Daily Business Report-July 16, 2015
Headquarters of the San Diego County Water Authority
County Water Authority Wins Major
Legal Battle With Metropolitan Water District
A Superior Court judge on Wednesday issued a tentative decision that the San Diego County Water Authority is owed $188.3 million in damages (plus interest) by the Metropolitan Water District of Southern California for illegal rates the Los Angeles-based agency charged from 2011 to 2014.
San Francisco Superior Court Judge Curtis E.A. Karnow also said the Water Authority is entitled to more MWD water under the MWD Act. The ruling, expected to be finalized in
about a month, gives the Water Authority victories in both phases of the landmark trial over MWD’s rates.
“San Diego has proven by a preponderance of the evidence that it was in fact damaged by paying conveyance rates that were higher than Met could have set pursuant to applicable law and regulation,” Karnow wrote in the tentative decision. And later, Karnow said, “each time Met sets unlawful conveyance rates, it breached its obligations.”
In April 2014, Karnow ruled that MWD’s 2011-2014 rates violated California statutes and common law that require public water agencies to limit the rates they charge to the costs of providing their services. He also ruled that MWD’s 2013 and 2014 rates violated Proposition 26, passed by California voters in November 2010, which shifted the burden to public agencies to prove they are not charging more than the actual cost of the services they provide. Karnow invalidated MWD’s 2011-2014 rates because they violated all these provisions of law.
On Wednesday, Karnow tentatively rejected all of MWD’s defenses to the Water Authority’s legal challenges, including the contention that the Water Authority consented to being overcharged by the Los Angeles-based wholesaler. Instead, he said the Water Authority was entitled to damages it claimed — four years of overpayments at approximately $188 million, plus interest. If allowed to stand, MWD’s overcharges could have exceeded $2 billion over 45 years.
“This decision is a major victory for the San Diego region — not just the Water Authority, but our many partners who have supported this rate case from the start,” said Mark Weston, chair of the Water Authority’s board of directors. “Judge Karnow’s tentative award is a clear signal that MWD has been living outside the law and will need to reform its rates going forward. Over decades, this ruling will save San Diego County ratepayers billions of dollars.”
In another pivotal tentative ruling, Judge Karnow said MWD has been under-calculating the Water Authority’s preferential right to MWD water supplies. In MWD’s water rights formula, it has improperly excluded hundreds of millions of dollars of payments by the Water Authority for transporting the Water Authority’s independent Colorado River water supplies.
A final ruling by Karnow is expected in about a month.
European Commission Opens Twin
Antitrust Investigations of Qualcomm
Reuters
The European Commission has opened two investigations into possible abuse of market dominance by San Diego-based chipmaker Qualcomm Inc., it said on Thursday, the latest in a string of antitrust and tax inquiries into major U.S. corporations.
The first investigation will examine whether Qualcomm, the market leader in chips used for voice and data transmission in smartphones, tablets and other mobile devices, offered financial incentives to customers on condition that they bought exclusively or almost exclusively from Qualcomm.
The second will look at whether Qualcomm engaged in “predatory pricing” by charging at less than cost with a view to forcing competitors out of the market.
“We are launching these investigations because we want to be sure that high-tech suppliers can compete on the merits of their products,” European Competition Commissioner Margrethe Vestager said in a statement.
“Many customers use electronic devices, such as a mobile phone or a tablet, and we want to ensure that they ultimately get value for money.”
Other U.S. corporations have already appeared on the EU’s radar, with antitrust investigators looking into possible market abuse by Google and the ebook business of Amazon, as well as the European tax affairs of Amazon, Apple and Starbucks.
Qualcomm said it was disappointed to hear of the new EU investigations.
“We have been cooperating and will continue to cooperate with the Commission, and we continue to believe that any concerns are without merit,” it said in a statement.
Qualcomm agreed this year to pay a fine of $975 million to end a 14-month Chinese government investigation into anti-competitive practices.
Businesses that the EU finds guilty of market abuse can be fined up to 10 percent of their global earnings. There is no specific deadline for completion of investigations into anti-competitive conduct.
Bill Protecting Pro Sports Teams
Cheerleaders Signed by Gov. Brown
City News Service
A San Diego lawmaker’s bill providing cheerleaders for professional sports teams with basic employee rights under state law was signed Wednesday by Gov. Jerry Brown.
Assemblywoman Lorena Gonzalez (D-San Diego), says the law requires that teams provide cheerleaders with the same rights and benefits as other employees, protecting them against financial and personal abuses that have been reported throughout the country.
“We would never tolerate shortchanging of women workers at any other workplace,” said Gonzalez, who was a cheerleader in high school and at Stanford University.
“An NFL game should be no different,” she said. “Today we took an important step toward ensuring that multibillion-dollar sports teams treat cheerleaders with the same dignity and respect as every other employee who makes the game-day experience special.”
