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Circulated Weekly To Cities In America Volume 731 Issue 16 Established 1998 April 16, 2012

Arkansas Judge FinesJohnson&Johnson$1.1B in Risperdal Case

LITTLE ROCk, Ark. (AP) -- An Arkansasjudge on Wednesday fined Johnson & Johnsonand a subsidiary more than $1.1 billion after ajury found that the companies downplayed andhid risks associated with taking the antipsychot-ic drug Risperdal.

Judge Tim Fox determined that Johnson &Johnson and its subsidiary, JanssenPharmaceuticals Inc., committed nearly240,000 violations of the state's Medicaid fraudlaw - or one for each Risperdal prescriptionissued to state Medicaid patients over a 3 1/2-year period. Each violation carried a $5,000fine, the state's mandatory minimum amount,bringing the total to more than $1.1 billion.

Fox issued an additional $11 million fine formore than 4,500 violations under the state'sdeceptive practices act, but he rejected thestate's request to levy fines in excess of the$5,000 minimum for the Medicaid violations.

Attorneys for the state declined to immedi-ately comment about the huge award after thehearing.

Janssen issued a statement in which it said,"We are disappointed with the judge's decisionon penalties. If our motion for a new trial isdenied, we will appeal."

Janssen attorney Ed Posner argued duringWednesday's penalty hearing that there was noevidence that harm had been done and that thepenalties were inappropriate.

Arkansas was one of several states to sueover Risperdol. A South Caroline judge uphelda $327 million civil penalty against the J&J and

In The News This WeekJOHNSON&JOHNSON $1.1B

IN RISPERDAL CASE An Arkansas judge on Wednesday finedJohnson & Johnson and a subsidiary more than$1.1 billion after a jury found that the compa-nies downplayed and hid risks. Page 1

SONy TO CUT 10,000 JOBS,TURN AROUNDTV BUSINESS

Faced with mounting losses, Sony Corp. saidThursday it will slash 10,000 jobs, or about 6percent of its global workforce, and try to turnaround its money-losing TV business over thenext two years. Page2

STUDy TIES OIL,GAS PRODUCTION TO

MIDWEST qUAkES

Oil and gas production may explain a sharpincrease in small earthquakes in the nation'smidsection, a new study from the U.S.Geological Survey suggests. Page 3

SUPREME COURTMISUNDERSTANDING ON

HEALTH OVERHAUL?

In fact, the law provides for a cheaper"bronze" plan that is broadly similar to today'sso-called catastrophic coverage policies forindividuals, several insurance experts said.

Page 4

STOCkS MAkE A U-TURN,CLIMB AFTER BIG DECLINE

The Dow Jones industrial average was up 98points to 12,813 in the first half-hour of trad-ing, erasing nearly half of Tuesday's 214-pointloss. Page 5

TRIBES, AGREE TO

$1 BILLION DOLLARSETTLEMENT

The federal government will pay more than $1billion to settle a class-action lawsuit broughtby American Indian tribes over mismanage-ment of tribal money and trust lands. Page 5

US SUES APPLEThe Justice Department and 15 states suedApple Inc. and major book publishersWednesday. Page 7

IN COLOMBIA, OBAMA TOFACE PRESSURE ON CUBA,

DRUGSPresident Barack Obama will face fresh pres-sure on Cuba and illegal drugs when he meetsthis week with Latin American leadershealth.

Page 8Continued on page 3

Janssen in December. Meanwhile, Texasreached a $158 million settlement with the com-panies in January in which the company didn'tadmit fault.

Shares of New Brunswick, N.J.-based J&Jwere trading after the ruling at $64.04, down 16cents per share.

Jurors in Arkansas were not told about thefinancial stakes during 10 days of testimony,beyond that Janssen could have seen a $200million swing in its revenues if it issued alarm-ing warnings that the drug could cause weightgain, diabetes and other health effects. Ifupheld, the award would go toward the state'sMedicaid fund, which is facing a projected $400million deficit next year.

Risperdal, introduced in 1994, is a "second-generation" antipsychotic drug that earnedJohnson & Johnson billions of dollars in salesbefore generic versions became available sever-al years ago. It is used to treat schizophrenia,bipolar disorder and irritability in autismpatients. Risperdal and similar antipsychoticdrugs have been linked to increased risk ofstrokes and death in elderly dementia patients,seizures, weight gain and diabetes.

The 12-person jury deliberated for threehours Tuesday before deciding in favor of thestate.

Arkansas Attorney General DustinMcDaniel said Tuesday he pursued the case toprotect consumers from "fraud and deceptivetrade practices."

Janssen continued to maintain after the ver-dict that it did not break the law, pointing outthat the package insert included with the med-ication was approved by the U.S. Food andDrug Administration.

J & J H e a d q u a r t e r s

U K L a w m a k e r s :O l y m p i c s c o u l dO v e r w h e l mHeathrow Airport

LONDON (AP) -- British lawmakers havequestioned Heathrow Airport's ability to copewith an influx of passengers during the LondonOlympics this summer, warning that long linesat immigration could force planes to sit on run-ways or even circle Europe's busiest airport.

The concerns were expressed in a letter toCulture Secretary Jeremy Hunt from the chair-man of House of Commons Culture, Media andSport committee, John Whittingdale. It was

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TOkyO (AP) -- Faced with mounting loss-es, Sony Corp. said Thursday it will slash10,000 jobs, or about 6 percent of its globalworkforce, and try to turn around its money-los-ing TV business over the next two years.

