Daily Business Briefing
Sept. 3, 2021, 12:51 a.m. ET
Sept. 3, 2021, 12:51 a.m. ET
A jury of 12 residents of Northern California and five alternates was sworn in on Thursday for the fraud trial of Elizabeth Holmes, the disgraced founder of blood testing start-up Theranos, which is set to begin next week.
The jury consists of seven men and five women.
For two days, Judge Edward Davila of U.S. District Court for the Northern District of California, federal prosecutors and Ms. Holmes’s defense lawyers questioned roughly 100 potential jurors over their answers to a 28-page questionnaire that spanned topics including what news outlets they read, whether they knew any potential witnesses and whether they have had negative medical experiences.
The jury will decide the fate of Ms. Holmes, who is battling 12 counts of fraud and conspiracy to commit wire fraud over false claims she made about Theranos’s blood tests and business. Her trial is one of Silicon Valley’s most prominent fraud cases and a public fascination with Ms. Holmes has spawned documentaries, a book and a mini-series starring Amanda Seyfried.
Finding jurors who had never heard of Theranos, which collapsed in 2018 after reports that its blood-testing technology did not work as advertised, was a challenge.
One potential juror said she went down a “YouTube rabbit hole” of videos about Ms. Holmes. Another said she had seen a social media meme about Ms. Holmes’s voice — Ms. Holmes appeared to have deepened her voice at times — something that contributed to her cult of personality and the interest in her downfall.
Scheduling was another issue. The trial is set to last 13 weeks or longer. Some jurors were dismissed because they had upcoming surgeries or long-awaited vacations. Others were excused because they were teachers with no one to fill in for them.
Who’s Who in the Elizabeth Holmes Trial
Who’s Who in the Elizabeth Holmes Trial
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial soon for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case →
Domestic abuse was a significant topic of discussion. Ms. Holmes’s lawyers have indicated that she is likely to argue that she was abused and controlled by her business partner, Ramesh Balwani, known as Sunny, whom she also dated. Mr. Balwani also faces fraud charges. When Judge Davila asked if any jurors had been exposed to domestic abuse on Wednesday, roughly half of them raised their hands and shared stories that they said could sway their views of the evidence and testimonies.
Another potential juror worked on a whistle-blower program for law enforcement. Theranos was felled, in part, by two young employees who reported issues with the company’s tests to government agencies and the press. Still another prospective juror was dismissed for bias because his mother-in-law went to prison for embezzlement.
On Wednesday, the prosecution argued that five of the potential jurors that Ms. Holmes’s lawyers had proposed to dismiss for hardship were people of color. Ms. Holmes’ lawyers denied any racial profiling of jurors.
On Thursday, lawyers for each side agreed on a jury within an hour, passing a list of jurors between them as each side used their allotted “challenges” to eliminate jurors of their choosing.
An earlier version of this article misstated the residence of the jurors in the fraud trial of Elizabeth Holmes. They are from Northern California, not solely Santa Clara County.
Walmart is raising hourly wages for about 565,000 workers in the latest example of a large employer trying to attract and retain employees in a challenging labor environment.
The pay raise, which will total at least $1 an hour and will take effect Sept. 25, will apply to workers in departments such as food and general merchandise.
The company’s average wage will rise to $16.40, Walmart said, though its minimum wage still lags that of other large retailers such as Target and Amazon. As of Sept. 25, Walmart’s minimum starting wage will rise to $12 an hour from $11. In some stores, however, starting wages will reach as high as $17 an hour. Walmart employs about 1.6 million people in the United States.
Employers, particularly in the retail, food service and hospitality industry, have faced a labor shortage during the pandemic. The unemployment rate dropped in July to 5.4 percent, from 5.9 percent. Weekly U.S. jobless claims last week dropped by 14,000 to 340,000, the Labor Department said Thursday, the lowest since March 2020.
Some politicians and companies have attributed the lack of workers to the enhanced unemployment benefits that are scheduled to end this month. But new research shows that these benefits alone are not keeping workers at home, but rather a combination of factors such as a lack of child care, health concerns related to the pandemic and general fatigue working in stressful, low-paid jobs.
