Business
Video: Google C.E.O. Comments On Landmark Monopoly Ruling
“Sundar Pichai is here, everybody, the C.E.O., of course, of Alphabet and Google. How much of your time, and I promise we’d get to it, is spent these days on thinking about this legal case that you are the center of with the U.S. government saying you’re a monopoly and we are going to break you up? They have talked about effectively trying to do a whole bunch of things, spinning off Chrome, figuring out how to deal with Android, preventing you from paying folks like Apple to make Google the default search engine on the phone.” “Look, I spend the vast majority of my time on innovation and product innovation we need to do as a company. But at our scale as a company, it’s a big part of my job to engage with regulators and viewed it as an important part of my role to do that. From a legal standpoint, look, these are complex cases. They are in the thick of it. We have very, very capable teams which work through it. I have, I spend time, but it’s not an extraordinary amount of time or something like that, yeah.” “But what do you think your chances are, if you will? I mean, do you say to you, I don’t know how much you want to speculate, but there’s a big question mark about if any of these things were to come to pass, what it would do to the business?” “Look, I mean, I would say this even through the ruling, the judge commented on that we are clearly the highest quality search engine product out there. And we have gotten to that position by innovating ahead of everyone else.”
Business
Commentary: Uber is trying to snow voters with a supposedly pro-consumer ballot initiative. Don’t buy it
Uber loves to define itself as a most public-spirited company.
“We’re reimagining how the world moves … to help make transportation more affordable, sustainable, and accessible for all,” as the ride-sharing giant declares on its website.
In 2020, when it spent nearly $100 million to pass Proposition 22, which overturned a state law designating its drivers as employees, gaining them benefits such as a minimum wage and workers compensation coverage, it described the goal of the ballot measure as granting the drivers “the flexibility to decide when, where and how they work.” Never mind that the initiative protected Uber’s business model, which involves sticking its “independent contractor” drivers with the cost of fuel, insurance and wear and tear on their vehicles. The initiative passed.
This would affect every accident in the state. Uber is trying to stop all cases, not just bad cases.
— Jamie Court, Consumer Watchdog
San Francisco-based Uber is now back in the ballot initiative game, this time with a proposal for a state constitutional amendment capping the fees of plaintiffs’ lawyers representing victims of auto accidents. The proposal, which is in its signature-gathering phase, is aimed at the November ballot.
The initiative text is replete with vituperative language attacking personal injury lawyers as a class. It labels them “self-dealing attorneys” and “billboard attorneys,” and accuses them of deliberately inflating their clients’ medical claims so they can grab a larger fee and engaging in unsavory and perhaps illegal sub-rosa arrangements with complaisant medical providers.
Its putative target is contingency fees, which are typically percentages of the payouts awarded by juries or through negotiations. These are common in personal injury cases, because the clients often don’t have the wherewithal to pay a lawyer’s retainer fee in advance.
The initiative would cap contingency fees at 25% of the award. “Automobile accident victims deserve to keep more of their own recovery,” the initiative says.
“Capping attorney fees, banning kickbacks, stopping inflated medical billing and putting in place whistleblower protections will protect auto-accident victims and have the additional benefit of reducing costs for consumers,” Nathan Click, a spokesman for the initiative campaign, told me by email. He labeled the initiative a “common-sense” reform.
(Just as an aside, whenever I see a legislative proposal described as a “common-sense reform,” I reach for the nearest vomit bag; the phrase almost always is applied to a measure larded with concealed drawbacks, as is this one.)
Superficially, this looks like it could be a win for accident victims. But it’s not really about them; it’s about Uber, which has been the target of lawsuits stemming from injuries its passengers suffer while traveling with its drivers.
Uber doesn’t say how many lawsuits it has faced from passengers, or the size of its financial exposure. But in its most recent annual report, the company acknowledged it “may be subject to claims of significant liability based on traffic accidents, deaths, injuries, or other incidents that are caused by Drivers, consumers, or third parties while using our platform.”
Uber’s bete noire on this issue is Downtown LA Law Group of Los Angeles, which Uber sued in federal court, accusing the firm of “racketeering” and “fraud.” The firm moved to dismiss the suit, but briefing on that won’t be done until spring at the earliest.
I asked Click why Uber thought its accusations against Downtown LA Law Group are so egregious that they warrant rewriting the state constitution. He replied that the Downtown LA case is just “the tip of the spear.”