New CEO and President kazuo Hirai out-lined his business strategy at a big press confer-ence where he pledged to revive the electronicsand entertainment company. Sony earlier thisweek more than doubled its annual net loss pro-jection for the fiscal year through this pastMarch to 520 billion yen, or $6.4 billion. Thatwould be its fourth straight year of red ink andworst loss ever.

"As CEO, I take this very seriously. But atthe same time, it strengthened my resolve totransform Sony," Hirai told hundreds of journal-ists. "Employees too want to restore Sony to itsformer glory and go beyond."

Sony, whose businesses run from digitalcameras and personal computers to PlayStationgame consoles and movies such as "TheSmurfs," has been battered by competitorsincluding Apple Inc. and Samsung ElectronicsCo. For years, it has been struggling to regainthe swagger and innovative flair that made it adominant force in the 1980s and early 1990s.

The company has also been hit over the pastyear by production disruptions from flooding inThailand and a strong yen, which reducesincome from exports.

"Sony will change. I've fully dedicated

myself to changing Sony," saidHirai, 51, who took over the helmfrom Welsh-born Howard Stringerthis month.

Hirai said he was committed tostrengthening the company's main-stay electronics business - whichincludes digital cameras, games andsmartphones - by concentratinginvestment and technological devel-opment in this division. He aims toboost its share of overall companysales to 70 percent by the yearthrough March 2015 from current 60percent.

Through cutting fixed and oper-ating costs, Sony will make its TV business,which has lost money for eight straight years,profitable again by the fiscal year throughMarch 2014, he said.

To cover the job cuts and restructuringefforts, Sony will take a 75 billion yen chargethis fiscal year.

Sony also will also seek new growth inemerging markets such as India and Mexico,targeting 2.6 trillion yen in sales by the yearthrough March 2015.

Sony also plans to expand its medical equip-ment business with products such as endoscopesand will enter the medical diagnostics business.

The company aims for 8.5 trillion yen inoverall sales for the year through March 2015,up from a forecast of 6.4 trillion yen for the just-ended fiscal year.

In February, Sony raised its net loss forecastto 220 billion yen. But on Tuesday, it furtherrevised that to a 520 billion yen loss, mainlyblaming an additional tax expense of 300 billionyen stemming from revaluing U.S. tax creditsthat are unlikely to be used due its string of loss-es.

It stuck with its operating loss forecast of 95billion yen ($1.2 billion). Sony predicts a returnto an operating profit of about 180 billion yenfor the year through March 2013.It will releaseearnings results and forecasts on May 10


The study results make sense and are likely

due to man-made stress in the ground, said

Rowena Lohman, a Cornell University geo-

physicist.

"The key thing to remember is magnitude 3s

are really small," Lohman said. "We've seen this

sort of behavior in the western United States for

a long time."

Usually, it's with geothermal energy, dams

or prospecting. With magnitude 4 quakes, a per-

son standing on top of them would at most feel

like a sharp jolt, but mostly don't last long

enough to be a problem for buildings, she said.

The idea is to understand how the man-

made activity triggers quakes, she said. One

possibility is that the injected fluids change the

friction and stickiness of minerals on fault lines.

Another concept is that they change the below-

surface pressure because the fluid is trapped and

builds, and then "sets off something that's about

ready to go anyway," Lohman said.

But another expert was not convinced of a

link to oil and gas operations.

Austin Holland, the Oklahoma state seis-

mologist, said the new work presents an "inter-

esting hypothesis" but that the increase in earth-

quake rates could simply be the result of natural

processes.

Holland said clusters of quakes can occur

naturally, and that scientists do not yet fully

understand the natural cycles of seismic activity

in the central United States. Comprehensive

earthquake records for the region go back only

a few decades, he said, while natural cycles

stretch for tens of thousands of years. So too lit-

tle is known to rule out natural processes for

causing the increase, he said.

__________________________________________________________Legal Street News Monday, April 16, 2012 3

STUdy TiES OiL, GAS PROdUCTiONT O M i d W E S T q U A K E S

NEW yORk (AP) -- Oil and gas production

may explain a sharp increase in small earth-

quakes in the nation's midsection, a new study

from the U.S. Geological Survey suggests.

The rate has jumped six-fold from the late

20th century through last year, the team reports,

and the changes are "almost certainly man-

made.

Outside experts were split in their opinions

about the report, which is not yet published but

is due to be presented at a meeting later this

month.

The study said a relatively mild increase

starting in 2001 comes from increased quake

activity in a methane production area along the

state line between Colorado and New Mexico.

The increase began about the time that methane

production began there, so there's a "clear pos-

sibility" of a link, says lead author William

Ellsworth of the USGS.

The increase over the nation's midsection

has gotten steeper since 2009, due to more

quakes in a variety of oil and gas production

areas, including some in Arkansas and

Oklahoma, the researchers say.

It's not clear how the earthquake rates might

be related to oil and gas production, the study

authors said. They note that others have linked

earthquakes to injecting huge amounts of left-

over wastewater deep into the earth.

There has been concern about potential

earthquakes from a smaller-scale injection of

fluids during a process known as hydraulic frac-

turing, or fracking, which is used to recover gas.

But Ellsworth said Friday he is confident that

fracking is not responsible for the earthquake

trends his study found, based on prior studies.

The study covers a swath of the United

States that lies roughly west of Ohio and east of

Utah. It counted earthquakes of magnitude 3

and above.

Magnitude 3 quakes are mild, and may be

felt by only a few people in the upper floors of

buildings, or may cause parked cars to rock

slightly. The biggest counted in the study was a

magnitude-5.6 quake that hit Oklahoma last

Nov. 5, damaging dozens of homes. Experts

said it was too strong to be linked to oil and gas

production.