This year “has been another trying year, with challenges that few could have predicted,” Walmart’s head of U.S. operations, John Furner, said in a note to employees on Thursday.
In February, Walmart raised wages for 425,000 workers, mostly focused on the company’s fast-growing online grocery pickup operation.
Locast, a nonprofit streaming service that piped local broadcast signals over the internet, is shutting down after a federal judge ruled against the organization in a rare case tackling the legality of network content delivered online.
The organization said it was “suspending operations, effective immediately,” and it added that Locast was meant to “operate in accordance with the strict letter of the law,” but had to comply with the ruling, with which it disagreed.
The service was in many ways a quixotic bet on the nature of copyright law. It was started by a Washington lawyer, David Goodfriend, who designed the platform specifically to challenge broadcasters. “Do you know you’re supposed to get television for free?” Mr. Goodfriend said in a 2019 interview.
The four big networks — NBC, CBS, ABC and Fox — are given a free license by the U.S. government to make use of the airwaves. But the companies also charge customers — on the order of at least $12 a month — for what are called “retransmission consent fees” through their cable and satellite providers. The fees amount to billions of dollars a year for the broadcasters.
Locast plans to appeal the ruling but it will effectively shut down for good.
“Locast always was meant to be a public service for people who want to watch their local broadcast TV stations, can’t get them over the air, and can’t afford expensive cable, satellite or streaming services,” Mr. Goodfriend said in a statement provided to The Times. “Locast showed that millions of Americans fit that category. They deserve something better than the status quo.”
Mr. Goodfriend, who had cast himself in a real-life David-versus-Goliath affair, dared the broadcasters to sue him to bolster the tenets of copyright law. Locast was set up to take advantage of provisions in the law that gives people free access to network telecasts and includes exemptions for nonprofits.
“We really did our homework,” Mr. Goodfriend said in 2019. “We are operating under parameters that are designed to be compliant within the law.”
The service seeks donations of $5 a month and interrupts the stream every so often to prompt users to make a contribution. About 3.2 million viewers have signed up for the service but not all of those people have made financial contributions. The service generated $4.3 million in revenue last year. The organization also offers complete access without donation requests to about 50,000 people who have shown economic hardship.
In 2019, the four major networks banded together and sued the service for infringement. Locast filed a suit of its own, claiming the networks had colluded in an effort to squash the nonprofit’s business dealings.
Late on Tuesday, Judge Louis L. Stanton of the Southern District of New York ruled against Locast, siding with the broadcasters over a specific element of copyright law that has to do with how charitable offerings can be solicited and used.
The judge found that Locast was using the proceeds to expand its service to other cities, a move that in his view ran afoul of the law. The copyright code allows nonprofits to solicit funds to “defray the actual and reasonable costs of maintaining and operating” the service. Locast was available in around 36 markets that served a little over half the U.S. population.
In a joint statement, the networks called the judge’s ruling “a victory for copyright law, vindicating our claim that Locast is illegally infringing copyrights in broadcast television content in violation of federal law.”
Locast’s appeal of the ruling will be heard by a three-judge panel in the Second Circuit Court of Appeals. If the decision is overturned, it could offer a blueprint for other similarly designed services to operate.
In the meantime, fans of Locast cried foul.
“It is absolute lunacy these companies are suing Locast,” said Cathy Gellis on Twitter. “The only reason I ever watch their affiliates is thanks to Locast. For them to sue Locast, thereby saying they don’t want viewers, should come as a shock to their advertisers. Because w/o Locast I’m not watching their ads.”
General Motors said on Thursday that it would idle six North American plants for two weeks this month and two others for a week each as the global shortage of computer chips continues to stymie carmakers.
Four plants in the United States will be affected — Fort Wayne, Ind.; Wentzville, Mo.; Spring Hill, Tenn.; and Lansing Mich. — as well as three in Mexico and one in Canada. The company is suspending production of some of its most profitable vehicles, including its full-size and midsize pickup trucks and sport-utility vehicles.