The law group has been the subject of an investigation by my colleague Rebecca Ellis, who has reported that that nine of the firm’s clients who sued over sex abuse in L.A. County facilities said recruiters paid them to file a lawsuit, including four who said they were told to fabricate claims. The L.A. County District Attorney’s Office is conducting a probe into the allegations. (The law firm denied the accusations.)
But nothing in Ellis’ reporting or what’s known about the county investigation validates Uber’s implicit argument that its behavior is generally characteristic of the plaintiffs’ bar.
The Uber initiative is the latest sally in a long war pitting plaintiffs and their lawyers against businesses, with legal fees as the battleground. In this war lawyers invariably are depicted as soulless and grasping ambulance-chasers unconcerned about their clients’ welfare, and businesses as, well, soulless, grasping and unconcerned about their customers. In the past the battle has been waged between lawyers and doctors, but with this initiative campaign nothing has changed other than the identity of the defendants.
Click pointed out that nothing in the proposed measure would prevent accident victims from suing Uber. But that’s hardly the point. Capping contingency fees makes many lawsuits uneconomical for attorneys, who must shoulder litigation costs such as expert testimony until a final judgment is achieved, and are left holding the bag if there is no recovery or the judgment doesn’t cover their costs. So this initiative, if passed, almost inevitably would reduce the tide of lawsuits filed against Uber.
Indeed, what gives this effort the stench of cynicism and hypocrisy is that we have plenty of experience about what happens when contingency fees are capped: Plaintiffs who have suffered grievous injury (or if they’ve died, their survivors) have trouble even getting through the courtroom door.
The lesson comes from California’s Medical Injury Compensation Reform Act of 1975. MICRA capped the noneconomic recoveries — think pain-and-suffering or reduced quality of life — for plaintiffs in medical malpractice cases at $250,000. It also capped plaintiffs’ attorney’s fees on a sliding scale, to as little as 21% on recoveries of six figures or more.
The idea was that the reduced attorney fees would make up for the reduced judgments, but according to a study by the Rand Corp., that didn’t happen. Plaintiffs’ net recoveries were still about 15% lower than they would have been without MICRA, Rand deduced. The result was “a sea change in the economics of the malpractice plaintiffs’ bar,” Rand found, with cases where the judgment cap would cut too deeply into attorney fees getting short shrift.
Those cases tended to be those with “the severest nonfatal injuries (brain damage, paralysis, or a variety of catastrophic losses)”; the median reduction in those patients’ recoveries was more than $1 million. After years of efforts the legislature finally amended MICRA in 2022, when the cap was raised to at least $350,000, with raises placing it at up to $1 million by 2032, followed by annual adjustments to accommodate inflation.
Uber’s proposal would have a larger blast zone than MICRA. Automobile-related injuries are more common than medical malpractice cases, but the range of injuries would seem comparable, up to and including death.
“This would affect every accident in the state,” says Jamie Court, the president and chairman of Consumer Watchdog, the California-based consumer advocacy organization. “Uber is trying to stop all cases, not just bad cases.”
It’s hard to reconcile Uber’s solicitude for accident victims with its most recent legislative victory in Sacramento. That was the passage of SB 371, a measure that cut Uber’s legally required insurance coverage when its drivers and passengers are injured in accidents caused by uninsured or underinsured motorists from $1 million per event to a mere $60,000 per person and $300,000 per incident.
In effect, as an Assembly analysis pointed out, the law shifts costs previously covered by premiums paid by Uber and its fellow ride-sharing firms to their drivers, who pay through their own insurance premiums — and even to passengers, if Uber’s insurance doesn’t cover their injuries.
Uber argued, with supreme nerve, that the $1-million policy requirement was what placed it among the “prime targets” of unscrupulous personal injury lawyers, because the prospect of a big judgment was what got the lawyers’ saliva flowing.
SB 371 sailed through both houses of the state legislature without a single vote in opposition and was signed into law by Gov. Gavin Newsom in October. I asked Uber why, given the greased passage of a law it desperately desired, it didn’t take the same route to cutting contingency fees rather than an initiative campaign that will swallow up tens of millions of dollars. Click responded that the law specifically covered only the uninsured and underinsured motorist coverage that only the ride-sharing companies have to carry. The initiative, he said, “is much broader.”