The researchers reported that from 1970 to

2000, the region they studied averaged about 21

quakes a year. That rose to about 29 a year for

2001 through 2008, they wrote, and the three

following years produced totals of 50, 87 and

134, respectively.

Continued from page 1

Heathrow Airport

published Wednesday.

Whittingdale wrote that lawmakers had metwith Heathrow operator BAA on its prepara-tions for Olympic games and "did not leave thebriefing confident" that Heathrow was ready tocope with huge numbers of arrivals around theOlympics in a "timely fashion." The games runfrom July 27 to Aug. 12.

"We understand that significant preparationshave been made to accommodate unusual sport-ing equipment, special lanes for the Olympicfamily, welcoming arrangements for competi-tors and additional Olympic ambassadors,"Whittingdale wrote. "However, far less thoughtseems to have been given to the issue of how todeal with long queues at immigration."

Whittingdale said those lines could push ter-minals over capacity, forcing planes to circle inthe air, sit on runways or block gates if theycan't unload their passengers.

Last year, even without the crush of theOlympics, Britain's former border chief relaxedsome passport checks during the busy summertourist season just to handle the demand.

Long immigrations waits could detertourists from returning to Britain, Whittingdaleadded.

Heathrow typically handles an average of190,000 passengers arriving and departing eachday, with 69.4 million total in 2011.

BAA noted that Whittingdale's concernsrelated to immigration - which is the U.k.Border Agency's responsibility - and criticizedthe agency.

"Immigration waiting times during peakperiods at Heathrow are frequently unaccept-able and we have called on Border Force toaddress the problem as a matter of urgency,"BAA said. "There isn't a trade-off betweenstrong border security and a good passengerexperience - Border Force should be deliveringboth."

The U.k. Border Agency responded to theletter by saying it is "well prepared" for theOlympics and has additional staff available forbusy periods.

"We will not compromise on border securi-ty," it said.

The day after the closing ceremony -Monday, Aug. 13 - is set to be the airport'sbusiest ever, BAA estimates, more than its pre-vious record of 233,561 passengers on July 31,2011. Heathrow is forecasting it will handle 35percent more baggage for departing flights onAug. 13 than on a normal day, which sees about150,000 items.

Heathrow is creating a special terminal forOlympic athletes, coaches and sponsor to flyout of Britain after the end of the games. Airportofficials say 10,000 athletes and support staffwill go through the "Special Games Terminal"in the three days after the closing ceremony toprocess the exodus.

X-FBi Officialis New PuertoR i c o P o l i c e

C h i e fSAN JUAN, Puerto Rico (AP) -- A former

FBI official has been sworn in as the new chiefof police in Puerto Rico at a time of heightenedconcern about crime on the island.

Hector Pesquera took the oath of officeWednesday, two days after his nomination wasapproved by Puerto Rico's Senate.

As superintendent, Pesquera will be incharge of a department with 17,000 officers.Pesquera gave no details on his plans to addresscrime in a U.S. territory that had a record num-ber of homicides last year.

He said officers need better training andequipment and more help from the public. The65-year-old Pesquera has held FBI posts inPuerto Rico, Florida, Washington and SouthAmerica. He was most recently assistant direc-tor of Miami's Port Authority.


S U P R E M E C O U R T M i S U N d E R S T A N d i N GO N H E A L T H O V E R H A U L ?

4 Legal Street News Monday April 16, 2012 ___________________________________________________________

WASHINGTON (AP) -- A possible misun-derstanding about President Barack Obama'shealth care overhaul could cloud Supreme Courtdeliberations on its fate, leaving the impressionthat the law's insurance requirement is moreonerous than it actually is.

During the recent oral arguments some ofthe justices and the lawyers appearing beforethem seemed to be under the impression that thelaw does not allow most consumers to buy low-cost, stripped-down insurance to satisfy its con-troversial coverage requirement.

In fact, the law provides for a cheaper"bronze" plan that is broadly similar to today'sso-called catastrophic coverage policies forindividuals, several insurance experts said.

"I think there is confusion," said Paulkeckley, health research chief for Deloitte, amajor benefits consultant. "I found myself won-dering how much they understood theAffordable Care Act. Several times the ques-tions led me to wonder how much (the justices')clerks had gone back into the law in advance ofthe arguments."

Monthly premiums for the bronze planwould be lower, and it would cover a muchsmaller share of medical expenses than a typicalemployer plan.

"Bronze is a very skinny product," saidkeckley.

Starting in 2014, the health care lawrequires most Americans to obtain health insur-ance, either through an employer, a governmentprogram, or by buying their own policies. In

return, insurance com-panies would be prohib-ited from turning awaythe sick. Governmentwould subsidize premi-ums for millions nowu n i n s u r e d .

The law's opponentsargue that Congressoverstepped its constitu-tional authority by issu-ing the mandate, whilethe administration saysthe requirement is per-missible because itserves to regulate inter-state commerce. The

scope of the mandate was one of several keyissues argued before the court.

"If I understand the law, the policies thatyou're requiring people to purchase ... must con-tain provision for maternity and newborn care,pediatric services and substance use treatment,"said Chief Justice John Roberts. "It seems to methat you cannot say that everybody is going toneed ... substance use treatment or pediatricservices, and yet that is part of what you requirethem to purchase."

That may be true, but the law's bronze planisn't exactly robust coverage. It would requirepolicyholders to spend thousands of dollars oftheir own money before insurance kicks in.That's how catastrophic coverage works now.