“These most recent scheduling adjustments are being driven by the continued parts shortages caused by semiconductor supply constraints from international markets experiencing Covid-19-related restrictions,” G.M. said in a statement.
The move is the latest sign that the shortage of parts is lingering longer than most automakers had expected. Several had forecast that the tight supply of semiconductors would begin to ease in the second half of 2021. Both G.M. and Ford Motor recently lifted their forecasts for operating profit this year, in part because the tight supply of vehicles has allowed dealers to sell cars for higher prices.
But on Wednesday, Ford reported that its new-vehicle sales declined by a third in August, to about 124,000 cars and light trucks, compared with the same month a year ago. Hyundai reported a sales decline of 16 percent and Toyota Motor of 2 percent.
Some factories in Asian countries like Malaysia that supply the auto industry have had to slow or stop production because of a rise in infections from the Delta variant of the coronavirus, according to auto executives and analysts.
Ford is idling production of pickup trucks at a plant near Kansas City, Mo., next week, and will slow production of heavy-duty pickups at a Kentucky plant for the next two weeks. Toyota is cutting production 40 percent worldwide this month because of the chip shortage.
And Tesla’s chief executive, Elon Musk, on Wednesday blamed supply chain problems for not being able to start selling a new version of its Roadster sports car until 2023. The electric carmaker previously delayed the production of a pickup truck and a semi truck.
The Federal Trade Commission fined Capital One’s chief executive, Richard Fairbank, on Thursday for repeatedly failing to inform authorities about his stock holdings.
Mr. Fairbank will pay a $637,950 civil penalty to settle charges that he didn’t report a purchase of more than 100,000 Capital One shares in 2018 that were part of his pay package, the commission said.
The agency said the purchases, which increased Mr. Fairbank’s holdings in the company to $168 million, were illegally finalized before government agencies could examine them.
The commission, which investigates unfair and anticompetitive business practices, called Mr. Fairbank a “repeat filing offender” whose wrongdoing spanned two decades. The agency said Mr. Fairbank failed to make the proper filings for transactions related to his compensation in 1999 and 2004.
Even so, Thursday’s penalty was his first.
“As the C.E.O. of one of America’s largest banks, Richard Fairbank repeatedly broke the law,” Holly Vedova, acting director of the trade commission’s competition bureau, said in a statement. “There is no exemption for Wall Street bankers and powerful C.E.O.s when it comes to complying with our country’s antitrust laws.”
Mr. Fairbank missed the 2018 filing requirement because of an administrative error at a law firm that advised him, Sie Soheili, a spokesman for the bank, said in an email. The law firm has agreed to pay the fine, he said.
“As soon as his counsel identified the firm’s error, as noted in the F.T.C.’s published order, Mr. Fairbank promptly self-reported to the F.T.C.,” Mr. Soheili said.
Amtrak will require all its employees to be vaccinated against coronavirus as the highly contagious Delta variant continues to concern public health officials.
Rail service employees must be fully vaccinated by Nov. 1 or submit a weekly negative coronavirus test. As of Oct. 4, new hires must show proof of vaccination before their first day of employment.
Amtrak requires all customers and employees to wear face masks, regardless of vaccination status or state and local laws.
The company joins a heap of others that have mandated inoculation in the workplace. Other transportation companies and agencies, including Frontier Airlines and New York’s Metropolitan Transportation Authority, also announced mandatory vaccination for their workers. Delta Air Lines said it would impose a $200 monthly surcharge on employees who had not been vaccinated as of Nov. 1.
Amtrak has catered mostly to leisure travel during the pandemic, said a spokesman for the rail service. Many business travelers, on which it relies, are still working from home while their companies settle on return-to-office plans.
Amtrak provided 16.8 million customer trips in 2020, a decrease of 15.2 million passengers from the year before.
“Ridership continues to improve,” said the Amtrak spokesman, with levels rising to 65 percent of what they were in 2019.