Citing news reports and lawsuits, Gonzalez said cheerleaders are subjected to sub-minimum wage pay, are forced to pay thousands of dollars of unreimbursed travel costs and work unpaid overtime.
Several NFL cheerleaders have sued their teams in the last couple of years over their working conditions. The Oakland Raiders and Tampa Bay Buccaneers settled lawsuits over the past year. The Raiders agreed to pay $9 an hour and back wages.
Celgene Corp. to Acquire
San Diego Biotech Receptos
Reuters
Celgene Corp. will buy San Diego-based Receptos Inc. for $7.2 billion in a move that will give the U.S. biotechnology company a potential multibillion-dollar drug in late stage development for inflammatory bowel disease and multiple sclerosis.
Celgene, whose shares rose nearly 6 percent in extended trading to $130.15 Tuesday after the announcement, said it would pay $232 per share in cash for the smaller biotech. Receptos shares closed at $207.18 on NASDAQ and rose to $228.14 after hours.
Celgene has been on something of a deal spree in recent months. The Receptos move comes just two weeks after Celgene said it would invest $1 billion in Juno Therapeutics to gain access to its cancer immunotherapy portfolio in a deal that would allow Celgene to buy up to 30 percent of Juno over the next decade.
The company also has collaborations with Agios Pharmaceuticals, which has a very promising leukemia drug in development as well as other oncology prospects, and with AstraZeneca in immuno-oncology.
“We have been fortunate to have been able to act on several major transactions that position us for sustained and enhanced long-term growth,” Celgene Chief Executive Bob Hugin said on a conference call.
“The Receptos acquisition provides a transformational opportunity for Celgene to impact multiple therapeutic areas,” Hugin said.
NV5 Holdings Awarded $5 Million
Contract for County Airports Work
NV5 Holdings Inc., a provider of professional and technical engineering and consulting solutions, has been awarded a contract for $5 million with the county of San Diego to provide on-call construction management services for three years.
NV5’s Civil Program Management group will be providing services for the eight county-owned airports for FAA-funded improvement projects throughout San Diego. Examples of projects encompassed in the contract include the Borrego Valley Airport Runway Rehabilitation, the Jacumba Airport and Agua Caliente Airport Runway Rehabilitation, and the Cajon Air Center, which includes taxiway, lighting, and storm drain services for a new business park that will be incorporated into the Gillespie Field Airport in El Cajon.
General Atomics Awarded $14.6 Million Contract
The U.S. Army awarded General Atomics Aeronautical Systems Inc. a $14.6 million contract modification for one year of software engineering services for its Gray Eagle unmanned aircraft
UC San Diego Graduate Awarded
‘Change the World’ Scholarship
UC San Diego Extension has awarded Alexis Alvarez its “Change the World” Alumni Scholarship to pursue a certificate in the growing field of biostatistics and help further her career in clinical psychology.
The scholarship offers financial assistance of up to $5,500 to pursue a continuing education certificate or special study program and is open to any University of California alumni.
Alvarez, who earned her bachelor of science in psychology from UC San Diego in 2013, hopes to use the biostatistics certificate to bolster her upcoming application for Ph.D. programs in clinical psychology.
“It’s super competitive to get into those programs so I’m hoping that being well versed in biostatistics will help me stand out,” she said. “This biostatistics certificate was an obvious résumé booster.”
Biostatistics uses statistical and mathematical methods to analyze biological data.
Alvarez, a native San Diegan who lives in Bankers Hill, also hopes it will help her in her current role as a research assistant by strengthening her ability to collect and analyze data to better serve mentally ill patients.
“I collect tons of data every day,” she said. “I want to be able to take all that information and analyze and translate it in order to help educate people.”
Alvarez initially was drawn to psychology because she enjoyed talking to patients who were struggling with a host of issues including schizophrenia, bipolar disorder and a variety of addictions.
Corporate Directors Forum
To Honor Six Executives
Corporate Directors Forum will honor six San Diego executives with 2015 Director of the Year Awards at a Sept. 15 event at the Hyatt Regency La Jolla. The awards honor directors who have made a significant positive contribution to the boardroom and behind the scenes.
The honorees:
Richard Sulpizio, director, ResMed Inc., Director of the Year for Corporate Governance.
Pratik Shah, president, CEO and director, Auspex Pharmaceuticals, Director of the Year for Enhancement of Economic Value.
Kieran T. Gallahue, director, Volcano Corporation, Director of the Year for Companies in Transition.
Leonard A. Comma, chairman and CEO, Jack in the Box, Director of the Year for Corporate Citizenship.
Jeffrey Jacobs, director, Challenged Athletes Foundation, Director of the Year for Corporate Governance, Nonprofit Board.