It means anyone - particularly younger,healthy people - can satisfy the health care law'sinsurance requirement without paying fullfreight for comprehensive coverage they maynot need.

Solicitor General Donald Verrilli did nothighlight the bronze plan in his defense of thelaw, an omission that may prove significant.

"I would definitely say that if you listen tothe court proceedings it would be easy to comeaway with the impression that the health carereform law was requiring people to buy Cadillacinsurance, which is certainly not the case," saidLarry Levitt, head of the kaiser FamilyFoundation's Initiative on Health Reform andPrivate Insurance. The foundation is a nonparti-san information clearinghouse.

The health care law does impose a minimum

set of "essential health benefits" for most insur-ance plans. Those benefits have yet to be speci-fied, but are expected to reflect what a typicalsmall-business plan now offers, with added pre-ventive, mental health and other services.

On the surface, the minimum benefitsrequirement does seem to mandate comprehen-sive coverage. But another provision of the lawworks in the opposite direction, and the twohave to be weighed together.

This second provision allows insurancecompanies to sell policies that have widely dif-ferent levels of annual deductibles and copay-ments. A "platinum" plan would cover 90 per-cent of expected health care expenses, but onthe bottom tier a bronze plan only covers 60percent. Employer plans now cover about 80percent.

"The minimum that people will be requiredto buy under the health reform law is clearly acatastrophic plan," said Levitt.

In return for taking on more financial risk,you'll pay lower monthly premiums for a bronzeplan, making it easier to budget for. you'll becovered for the same kinds of treatments aseverybody else, but your plan won't pay the hos-pital bill until you've spent a good chunk of yourown money out of pocket.

A kaiser study estimated that the annualdeductible for a bronze plan could range from$2,750 to $6,350. The deductible is the amounta policy holder must pay directly before insur-ance payments kick in.

A separate study by the foundation foundthat people buying individual health policies inthe current insurance market end up paying anaverage of 35 percent of their medical costs outof their own pockets, in line with the 40 percentconsumers with a bronze plan would face.

While the bronze plan is available to any-one, the law also provides for another level ofcatastrophic insurance limited to people underage 30, and expected to be even skimpier.

Such nuances were seemingly lost beforethe Supreme Court. One of the lawyers repre-senting the plaintiffs, Michael Carvin, assertedduring the arguments that "Congress prohibitsanyone over 30 from buying any kind of cata-strophic health insurance."

Verrilli did not challenge Carvin's character-ization, but it is raising eyebrows among insur-ance professionals.

"I don't think that's exactly right," said ben-efits lawyer Mark Holloway of the LocktonCompanies, a major insurance broker servingmid-size companies. "It depends on what youcall catastrophic coverage."

Carvin says he stands by his statement incourt that the law prohibits anyone over 30 frombuying any kind of catastrophic insurance.

"The bronze plan is not catastrophic cover-age," said Carvin, who represents the NationalFederation of Independent Business.

"It's got all the minimum essential benefitsin it," he added. "It's got to have wellness, pre-ventive, contraceptives - all kinds of things a30-year old would never need. It's not remotelycatastrophic."

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S t o c k s M a k e A U - t u r n ,C l i m b A f t e r B i g d e c l i n e

NEW yORk (AP) -- Stocks made a U-turnon Wednesday, climbing sharply a day aftertheir worst loss of the year.

The Dow Jones industrial average was up 98points to 12,813 in the first half-hour of trading,erasing nearly half of Tuesday's 214-point loss.The broader Standard & Poor's 500 rose 13points to 1,371. The Nasdaq composite indexre-crossed the closely watched 3,000 mark, ris-ing 26 points to 3,017.

The broad gains came after the Dow andS&P 500 fell for five days straight, their longestlosing streaks of the year. Most European mar-kets also rose. The dollar and Treasury pricesfell.

Investors had been unnerved earlier in the

week over concerns about Spain's economichealth and fears of weak earnings growth in theU.S. But Tuesday night, they went to bed reas-sured by a much-better-than-expected earningsreport from Alcoa, the aluminum producer thatgenerally kicks off the U.S. corporate earningsseason. Wednesday morning, they woke up tonews that Europe had not imploded and thatborrowing costs in volatile Spain and Italy hadedged down.

Spain's borrowing rate on its 10-year bondsdropped back to 5.87 percent, down fromTuesday's four-month high of 5.93 percent.That's still dangerously close to the 7 percentthat is usually considered the point at which acountry can longer afford to borrow money.

There were other signs that problems inEurope are still hibernating rather than solved.Italy sold 12-month bonds but was forced to paymore than double the interest rate compared tolast month, a concession to investors who arenervous about Europe's health. Even Germany,whose bonds are considered a much saferinvestment, struggled in its own debt sale.Germany failed to sell all the 10-year bonds thatit intended to on the open market.

Upcoming elections in Greece and Francealso threaten to unravel some of the uneasy

peace that has been reached between the weakand the strong countries in Europe. Oppositioncandidates have promised they won't go alongso easily with the European deals that have beenhammered out calling for weaker countries likeGreece to cut spending if they are to continue toget rescue funds. Uncertainty in Greece went toa new level Wednesday when the countryannounced it will hold parliamentary electionsmonths ahead of schedule.

The market has had a rough start to the sec-ond quarter, and Europe's debt crisis and anexpected slowdown in U.S. earnings aren't theonly problems. There are also signs that jobsgrowth is slowing and that the Federal Reserveis disinclined to pump more money into theeconomy. Some of the sell-off is also probablyfrom investors trying to get out of the marketnow with their first-quarter gains still intact. Ifthe Dow closes higher today, it will be the firsttime since April 2 and only the second gainsince the second quarter began.