The Republican-controlled Texas Legislature this week passed a major bill overhauling election laws in the state, the latest of many to tighten voting rules this year. In Texas, as elsewhere, many businesses and industry groups have spoken out against the move, arguing that it is bad for the economy.
Texas has persuaded many companies to relocate or expand operations there with its business-friendly policies. But in taking a stand on voting rights, some companies have invited scrutiny of their words and actions, especially with political donations. Balancing this against the tightening of some of the country’s strictest voting rules will test companies’ social pledges with financial imperatives.
There is also the risk of political blowback for speaking out in a state with a Republican governor and a Republican senator embracing restrictive voting rules as a platform for potential presidential runs in 2024.
“It is about ensuring that all Texans trust the outcome of every election in Texas,” Lt. Gov. Dan Patrick, a Republican who presides over the Texas Senate, said in a statement.
In the day or so after the voting bill passed, the first reaction of Texas-based businesses that spoke out on ballot access appeared to pivot to Washington, putting pressure on Congress to pass federal voting protections.
“We hoped for a different outcome,” an American Airlines spokeswoman told the DealBook newsletter. The airline, based in Fort Worth, had sought legislation “making it easier to vote, not harder,” issuing a statement in April opposing the law. In May, the airline joined Fair Elections Texas, a nonpartisan coalition of about two dozen businesses — including Microsoft, Unilever and Levi Strauss — that called on lawmakers to expand ballot access.
A spokeswoman for Dell, which is based in Round Rock, said it would encourage employees to vote and urge political leaders to “focus on staying committed to a healthy and welcoming business climate for all Texans.” Microsoft, Patagonia and Levi Strauss also said they were disappointed with the Texas bill’s passage and called for Congress to pass voting rights legislation.
“Texans love Texas,” but they want Washington’s help, said Nathan Ryan, an Austin city commissioner and the chief executive of the consulting firm Blue Sky Partners, part of the Fair Elections Texas group. He and others are strategizing, he said, and will approach the Biden administration and congressional leaders to press for passage of two federal voting rights laws: the John Lewis Voting Rights Advancement Act and the For the People Act. (Both passed the House but have stalled in the Senate amid a Republican filibuster.)
There is “an immediate need for a national minimum standard for voter protection,” said David Clunie of the Black Economic Alliance, an organization behind a letter in April with hundreds of signatories condemning laws restricting ballot access.
New “categories of attack” are being created, like introducing criminal penalties for election administrators, said Sarah Walker of the nonpartisan group Secure Democracy, which businesses and industry groups turn to for help understanding these bills.
“The clock is ticking. The U.S. Senate must act,” said Rafael Anchia, a Texas House member and a Democrat. The Texas bill will be put in place in about 90 days, he noted, calling on “those in the seat of democracy to pass a national voting rights bill.”
Facebook’s WhatsApp messaging service was fined nearly $270 million by Irish authorities on Thursday for not being transparent about how it uses data collected from people on the service, in a case that represents a big test of Europe’s ability to enforce its landmark data privacy law.
The 265-page decision is the first major ruling against Facebook under the European Union’s far-reaching General Data Protection Regulation, or G.D.P.R., a three-year-old law that many have criticized for not being properly enforced. Irish regulators said WhatsApp was not clear with users about how data was shared with other Facebook properties like its main social network and Instagram.
WhatsApp said it would appeal the decision, setting up what is expected to be a lengthy legal battle.
The G.D.P.R. was heralded as the world’s most comprehensive data privacy law when it was enacted, and championed as a model for the rest of the world to counter the data-hording practices of Facebook, Google and other internet giants. But the law has resulted in few fines or penalties, and many have said it has not fulfilled its promise.
Regulators in Ireland have been at the center of the debate. Under the law, companies must be regulated by the countries where they have their European headquarters. The European offices of Facebook, Google, Twitter, Apple and scores of other companies are based in Ireland because of its low corporate tax rates and other benefits.