If the Uber initiative reaches the ballot, spending by its supporters and opponents might well set records. Uber seeded the campaign with a $12-million contribution in October. But that’s probably just an amuse-bouche, launching a full-size meal.
The initiatives’ target, the personal injury bar, has responded in kind. They’ve proposed two counter-initiatives — one to increase the liability of ride-sharing companies for injuries to their passengers, and another giving Californians the constitutional right to contract with any attorney on any agreed-upon terms. Those initiatives are both in the signature-gathering phase.
Consumer Attorneys of California, the bar’s lobbying organization, already assembled a war chest approaching $50 million in contributions from lawyers and law firms.
Fasten your seat belts. Both sides are just getting started.
Business
Supreme Court may block thousands of lawsuits over Monsanto’s weed killer
WASHINGTON — The Supreme Court announced Friday it will hear Monsanto’s claim that it should be shielded from tens of thousands of lawsuits over its weed killer Roundup because the Environmental Protection Agency has not required a warning label that it may cause cancer.
The justices will not resolve the decades-long dispute over whether Roundup’s key ingredient, glyphosate, causes cancer.
Some studies have found it is a likely carcinogen, and others concluded it does not pose a true cancer risk for humans.
However, the court may free Monsanto and Bayer, its parent company, from legal claims from more than 100,000 plaintiffs who sued over their cancer diagnosis.
The legal dispute involves whether the federal regulatory laws shield the company from being sued under state law for failing to warn consumers.
In product liability suits, plaintiffs typically seek to hold product makers responsible for failing to warn them of a known danger.
John Durnell, a Missouri man, said he sprayed Roundup for years to control weeds without gloves or a mask, believing it was safe. He sued after he was diagnosed with non-Hodgkin’s lymphoma.
In 2023, a jury rejected his claim the product was defective but it ruled for him on his “strict liability failure to warn claim,” a state court concluded. He was awarded $1.25 million in damages.
Monsanto appealed, arguing this state law verdict is in conflict with federal law regulating pesticides.
“EPA has repeatedly determined that glyphosate, the world’s most widely used herbicide, does not cause cancer. EPA has consistently reached that conclusion after studying the extensive body of science on glyphosate for over five decades,” the company told the court in its appeal.
They said the EPA not only refused to add a cancer warning label to products with Roundup, but said it would be “misbranded” with such a warning.
Nonetheless, the “premise of this lawsuit, and the thousands like it, is that Missouri law requires Monsanto to include the precise warning that EPA rejects,” they said.
On Friday, the court said in a brief order that it would decide “whether the Federal Insecticide, Fungicide, and Rodenticide Act preempts a label-based failure-to-warn claim where EPA has not required the warning.”
The court is likely to hear arguments in the case of Monsanto vs. Durnell in April and issue a ruling by late June.
“The Supreme Court decision to take the case is good news for U.S. farmers, who need regulatory clarity,” said Bayer CEO Bill Anderson. “It is time for the U.S. legal system to establish that companies should not be punished under state laws for complying with federal warning label requirements.”
Monsanto says it has removed Roundup from its consumer products, but it is still used for farms.
Last month, Trump administration lawyers urged the court to hear the case.
They said the EPA has “has approved hundreds of labels for Roundup and other glyphosate-based products without requiring a cancer warning,” yet state courts are upholding lawsuits based on a failure to warn.
Environmentalists said the court should not step in to shield makers of dangerous products.
Lawyers for EarthJustice said the court “could let pesticide companies off the hook — even when their products make people sick.”
“When people use pesticides in their fields or on their lawns, they don’t expect to get cancer,” said Patti Goldman, a senior attorney. “Yet this happens, and when it does, state court lawsuits provide the only real path to accountability.”
Business
Why is L.A.’s salad titan, Sweetgreen, wilting?
Sweetgreen’s salad business isn’t as fresh as it used to be.
Not long ago, the Los-Angeles-based company’s fresh bowls of fancy salads were all the rage, and its shares soared on hopes that salad-slinging robots could make it more profitable.
Last year was tough, though, as enthusiasm for the brand waned and cash-strapped diners abandoned fast-casual options for cheaper fast food and homemade meals.
Sweetgreen’s same-store sales slid 9.5% last quarter, even as it increased portion sizes and tried new menu items — including French fries, which flopped. It laid off 10% of its support center workforce in Los Angeles, and one of its founders stepped down.
Over the last 12 months, Sweetgreen shares have tumbled more than 75%. The stock closed Thursday at $8.