Investors remain concerned that high gasprices could rekindle a recession, forcing com-panies to raise prices and crimping householdbudgets.

Oil prices inched up toward $102 per barrelWednesday on the New york MercantileExchange, reversing Tuesday's decline. Thoughthey're down from the nearly $110 per barrelreached last month, they're still above October'sprice of $75.

The rising prices are partly because of inter-national tension over Iran's nuclear program,with new talks scheduled to begin Saturday.Iran, which has already cut off shipments to sev-eral European countries, said Wednesday it hadstopped shipping to Germany.

Among stocks making big moves:

- Alcoa rose 8 percent after handily beatinganalysts' expectations for the quarter and turn-ing a profit. The stock had fallen nearly 3 per-cent the day before as investors bet that thecompany would lose money.

-Avon rose nearly 3 percent, two days afternaming a new CEO that it hopes will turnaround a company plagued by bribery allega-tions and an unwanted takeover bid.

-Owens-Illinois Inc., which makes glasscontainers for the food and beverage industries,jumped 10 percent. The company said it expectsits earnings per share to surge 35 percentbecause of more productive manufacturingmethods and cost cuts

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Tribes, government Agree To $1 Billion dollar Settlement

yAkIMA, Wash. (AP) -- The federal gov-ernment will pay more than $1 billion to settle aclass-action lawsuit brought by AmericanIndian tribes over mismanagement of tribalmoney and trust lands, under a settlementannounced Wednesday.

The agreement resolves claims brought by41 tribes from across the country to reclaimmoney lost in mismanaged accounts and fromroyalties for oil, gas, grazing and timber rightson tribal lands.

The settlement was announced jointly by theJustice Department and the Interior Department,which manages more than 100,000 leases ontribal trust lands and about 2,500 tribal trustaccounts for more than 250 federally recognizedtribes.

"These settlements fairly and honorablyresolve historical grievances over the account-ing and management of tribal trust funds, trustlands, and other non-monetary trust resourcesthat, for far too long, have been a source of con-flict between Indian tribes and the UnitedStates," Attorney General Eric Holder said.

Ending the long-running dispute allows thegovernments involved to move beyond distrustand antagonism, and empowers Indian commu-nities going forward, Interior Secretary kenSalazar said.

All tribes have had a dark relationship withthe federal government, said Gary Hayes, chair-man of the Ute Mountain Ute Tribe, whosereservation covers southwest Colorado, south-east Utah and northern New Mexico. But thesettlements will assist tribal governments in

supplementing decades of inadequate fundingthroughout Indian Country, helping to improvepublic safety, infrastructure and health care, hesaid.

"The seeds that we plant today will profit usin the future and continue for generations tocome," Hayes said.

The latest announcement follows a $3.4 bil-lion settlement in a class-action lawsuit broughtby the late Elouise Cobell, a member of theBlackfeet Tribe from Browning, Mont. Thatdeal settled cases brought by more than 300,000individual Indians over the government's mis-management of trust lands.

Congress delayed approval of that settle-ment for months. Unlike the Cobell case, moneyfor the latest settlement has already been appro-priated under a congressionally approved judg-ment fund, Interior spokesman Adam Fetchersaid.

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Sponcor A Child

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Hopr for Today...Hope for Tommarow


6 Legal Street News Monday April 16, 2012_____________________________________________________________

Fed Survey Shows US Growth, Hiring improvesWASHINGTON (AP) -- A Federal Reserve

survey of business conditions across the UnitedStates suggests last month's pullback in hiringmay prove to be temporary.

The survey released Wednesday showedthat each of the Fed's 12 bank districts grewsteadily from mid-February through April 2.And the survey noted that hiring was stable orincreased in most of the country.

The Labor Department last week said hiringslowed in March to half the pace from the pre-vious three months. But the Fed survey, whichis anecdotal, didn't reflect that slowdown.

The survey noted that job gains occurred inmanufacturing, shipping, information technolo-gy and professional business services.

Businesses expressed concerns about risinggas prices. And retailers in five districts saidthey were worried that pricier gas would dragon consumer spending in coming months.

For now, consumers are still spending, thesurvey noted. Retail sales increased in almostall districts, the report said. And four districtssaid the short-term outlook for retail spending ispositive.

Residential real estate activity improved inmost areas, the report said, as developers builtmore apartments. And banks said that demandfor loans is increasing.

The Beige Book is released eight times ayear and is based on surveys by the Fed's 12regional banks. There are no numbers in thereport. But its findings, which are released twoweeks before the Fed's policy meeting, helpinfluence the discussions.

When they meet April 24-25, members areexpected to stick with their plan to hold short-term interest rates at record lows until at leastlate 2014. They will likely note the slower hir-ing pace reported by the government. FedChairman Ben Bernanke has cautioned that theeconomy is growing too slowly to maintainrecent declines in the unemployment rate.

Until last week, the job market looked to bestrengthening. Employers added an average246,000 jobs from December through February,nearly 100,000 more per month that the previ-ous three months.

Many economists downplayed March'sweak job figures, noting that better winterweather may have boosted hiring in January andMarch at the expense of later months.

The unemployment rate has fallen from 9.1percent in August to 8.2 percent in March,although part of the drop was because peoplegave up looking for work. People who are out ofwork but not looking for jobs aren't countedamong the unemployed.

Additional hiring has boosted consumerconfidence and spurred more spending.Consumer spending jumped in February by themost in seven months. And many large retailchains have reported healthy sales for March.