But that has put tremendous pressure on Ireland’s Data Protection Commission, an underfunded and much-criticized agency that has been tasked with enforcing a novel and complex data protection law against some of the largest companies in the world.
In July, lawmakers in Ireland’s Parliament issued a scathing report, saying the Irish regulator “fails to adequately protect the fundamental rights of citizens” because of its lack of enforcement.
“G.D.P.R. enforcement against Big Tech has been paralyzed by Ireland’s failure to deliver,” said Johnny Ryan, a privacy activist and senior fellow at the Irish Council for Civil Liberties.
The challenge of enforcing the G.D.P.R. is being closely watched as European Union officials debate new regulations for other areas of the technology industry, including stricter antitrust and content moderation policies. Critics contend that the G.D.P.R shows that although the European Union has drafted strong digital policies, it has struggled to enact them well.
The fine of 225 million euros, a fraction of Facebook’s annual profit, was the largest issued by Irish regulators against a tech giant under the law; in December, Ireland fined Twitter 450,000 euros related to a data breach. The ruling said WhatsApp did not meet its “transparency obligations” to clearly disclose how data from users would be used by Facebook for its other services.
The WhatsApp case has generated considerable debate among European Union countries about the appropriate level of enforcement under the region’s data protection rules. Officials in other countries in the 27-nation bloc have criticized Ireland for not acting more quickly against large tech platforms.
Other countries pushed Ireland to increase its initial proposed fine, which had been set at only up to 50 million euros. That sum was raised to 225 million euros after other national regulators used a board created by the law to coordinate enforcement and adjudicate disputes to push for a larger penalty.
Max Schrems, an Austrian lawyer and privacy activist who has filed several complaints with authorities in Ireland against Facebook, welcomed Thursday’s decision but said the fine by the Data Protection Commission was still too small. The G.D.P.R. allows fines of up to 4 percent of global revenue. He said there were scores of other cases waiting to be addressed.
“This shows how the D.P.C. is still extremely dysfunctional,” said Mr. Schrems, who now runs a privacy advocacy group called Noyb.
“WhatsApp is committed to providing a secure and private service,” Joshua Breckman, a spokesman for WhatsApp, said in a statement. “We have worked to ensure the information we provide is transparent and comprehensive and will continue to do so. We disagree with the decision today regarding the transparency we provided to people in 2018 and the penalties are entirely disproportionate.”
Other tech companies have also been targeted under G.D.P.R., although critics say the punishments are relatively small and unlikely to result in meaningful changes in behavior.
In July, Amazon was fined nearly 750 million euros for violations related to its advertising practices by Luxembourg’s privacy regulator. In 2019, Google was fined 50 million euros by French authorities for not getting adequate permission from uses for certain online advertising.
Paramount Pictures on Wednesday scrapped a plan to release a much-anticipated “Top Gun” sequel in theaters in November, citing uncertainty about the willingness of moviegoers to brave the fast-spreading Delta variant of the coronavirus, particularly overseas. “Top Gun: Maverick,” with Tom Cruise returning to the rebel fighter pilot role that made him a superstar, was rescheduled for theatrical release in May.
The Department of Justice has accelerated an investigation into Google’s digital advertising practices and may file an antitrust lawsuit against the internet giant before the end of the year, two people with knowledge of the government’s thinking said on Wednesday. The investigation focuses on Google’s power in the digital ad market, looking at how the company uses its dominance in auctions and ad technology to maintain its power, said the people, who spoke on condition of anonymity. In recent weeks, the Justice Department has called in more third parties as witnesses and asked for documents and interviews, in a sign it has picked up the investigation’s pace, the people said.
Wells Fargo postponed its broader return to office until Oct. 18 from Oct. 4 for U.S. employees who are working from home, the bank’s chief operating officer Scott Powell wrote in a memo to staff Wednesday. The company will give employees at least 30 days of advance notice if those plans change.