William H. Rastetter, director, Illumina, recognized for Lifetime Achievement in Corporate Governance.
The event lasts from 6 to 9:30 p.m. and is open to the public. Tickets are $250. For reservations, call (858) 455-7930,
San Diego Volunteer Lawyer Program
To Honor Pro Bono Contributions
San Diego Volunteer Lawyer Program will host its annual Justice For All Celebration on Sept. 17 to honor the outstanding pro bono contributions for 2015.
The Pro Bono Publico Award will go to Debra Greenfield while Latham & Watkins LLP will receive the Outstanding Law Firm award. The San Diego Law Library will be honored with the Community Service Award.
“We are proud to recognize those who have made a difference in our organization and the San Diego community through their pro bono work,” said Amy Fitzpatrick, chief executive officer. “Without the commitment of all of our volunteers, SDVLP would not be able to continue to provide free civil legal services to more than 5,000 low-income San Diegans each year.”
Debra Greenfield has been a regular volunteer at SDVLP’s bi-weekly Guardianship Clinic since 2010, contributing more than 700 hours of service. She is a three-time recipient of the State Bar of California Wiley W. Manuel Award. Greenfield is retired, after having worked as general counsel for SANDAG for several years.
The San Diego Law Library serves as the host site of a weekly family law clinic that was launched earlier this year with the Volunteer Lawyer Program. The clinic provides an opportunity for the private bar to participate in pro bono service.
Latham & Watkins LLP has strengthened SDVLP’s ability to meet the growing need for pro bono legal assistance through its involvement in contentious family law cases involving extensive litigation. The firm contributed more than 2,600 hours of service to assist on a variety of matters
The Justice for All Celebration will be held at The New Children’s Museum in Downtown San Diego. Doors open at 5:45 p.m.
New Limits on Turf Grass for Homes, Business
The California Water Commission unanimously approved new rules that essentially limit how much turf grass may be installed in new homes to 25 percent of landscaping. Old rules permitted 33 percent. Grass is eliminated at new office and commercial buildings. Sacramento Bee.
Tom Selleck Agrees to Stop Stealing Water
“Magnum, P.I.” and “Blue Bloods” actor Tom Selleck agreed to stop taking water from a water district that alleged he illegally delivered water to his Hidden Valley ranch. He also agreed to pay $21,685.55 to cover the district’s investigative costs. Los Angeles Times
Personnel Announcements
CONNECT Goes on Hiring Binge
CONNECT, San Diego’s startup accelerator, announced several new hires and a promotion.
Steve Hoey, a CONNECT employee for eight years, has been promoted to the position of senior director of Springboard and Innovation Research. Having managed and run the Springboard program over the last few years, Hoey’s new role will allow him to concentrate on re-invigorating, growing, and transforming the program to align with the CONNECT 3.0 mission - to help create and scale great innovation companies in San Diego.
Shawn Richardson, most recently the executive director of the Cell Society, an international nonprofit organization dedicated to advancing the clinical applications of stem cell regenerative therapies worldwide, has been hired as senior irector of CONNECTMatch. She will be responsible for developing the overall strategy and operational model for the CONNECTMatch programs consisting of four sections - CapitalMatch, CorporateMatch, TalentMatch, and TechMatch.
In addition to Hoey and Richardson’s new positions, CONNECT has hired several new team members: Erin Rist, director of business development and strategic partnerships; Liz Hobson, program director; Dan Levey, marketing manager; and Rebecca Wright, event manager for the CEO Leadership Dinner program.
NuVasive Announces New
Executive Leadership Team
Medical Device company NuVasive Inc. announced new executive appointments to drive its next phase of growth in spine surgery.
The company also announced it has begun a search for a chief information officer, a newly created role, and a new general counsel.
The executive leadership team:
• Pat Miles, president and CEO. Miles has been with NuVasive for 14 years. He is responsible for leadership and management of NuVasive’s global products and services.
• Matt Link, president, U.S. Commercial. Link joined NuVasive in 2006 and has been a leader in NuVasive’s sales growth over that period of time.
• Quentin Blackford, executive vice president and chief financial officer. Blackford has served as CFO of NuVasive since 2014. He joined the company in 2009 as corporate controller.
• Jason Hannon, executive vice president, International and General Counsel. Hannon assumes the role from Russell Powers, who continues to serve as an executive vice president. Hannon has extensive experience at NuVasive in the areas of corporate development, mergers and acquisitions, and regulatory and legal.
• Carol Cox, executive vice president, Strategy, Corporate Development and External Affairs. Cox has more than 20 years of senior level experience in cross-functional corporate roles in the health care sector.
• Pete Leddy, executive vice president, Human Resources and Corporate Integrity. Leddy assumes leadership of the company’s human resources, compliance, regulatory and facilities functions after serving as a member of NuVasive’s board of directors since 2011.