Higher auto sales and rising businessdemand for machinery and other equipment isboosting factory output. The manufacturingsector expanded in March at a faster pace thanthe previous month, according to a private sur-vey.

But the economy grew at an annual rate ofjust 3 percent in the October-December quarter.Most economists are predicting growth slowedin the January-March quarter to an annual rateof less than 2.5 percent.

Bernanke has said growth normally needsto be closer to 4 percent for a full year to lowerthe unemployment rate by a full percentagepoint. He has warned that hiring is likely toslow until consumers and businesses spendmore, fueling faster growth.

Wages aren't rising fast enough to keep upwith inflation. Rising gas prices are also weigh-ing on consumers' ability to spend money onother goods and services. And Europe's debtcrisis has flared up again, as Spain and Italyhave been forced in recent days to pay higherinterest rates on their debts.

65 or over or blind, the taxable amount ofSocial Security benefits and the Child andDependent Care Credit.6. INCORRECT BANk ACCOUNT NUM-BERS FOR DIRECT DEPOSIT.Double-check your bank routing and accountnumbers if you are using direct deposit foryour refund.7. FORGETTING TO SIGN AND DATE THERETURN.An unsigned tax return is like an unsignedcheck - it is invalid. Also, both spouses mustsign a joint return.8. INCORRECT ADJUSTED GROSSINCOME.If you file electronically, you must sign thereturn electronically using a PersonalIdentification Number. To verify your identity,the software will prompt you to enter your AGIfrom your 2010 federal income tax return orlast year's PIN if you e-filed. Taxpayers shouldnot use an AGI amount from an amendedreturn, Form 1040X, or a math-error correctionmade by the IRS.

8 C O M M O N TA X - T i M E G O O F S T H AT C A Nd E L A y y O U R R E F U N d

Waiting until the 11th hour to file yourtax return suggests your main goal isjust to make sure it gets done on time.

But�if�you�slip�up,�it�may�be�simply�a

case�of�hurry�up�and�wait�--�for�your

refund.�The�Internal�Revenue�Service

says�a�mistake�can�make�your�return

take�longer�to�process,�which�may�delay

any�refund.

Here are eight common errors and the IRS'comments about how to avoid them:1. INCORRECT OR MISSING SOCIALSECURITy NUMBERS.When entering SSNs for anyone listed on yourtax return, be sure to enter them exactly as theyappear on the Social Security cards.2. INCORRECT OR MISSPELLING OFDEPENDENT'S LAST NAME.

When entering a dependent's last name on yourreturn, make sure to enter it exactly as itappears on his or her Social Security card.3. FILING STATUS ERRORS.Choose the correct filing status for your situa-tion. There are five filing statuses: Single,Married Filing Jointly, Married FilingSeparately, Head of Household and qualifyingWidow(er) with Dependent Child. SeePublication 501, Exemptions, StandardDeduction and Filing Information, to deter-mine the filing status that best fits your situa-tion.4. MATH ERRORS.When preparing paper returns, review all mathfor accuracy. Or file electronically; the soft-ware does the math for you.5. CARELESS ERRORS.Take your time. Many taxpayers make mis-takes when figuring their taxable income, with-holding and estimated tax payments, EarnedIncome Tax Credit, Standard Deduction for age

If You Hve It

Give Some Back


US SUES TO LOWER PRiCES OF E-BOOK BEST-SELLERSWASHINGTON (AP) -- The Justice

Department and 15 states sued Apple Inc. andmajor book publishers Wednesday, alleging aconspiracy that raised the price of electronicbooks. They said the scheme cost consumersmore than $100 million in the past two years byadding $2 or $3, sometimes as much as $5, tothe price of each e-book

If there was price fixing, even the e-bookversion of the hot-selling Walter Isaacson biog-raphy of Steve Jobs, the late genius behindApple computers, may have cost too much.

Attorney General Eric Holder said execu-tives at the highest levels of the companies con-spired to eliminate competition among e-booksellers. Justice's antitrust chief, Sharis Pozen,said the executives were desperate to getAmazon.com - the marketer of kindle e-bookreaders - to raise the $9.99 price point it had setfor the most popular e-book titles, because thatwas substantially below their hardcover prices.

The federal government reached a settle-ment with three of the publishers, Hachette,HarperCollins and Simon & Shuster. But it willproceed with its lawsuit in federal court in Newyork City against Apple and HoltzbrinckPublishers, doing business as Macmillan, andThe Penguin Publishing Co. Ltd., doing busi-ness as Penguin Group.

Connecticut and Texas, two of the 15 statesfiling a separate lawsuit, reached agreementswith Hachette and HarperCollins to provide $52million in restitution to consumers, using a for-mula based on the number of states participatingand the number of e-books sold in each state.Other states in the case may sign onto the agree-ment, and other companies might be persuadedto join.

Susan E. kinsman of the Connecticut attor-ney general's office said it's too early to say howconsumers can go about getting refunds. Butthere could be millions of people applying. Arecent Pew Research Center survey found that21 percent of adults said they had read an e-book in the last year.

Since Amazon introduced the kindle in2007, e-book sales have surged. They represent-ed just 2 percent of all titles sold in the UnitedStates that year, but soared to 25 percent lastyear. In 2010, about 114 million e-books weresold at a total cost of $441.3 million.

Holder told a Justice Department news con-ference that "we believe that consumers paidmillions of dollars more for some of the mostpopular titles" as a result of the alleged conspir-acy. Pozen said the scheme added an average of$2 to $3 to the prices of individual e-books.