“Sweetgreen is more of a premium health product, and it’s going to cost more than a Big Mac,” said retail expert Dominick Miserandino, who runs the company Retail Tech Media Nexus.
“The average consumer, when they’re hit with survival-type questions about basic necessities, wellness is not going to be No. 1 for them,” he said.
Younger consumers are showing less interest in Sweetgreen salads at the same time as tariffs and other factors are driving inflation. The company fell short of Wall Street’s expectations last quarter with a net loss of $36.1 million on revenue of $172.4 million.
“Performance was impacted by softer sales,” Sweetgreen co-founder and Chief Executive Jonathon Neman said in November. “This was coupled with lighter spending among younger guests.”
As it braces for the future, Sweetgreen decided to sell the food automation company it bought only a few years ago. Sweetgreen closed the sale of its automated kitchen technology, dubbed Infinite Kitchen, to the takeout and food delivery company Wonder Group last month.
Spyce, the business unit behind Infinite Kitchen, was sold for close to $200 milion in cash and shares of Wonder’s Series C preferred stock. Sweetgreen bought Spyce in 2021 for about $70 million. Sweetgreen will continue to use the technology in some restaurants. The tech uses automatic conveyor belts to assemble salads and other meals.
“The sale marks a strategic milestone for Sweetgreen, enabling the company to reinvest in key priorities and focus on growth and operational efficiency,” the company said in a news release.
Sweetgreen did not respond to a request for comment.
Sweetgreen was founded in 2007 in Washington by Georgetown students looking to make healthy food as convenient as fast food. It moved its headquarters to Los Angeles in 2016.
The chain has grown to more than 280 stores in the U.S.
California — with 56 Sweetgreens — is the state with the most locations.
The company made its initial public offering in 2021, and a day later was valued at nearly $6 billion. Sweetgreen is now worth around $900 million.
Fast-casual eateries — considered a step above fast food but more affordable than a full-service restaurant — once boomed in popularity. But value-seeking consumers are now turning to other options, said Evert Gruyaert, head of U.S. restaurants and food service at Deloitte.
“There is extremely strong competition and pressure coming from quick-service brands, and casual dining now has very compelling value offers too,” he said. “Fast casual is really squeezed in the middle.”
Fast-casual chains such as Cava and Newport Beach-based Chipotle popularized the customizable lunch bowl, usually including a protein, grain, and veggies.
The idea took off after Chipotle founder Steve Ells noticed that customers were opening up their burritos and asking for a fork. The Mexican chain launched bowls in 2003, paving the way for the Mediterranean bowl destination Cava to open in 2006.
Sweetgreen’s menu includes a range of salads as well as warm bowls featuring rice, salmon and chicken. A caramelized garlic steak bowl sells for $17.95, and a garden cobb salad is $15.75.
With tax, tip and a drink, customers could easily spend more than $20 on lunch.
The trend of lunching on big bowls of healthy ingredients has lost some momentum in recent years.
On social media, some diners are complaining about “slop bowls,” saying that lunch shouldn’t be just a collection of ingredients thrown in a bowl.
Chipotle shares have slid about 30% over the last year and Cava shares have fallen close to 40% over the same time frame. Ells, who left Chipotle in 2020, returned to sandwiches and handheld foods in his new venture Counter Service.
On an earnings call in November, Sweetgreen’s Neman said the chain’s new handheld product will begin market testing early this year.
Whether in a bowl or on bread, much of Sweetgreen’s appeal comes from the perception that it’s a healthy choice. But even in Southern California, where wellness is often top of mind, its offerings are failing to attract as many customers as they once did.
“If you’re financially pushed to the limit, you need fast food to get you through the day at the cheapest possible price,” Miserandino said.
Millennials and Gen. Z, who according to Neman make up about a third of Sweetgreen’s customer base, are facing a difficult job market and cutting back on spending more than their older peers.
Sweetgreen is trying to find a way back into the sweet spot of salad consumers. It debuted a new nutrient-dense menu, created in collaboration with the wellness company Function.
The menu, which follows a recent surge in demand for protein and other macronutrients, includes options with extra iron, omega-3 fatty acids and antioxidants.
“Amid a challenging macro backdrop, our priorities remain clear,” Neman said in November. “I am extremely confident that our leadership team and focused strategy will lead Sweetgreen back to sustained, profitable growth.”
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