Tesla was ordered by the National Highway Traffic Safety Administration, the main federal auto safety agency, to hand over a trove of data on its Autopilot driver-assistance system as part of an investigation into Tesla cars crashing into fire trucks or other emergency vehicles parked on roads and highways. In a letter dated Tuesday, the NHTSA told the electric carmaker to produce detailed information on how Autopilot works, how it ensures drivers are paying attention to the road and whether there are any limits on where it can be turned on.
As the green building movement evolves beyond energy efficiency into new areas of sustainability, one promising effort focuses on finding new life for used building materials.
“Just in the past year or two, the conversation around deconstruction and reuse has really catapulted,” said Shawn Wood, a construction waste specialist for the City of Portland, Ore., which he believes is the first municipality in the country to adopt an ordinance requiring certain homes to be deconstructed, rather than demolished.
Deconstruction ordinances can help reduce waste, but more demand for salvaged materials is needed to really drive the market, he said. Interest is ticking up among municipal leaders and even Google as the construction industry tries to reduce its carbon footprint, reports Lisa Prevost for The New York Times.
But there are challenges to scaling up the effort for large commercial projects:
Using salvaged materials isn’t necessarily a money saver if the materials have to be refurbished and stored.
Older materials don’t necessarily adhere to new building codes and certifications.
Structures built in the 1960s or later include more composite materials that are difficult to take apart and reuse.
The obstacles are considerable, but the Kendeda Building for Innovative Sustainable Design, at the Georgia Institute of Technology in Atlanta, offers an example of what’s possible.
It was designed to meet the Living Building Challenge, which requires, among many other standards, the incorporation of salvaged materials — specifically, one salvaged item for every 500 square meters of design.
Lifecycle Building Center, an Atlanta store that sells donated materials for reuse, sourced 25,000 linear feet of two-by-fours, all salvaged from television and movie sets from Georgia’s thriving film industry. That was enough, when nailed together with the new boards, to form 125 floor panels.
“We weren’t trying to meet the minimum for salvage — we wanted to find big examples,” said Jimmy Mitchell, a sustainability engineer at Skanska USA, the construction manager for the project.
U.S. stocks rose on Thursday, with the S&P ticking up 0.3 percent. U.S. jobless claims last week dropped by 14,000 to 340,000, the lowest since March 2020.
The Labor Department is expected to release its monthly jobs report for August on Friday. Economists surveyed by Bloomberg expect to see an increase of 750,000 positions.
European stocks rose, with the Stoxx Europe 600 gaining 0.3 percent.
Oil prices rose sharply a day after officials from OPEC, Russia and other oil-producing countries decided to continue increasing oil production each month by 400,000 barrels a day. Futures for West Texas Intermediate, the U.S. crude benchmark, rose 1.6 percent to $69.70 a gallon.
Cathay Pacific Airways, Hong Kong’s biggest carrier, has begun disciplinary proceedings against flight attendants and pilots who have refused to get Covid-19 vaccines, one of the first examples of an airline enforcing a vaccination mandate.
“We continue to review the future employment of those who are not vaccinated and assess whether they can continue to be employed as aircrew with Cathay Pacific,” a company spokesperson said in an email, following a policy announced in June that all air crew must be fully vaccinated by the end of August.
The carrier, which now operates all flights with fully vaccinated aircrew, employs 13,500 people in Hong Kong, according to its latest half-year report.
The spokesperson said that the vast majority of Hong Kong employees — 93 percent — had booked or received their vaccinations as of Thursday, including 99 percent of pilots and 93 percent of cabin crew.
But a number of those who remain, the company said, may risk losing their jobs. The airline said that most of the unvaccinated employees were exempt from its vaccine mandate because they had valid medical reasons or were on long-term leave.
The stringent policy — which other airlines like United Airlines, Air Canada and SWISS also adopted — is harsher than that of many other airlines, which have mostly focused on encouraging their employees to get shots. Delta Air Lines, for example, has said that workers who are not vaccinated by Nov. 1 will have to pay an additional $200 per month to remain on the airline’s health plan. More companies are considering imposing such fees on the unvaccinated, following the airline’s lead.