Connecticut Attorney General GeorgeJepsen said the individual book markups wentas high as $5 and the total cost to consumerswas more than $100 million since April 2010,when the scheme allegedly took effect.

The government lawsuits did not discloseindividual titles whose prices were allegedlyjacked up. The Fey, Tebow, Richards andIsaacson books all came out in electronic ver-sions from the named publishers after April2010.

According to Pozen, Apple's Steve Jobs toldpublishers involved in the alleged conspiracythat "the customer pays a little more, but that'swhat you want anyway." The lawsuit said theeffort to get e-book prices increased by

Amazon.com came as Apple was preparing tolaunch the iPad. The government said the con-spirators agreed that instead of selling books toretailers and letting them decide what retailprice to charge, the publishers would convertthe retailers into "agents" who could sell theirbooks but not alter the publisher-set retail price.The scheme called for Apple to be guaranteed a30 percent commission on each e-book it sold,the lawsuit said.

"To effectuate their conspiracy, the publish-er defendants teamed up with defendant Apple,which shared the same goal of restraining retailprice competition in the sale of e-books," thelawsuit said.

The European Union conducted an investi-gation that paralleled the U.S. probe. TheUnion's Joaquín Almunia, vice president of thecommission in charge of competition policy,said in Brussels that he welcomes the fact thatthe five companies are making proposals toreach an early resolution of the EU case. "Weare currently engaged in fruitful discussionswith them," said Almunia.

Hachette denied it was involved in any con-spiracy to illegally fix the price of e-books andsaid it changed its pricing structure - the centralgovernment allegation - to facilitate entry by anew retail competitor, Apple.

"Two years ago, Amazon effectively had amonopoly on the sale of e-books and e-readers,and was selling products below cost in an effortto exclude competitors," said Hachette.

Amazon called the settlement "a big win forkindle owners, and we look forward to beingallowed to lower prices on more kindle books."

After reading the federal complaint, theConsumer Federation of America called it "a`slam-dunk' case of collusive, anti-competitivebehavior."

At Apple, spokesman Tom Neumayrdeclined to comment on the lawsuit.

Macmillan CEO John Sargent said in a let-ter to authors, illustrators and agents that thecompany has not settled because it is "hard tosettle a lawsuit when you know you have doneno wrong."

Sargent said there were months of discus-sions with the Justice Department over a possi-ble settlement, but the government's proposedterms "were too onerous" and "could haveallowed Amazon to recover the monopoly posi-tion it had been building before our switch tothe agency (pricing) model."

"We also felt the settlement the DOJ wantedto impose would have a very negative and long-term impact on those who sell books for a liv-ing, from the largest chain stores to the smallestindependents." he said.

Sargent denied he colluded with competitorsto change Macmillan's pricing. "After days ofthought and worry, I made the decision onJanuary 22nd, 2010, a little after 4:00 AM, on anexercise bike in my basement. It remains theloneliest decision I have ever made, and I see noreason to go back on it now," he wrote.

At the heart of the e-book pricing debate isthe industry's ongoing concern about Amazon.Publishers see the "agency model" as their best,short-term hope against preventing the onlineretailer from dominating the e-book market anddriving down the price of books to a level

unsustainable for publishers and booksellers.

What the agency model achieved was toshift the power for setting retail prices on e-books from the retailer - in this case primarilyAmazon - to the alleged conspirator publishers,who then exerted pressure on Amazon to com-ply with the higher prices. The alleged schemeapplied to New york Times bestselling titles, alltitles that have gone on sale in the current yearand mass market paperback titles.

Amazon's $9.99 price for best-sellers wassuch a deep discount from list prices of $20 andmore that it was widely believed Amazon wasselling the e-books at a loss to attract more cus-tomers and force competitors to lower theirprices. Amazon also has been demanding high-er discounts from publishers and stopped offer-ing e-books from the Independent PublishersGroup, a Chicago-based distributor, after theycouldn't agree to terms.

When Apple launched its tablet computertwo years ago, publishers saw two ways to bal-ance Amazon's power: Enough readers wouldprefer Apple's shiny tablet over the kindle to cutinto Amazon's sales, and the agency modelwould stabilize prices.

Apple's iBookstore has yet to become amajor force, but publishers believe the newprice model has reduced Amazon's market sharefrom around 90 percent to around 60 percent,with Barnes & Noble's Nook in second at 25percent. The iBookstore is believed to have 10percent to 15 percent.

Macmillan's Sargent has been at the heart ofthe dispute. In early 2010, as publishers weretrying to get Amazon to agree to Apple's pricingsystem, Amazon pulled all the listings forMacmillan books, including titles like JonathanFranzen's "The Corrections" and BarbaraEhrenreich's "Nickle and Dimed." Sargentrefused to back down and Amazon eventuallygave in.

New e-books from Macmillan and the otherpublishers investigated by the JusticeDepartment often are priced initially between$12.99 and $14.99, with Amazon making apoint of noting that the price was set by the pub-lisher. Ironically, publishers usually make lessmoney off the agency model than the tradition-al one because they receive a smaller percentageof the proceeds.

Random House Inc. was the only "Big Six"publisher not to agree to the agency model in2010 and was not part of the lawsuit. But it didagree to terms with Apple last year. SpokesmanStuart Applebaum said Random House wouldhave no comment Wednesday.

According to federal court papers, the set-tlement agreement with three publishers saidthat for two years they will not restrict, limit orimpede an e-book retailer's ability to set, alter orreduce the retail price of any electronic book. Itsaid the retailers will be able to offer price dis-counts and other forms or promotions to encour-age consumers to buy one or more electronicbooks.

