous 18-month tenure, continuing a long exodus of senior managers and corporate upheaval at the entertainment giant. Schneider, who is moving on to become a Broadway producer, said his resignation was a “deeply personal decision and has not been made in haste.”

Disney Chairman Michael Eisner plans to become more involved in the film operation that has seen a series of recent disappointments at the box office, notably with the rapidly slowing business for the costly epic “Pearl Harbor” and the less-than-spectacular opening of its new animated film “Atlantis.”

Times Staff Writers

Disney Offers Discounts at California Adventure

Walt Disney Co. took a drastic step to boost attendance at its new California Adventure theme park, offering free admission all summer for Southern California children accompanied by an adult, whose ticket also will be significantly reduced.

The offer is highly unusual for Disney, which traditionally has given modest discounts only in the off-season and has long been the industry’s trendsetter for raising admission prices.

Bonnie Harris and Leslie Earnest

Suit Alleges Fraud in Executive Life Purchase

California Atty. Gen. Bill Lockyer joined a whistle-blower’s lawsuit that accuses some European investors and a French government-owned bank of defrauding hundreds of thousands of policyholders of the now-defunct Executive Life Insurance Co.

The suit seeks $2 billion in damages and alleges that more than 300,000 policyholders were cheated out of billions of dollars when Credit Lyonnais and other investors operated a scheme to obtain the assets of the failed California company.

State law prohibits foreign governments from owning California insurance companies, but the suit, filed in 1999, accused Credit Lyonnais of using dummy companies to front for the purchase of Executive Life’s insurance portfolio in 1991.

Davan Maharaj

U.S. Weighing Inquiry Into Explorer Stability

The federal government said it is considering investigating Bridgestone/Firestone Inc.’s claim that Ford Motor Co.’s Explorer SUV is prone to rollovers.

Deputy Transportation Secretary Michael Jackson, in a surprise announcement, told Congress that the claim would get “full consideration” from the department’s National Highway Traffic Safety Administration unit.

Meanwhile, Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House Commerce Committee, asked NHTSA to look into claims that Ford, in its recall of 13 million Firestone tires, plans to replace them with tires that are more dangerous.

Jube Shiver Jr.

Washington Again Taking on Hollywood

Saying the problem of media violence is “not a partisan issue,” a group of lawmakers led by Sen. Joseph I. Lieberman (D-Conn.) urged President Bush to actively support legislation that would slap financial penalties on entertainment companies that peddle adult material to children.

Two of the lawmakers introduced a bill in the House that would allow federal officials to fine companies that violate their own marketing guidelines up to $11,000 a day.

The bill is identical to legislation introduced this year in the Senate that immediately was denounced as unconstitutional by Hollywood advocates.

Megan Garvey

These and additional stories from last week are available at www.latimes.com/business.