National Briefing

Friday, September 5, 2008

LEGAL

Comcast Appeals FCC Ruling

Comcast asked a federal appeals court to overturn an FCC ruling that the company is improperly managing customers' online traffic.

On Aug. 1, the Federal Communications Commission found that Comcast had improperly blocked peer-to-peer programs, such as BitTorrent, that are used to share videos and other files. The company said it temporarily slowed some users' service when its network was congested.

"The commission's action was legally inappropriate and its findings were not justified by the record," Comcast Executive Vice President David L. Cohen said in a statement. Cohen said Comcast, the biggest U.S. cable-TV operator, still intended to "comply fully" with the FCC order.

"I'm certainly disappointed they ended up appealing," FCC Chairman Kevin J. Martin said. "The commission has done a very thorough job on investigating the complaint," he said. "We thought we needed to step in and protect consumers' access to the Internet."

Mervyn's Sues Over Buyout

Mervyn's has sued the private-equity firms involved in the leveraged buyout of the department store chain from Target, alleging the deal stripped the retailer of its real estate assets, forcing it into bankruptcy proceedings.

Mervyn's says in the suit that the investment group, which included Cerberus Capital Management and Sun Capital Management, bought Mervyn's in 2004, acquired its real estate and leased it back to the company at substantially increased rates. According to the suit, the pumped-up rent contributed to Mervyn's financial woes, pushing its into filing for bankruptcy protection this July.

A spokeswoman for Sun Capital said the suit had no merit. Target said in a statement that it "emphatically disagrees with the claims against Target in this lawsuit."

Representatives from Cerberus did not immediately respond to requests for comment.

Ex-CEO of Refco Starts Sentence

Former Refco chief executive Phillip R. Bennett entered a federal prison to begin a 16-year sentence for cheating investors out of $2.4 billion. Bennett, 60, surrendered to the Federal Correctional Institution at Fort Dix, N.J., according to a Bureau of Prisons spokeswoman. In February, Bennett pleaded guilty to bank fraud and money laundering stemming from an eight-year scheme to deceive banks, auditors and investors.

Once the biggest independent U.S. futures trader, Refco collapsed in October 2005, two months after raising $670 million in an initial public offering.

CONSUMER SAFETY

New FAA Directive Aimed at 777s

U.S. regulators will tell airlines to make changes aimed at preventing ice from building up in fuel lines of Boeing 777s, which British investigators say probably caused one of the jets to make a jarring emergency landing last January in London.

The Federal Aviation Administration will issue a formal directive by week's end requiring changes in the way ground crews prepare planes and pilots fly them in extreme cold weather, FAA spokeswoman Alison Duquette said.

Currently 777 pilots are required to rev their engines when the fuel temperature falls to 14 degrees Fahrenheit. That would conceivably dislodge any ice that might be in the fuel line.

The directive will apply to more than 50 U.S.-registered Boeing 777s, mostly operated by American Airlines and Delta Air Lines.

Mexican Meat Imports Halted

The government of Mexico voluntarily suspended shipments of meat and processed poultry to the United States after U.S. officials raised concerns about the quality of Mexican food processing and inspections.

The U.S. Agriculture Department's Food Safety and Inspection Service identified systemic problems with sanitation controls and recordkeeping during an annual audit that took place in Mexico from June 24 to July 31.

The voluntary suspension began Aug. 29, a spokeswoman for the service said. About 2 percent of beef and poultry in the United States comes from Mexican producers.

The spokeswoman said the audit report was not yet completed and would be posted on the agency's Web site within 60 days. It was not known how long the suspension would last.

EARNINGS

Toll Brothers, the largest U.S. luxury home builder, reported its fourth straight quarterly loss as the deepening housing recession deterred buyers. For the third quarter ended July 31, Toll had a loss of $29.3 million, compared with a profit of $26.5 million in the corresponding period last year. Revenue fell 34 percent, to $797.7 million.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.

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