The 15 states in the state complaint areTexas, Connecticut, Alaska, Arizona, Colorado,Illinois, Iowa, Maryland, Missouri, Ohio,Pennsylvania, South Dakota, Tennessee,Vermont and West Virginia. Puerto Rico alsojoined that lawsuit, which was filed in federalcourt in Austin, Texas.



i N C O L O M B i A , O B A M A T O F A C EP R E S S U R E O N C U B A , d R U G S

WASHINGTON (AP) -- President BarackObama will face fresh pressure on Cuba andillegal drugs when he meets this week withLatin American leaders, some of whom havegrown skeptical of his promise to forge a newera of partnership.

Obama will join more than 30 heads of statein the coastal Colombian city of Cartagena forthe Summit of the Americas. Notably absentwill be Cuban leader Raul Castro, as well as thepresident of Ecuador, who is boycotting overHavana's continued exclusion from the hemi-spheric meetings.

The White House, wary of a foreign policydistraction in an election year focused largelyon domestic issues, has tried to play down apush by some regional leaders to include Cubaat future summits, as well as discussions aboutdecriminalizing drugs as a way of reducing car-tel violence.

Instead, Obama will aim to highlight issuesthat are more politically palatable back home,namely the prospect of Latin America as agrowth market for U.S. businesses. The WhiteHouse says 40 percent of U.S. exports are to theWestern Hemisphere.

To make that point even before leaving theU.S., Obama will stop first in Tampa, Fla., for aspeech Friday on the benefits of boosting tradeties with Latin America. Florida is a pivotalstate in the general election.

Obama will also join dozens of private sec-tor executives from U.S. companies at a CEOsummit Saturday to discuss increasing businessties and trade with their Latin American coun-terparts.

The president planned to spend two nightsin Cartagena and return to Washington lateSunday. In addition to the summit program,Obama will hold a separate meeting withCaribbean leaders, a one-on-one meeting andnews conference with Colombian PresidentJuan Manuel Santos and tour Cartagena's his-toric San Pedro Claver church.

Obama's reception at the Summit of theAmericas probably will be more subdued thanat the last meeting in 2009, in the two-islandnation of Trinidad and Tobago. Back then, thenewly inaugurated American president wasgreeted with cheers, winning praise for pledgingto be a humble, cooperative partner and raisingthe prospect of a shift in relations between theU.S. and Cuba.

Stephen Johnson, a Latin America expert,said Obama's promises to the region sometimeshave been put on the backburner because ofeconomic woes at home and pressing foreignpolicy concerns elsewhere.

"Contact, personal contact, means a lot inthe Americas. And there hasn't been a lot of timeto be able to build up that sense of good will,"said Johnson, director of the Americas programat the Center for Strategic and InternationalStudies.

White House officials dispute the notionthat Latin America has been a lower priority forthe president than other regions, noting thatObama did carve out time for a three-country,five-day trip to Latin America last year. He alsofinalized free trade agreements with Panamaand Colombia that had languished for years.

"We really see the Americas as a successstory both in their own right and in terms ofU.S. engagement," White House deputy nation-al security adviser Ben Rhodes said Wednesday.

The White House has also tried to highlightsteps Obama has taken to ease travel restrictionson Cuba and allow Cuban-Americans to sendmoney back home. But the president hasstopped well short of discussing lifting the 50-year U.S. economic embargo on the communistcountry.

The embargo is widely viewed in LatinAmerica as a failure and has complicated U.S.relationships in the region. Some countries haveindicated they plan to push for Cuba's futureinvolvement in regional summits during themeetings in Colombia.

Raul Castro, who assumed power from

brother Fidel in 2008, had expressed a desire toattend this week's summit. But the Colombianpresident delicately told Castro he would not beinvited, preventing Obama from facing an awk-ward meeting with the Cuban leader or havingto boycott the summit himself.

The U.S. says Cuba does not meet the sum-mit's standards of democracy and therefore hasno business taking part. Dan Restrepo, Obama'stop Latin America adviser, said the Obamaadministration would support Cuba's inclusionif it undertook democratic and economicreforms.

"The path is there for Cuba's return to theinter-America system and we very much hopeCuba will travel down that path as soon as pos-sible," Restrepo said.

Another issue expected to hang over theCartagena meeting is the prospect of drug legal-ization in the region. Some leaders, includingthe presidents of Mexico and Colombia, havecalled for a discussion about decriminalizingdrugs as a way to ease the deadly cartel violencethat has consumed Latin America.

Restrepo said that while Obama does notsupport legalizing drugs, he believes the debateis worth having, if only to highlight the array ofproblems that could arise from decriminaliza-tion.

SAN FRANCISCO (AP) -- The Universityof California is set to release a long-awaitedreport on the pepper-spraying of student demon-strators by UC Davis police last fall.

The university plans to publish the docu-ment online at noon Wednesday, a day after anAlameda County judge approved its publicationwithout the names of most officers involved inthe Nov. 18 clash.

The task force that wrote the report original-ly planned to release it on March 6.

But the UC Davis police officers' union suedto keep the document under wraps, saying thatnaming officers would violate their privacy andsubject them to harassment.

The task force was created to investigate theincident, which made national headlines afteronline videos of the confrontation went viral.

Task force members are scheduled to pres-ent the report Wednesday afternoon at UCDavis.

UC Davis To

Release Report On

Pepper-Spay Clash

8 Legal Street News Monday, April 16, 2012 ___________________________________________________________


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