Behind the Lines

Investor "Rights" Upheld

In August, a dispute settlement tribunal ordered Mexico to pay approximately $17 million to Metalclad, a small California company that had sought to operate a hazardous waste landfill in the Mexican state of San Luis Potosi. Local and state government officials had blocked operation of the facility through the denial of a construction permit and declaration of the area around the facility as a protected ecological zone.

Metalclad claimed that it had received all necessary permits to proceed with construction of the landfill, and had received assurances from the Mexican federal government that the company would be able to operate the facility. Metalclad alleged that the construction permit denial decision, which was issued after the company had completed construction of the landfill, did not follow proper procedure and was not based on relevant evidence.

Having failed to negotiate a resolution with the Mexican government, Metalclad filed suit against the government, invoking the investment protections contained in NAFTA. The company claimed that, as a foreign investor, it was denied fair and equitable treatment, as guaranteed by NAFTA Chapter 11.

The tribunal agreed. In far-reaching language, it declared that NAFTA investor protections encompass "the idea that all relevant legal requirements for the purpose of initiating, completing and successfully operating investments made, or intended to be made, under the Agreement should be capable of being readily known to all affected investors of another Party. There should be no room for doubt or uncertainty on such matters."

That such conditions may not prevail even for domestic investors seemed not to matter to the tribunal.

While winning the decision, Metalclad objected to the award, which did not include payment for lost potential earnings from the landfill.

The Metalclad decision may help pave the way for a much larger Chapter 11 decision. Methanex, a Canadian company, has sued the United States under Chapter 11 for $970 million in profits it estimates it will lose if California proceeds with plans to ban the toxic chemical MTBE from gasoline. Methanex makes methanol, a component of MTBE.

Union Contract at Gallo

For three years, Gallo resisted recognizing the union, engaging in protracted litigation to challenge the union�s victory in a 1994 representation election.

Following recognition, negotiations have extended for three years, with the involvement of a state labor mediator over the last two years.

The UFW had made a winning a contract at Gallo Sonoma a top union priority.

At a news conference in May, UFW co-founder Dolores Huerta denounced the company for housing employees imported from outside the area in inexpensive Santa Rosa motels where they are "virtually imprisoned" and denied visitors; failing to pay workers for all the hours they have worked; refusing to provide legally required overtime; failing to furnish bathrooms and clean drinking water in the fields; and firing an entire 23-person crew of workers because they supported the UFW.

Worker gains in the contract, according to the UFW and Gallo, include average wage increases of 60 cents to $1.40 an hour; job security and seniority protections, protections for workers employed by labor contractors; and a grievance and arbitration procedure.

The contract covers only workers at the Sonoma vineyard of Gallo, the world�s largest wine maker.

Fired Fox Reporter Wins

A Florida state jury in August awarded former Fox Television reporter Jane Akre $425,000 after finding that a Fox station in Tampa, WTVT, took retaliatory action against Akre because she threatened to tell federal regulators that a news report was slanted.

The jury did not find for Steve Wilson, Akre�s husband, who also sued the company.

After a five-week trial, the six-person jury found that the Fox station retaliated against Akre for a story about Monsanto�s bovine growth hormone in milk. The story highlighted the possible health effects of the hormone, but the station wanted to water down the story.

Wilson, and Akre were hired by Fox in 1996 to do investigative reporting. They began by researching a story on Monsanto�s rBGH. The Friday before the story was to air in February 1997, Fox received a threatening letter from Monsanto, alleging that Wilson and Akre were biased against the company.

Wilson and Akre alleged in their lawsuit that in response to the Monsanto letter, Fox ordered them to change the story to include lies. Wilson and Akre alleged that they refused to change the story the way Fox wanted it, and they were fired.

A Florida whistleblower protection law bars the firing of employees for refusing to comply with employer instructions that would violate federal law. The two reporters claimed that Fox ordered them to air false and misleading information on a news broadcast, in violation of the Federal Communications Act.

Fox has moved to have the jury verdict overturned.