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| Happy Friday, Insiders! Starbucks employees are striking because of the company's Pride Month agenda and 3M is paying out a huge settlement for "forever chemicals." These stories, plus Honda recalling 1.2 million vehicles, are just some of what you'll find in today's newsletter. Have a great weekend! Christopher
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| 1 | | 3M agreed to pay up to $12.5B in order to settle hundreds of lawsuits brought against the company. The lawsuits were brought by cities claiming the drinking water was contaminated by "forever chemicals." More: - The national class-action settlement involves PFAS chemicals in firefighting foam.
- 3M will be required to pay between $10.5B and $12.5B, and the settlement will cover public water systems across the U.S.
- If paid out, this would be the largest settlement for something deemed a "health risk," more than any from lawsuits against the tobacco or opioid industries.
- The current cases stem from PFAS chemicals from firefighting foam that seeped into the ground in communities.
- 3M has manufactured and used PFAS for years, despite the fact that they are "forever chemicals," meaning they won't break down in the environment.
- 3M said that the agreement wasn't an admission of liability and that the company would be prepared to defend itself in the litigation if the agreement wasn't approved.
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What the data says: Starbucks has seen an upward rise in revenue during Q1 of most years since 2020. The company $8.7B in the first quarter of this year, which jumped up over $1B from Q1 of 2022. Each quarter between those, the company saw growth as well. Relevancy: Starbucks employees at 150 stores announced they plan to go on strike next week following the company's decision to ban Pride Month decorations in its cafes. The call for the strike comes days after the union for employees said Starbucks had taken down some Pride Month decorations and flags at several stores. The company denied the claims on Friday and said that it was still encouraging store managers to celebrate Pride Month. Shares of Starbucks fell 3%. Other incidents: This isn't the first company to deal with backlash over anti-Pride Month rhetoric. Target received a lot of backlash after it removed Pride Month apparel and decorations in several stores following anti-LGBTQ outbursts from some customers. Bud Light has seen a boycott after conservative and anti-LGBTQ consumers argued against an ad campaign featuring a trans influencer. It remains to see how this will affect the upcoming earnings for both these companies. | | | |
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| 3 | | Southwest Airlines reached a tentative agreement with the union representing its mechanics, aircraft inspectors, maintenance controllers, and training instructors after ongoing labor deal negotiations. The agreement still needs to be approved by the workers. More: - The agreements will cover more than 2,800 employees.
- Neither the union nor the airline disclosed the numbers or details of the agreement.
- "Our Mechanics & Related Employees work around the clock to safely maintain our aircraft, and we reached a Tentative Agreement that rewards them and helps Southwest maintain an efficient operation," Adam Carlisle, vice president of labor relations at Southwest, announced in a press release.
- Southwest is still in labor negotiations with the unions representing its flight attendants and its pilots.
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| 4 | | JPMorgan Chase was fined $4M by the Securities and Exchange Commission for mistakenly deleting 47 million emails, many of which were part of probes by the regulator. The contents of some of the emails, which were not recovered because they were permanently deleted, were requested in subpoenas in over a dozen securities investigations. More: - Emails from January to April 2018 were deleted in 2019 from 8,700 inboxes belonging to as many as 7,500 employees.
- Miscommunications between the company's corporate compliance technology division and an outside vendor tasked with archiving and deleting communications led to the accidental deletions.
- Once JPMorgan discovered this, it reported it to the SEC in 2020.
- "JPMorgan takes its record-keeping obligations seriously," said Veronica Navarro, who heads JPMorgan's corporate communications division. "We have taken steps to enhance our process and procedures."
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| 5 | | Honda is set to recall 1.2 million vehicles in the U.S. due to cable issues causing disruptions for the rear-view camera while the vehicles are in reverse. The company received nearly 274,000 warranty claims about the issues. More: - Claims over the past three years were made for the Honda Pilot and the Honda Odyssey.
- Honda has stopped selling the vehicles in order to make repairs, as the fix requires a trip to a dealership.
- Honda said no injuries have been reported yet.
- Replacing parts may prove costly, as the company restated its operating profit for the fiscal year ending in March to ¥781 billion ($5.5B), down just over 10%, partly due to increased warranty expenses.
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| 6 | | Moody's Analytics, the rating agency, warned that the private credit industry is about to face its "first serious challenges." The $1.4T industry is set for trouble as tens of billions of dollars in loans underwritten at the top of the market in 2021 are being strained by higher interest costs and a slowing economy. More: - Moody's singled out two specific companies, funds managed by Ares and Owl Rock, as ones to be concerned about.
- These loans were generally written when interest rates were close to zero nearly two and a half years ago.
- This has changed since the Federal Reserve raised interest rates to cool U.S. inflation.
- Even though Moody's issued this warning, it did not change the ratings for Ares or Owl Rock, which are publicly traded lending funds.
- Since the 2008 financial crisis, the private credit industry has changed as lenders are more focused on small and midsized takeovers.
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Editor | | Christopher Hachey is a freelance writer and editor based in the New York City area. He has spent most of the past 15 years in newsrooms covering all kinds of topics like sports, tech, business, finance, and commerce. He's now returning to his broadcast journalism roots by diving into podcasting news. Reach out to him at chris@inside.com | | This newsletter was edited by Aaron Crutchfield | |
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