Pittsburgh Post-Gazette du lieu suivant : Pittsburgh, Pennsylvania • Page 44

30 Industrial! DOW JONES 12.61 D-6 WEDNESDAY, JUNE 8, 1994 Ob the prowl "The club believes that the tip-pooling arrangement is fair and legal and that the club will prevail. Suit targets tipping at Duquesne Club 45 i Y-'. i vv Y4 subject of a grievance heard by an independent arbitrator who ruled in favor of the club. "Now, these plaintiffs have gone to court to overturn this decades-old practice to which they consented through their union and which they unsuccessfully challenged before an independent arbitrator," Olson says. "The club believes that the Up pooling arrangement is fair and legal and that the club will prevail in the lawsuit." i But one of the attorneys for the workers, John R.

Linkosky, says the tips are being distributed to managerial staff. "That may be a defense that these people are maitre d's but it remains to be proven that they are in fact maitre d's and may or may not be tipped employees," he says. Linkosky also plays down the union agreement and arbitrator decision, saying it not uncommon for a labor agreement to have provisions that violate the law. "The contract may be written in violation of the law and that doesn't relieve the club of the responsibility to comply with the law," he says. Furthermore, Linkosky argues, an arbitrator is "not an authority to rule on compliance and noncompliance with the fair labor standards." "The court is the ultimate arbiter of whether or not the Fair Labor Standards Act is being complied with," he says.

Other aspects of the suit deal with claims that the club did not pay some workers' overtime at the correct rate and that it did not maintain adequate records of the work-; ers' earnings and the basis on which tips were distributed. Linkosky says the lawsuit is alleging that that the club has not factored service charges into the overtime rate. Under the law, service charges distributed among staff must be included as part of the rate of pay when overtime is calculated, he says. "Although they might have paid time-and-a-half on their hourly rate, they didn't include the service charge," he says. The suit seeks lost earnings and damages.

By Steve Creedy Post-Gazette Start Writer It's enough to make blue blood boil. Eleven workers at the Duquesne Club are attempting to overturn tradition by suing their employer for alleged violations of the federal Fair Labor Standards Act The lawsuit, filed last week in U.S. District Court in Pittsburgh, alleges overtime, tipping and record-keeping violations. Under fire is a tip pooling arrangement the club's attorney, Stephen M. Olson, says "has been the practice of the Duquesne Club" for decades.

What's more, he says, the arrangement is expressly approved by the collective bargaining agreement between the Duquesne Club Employees' Association and the club. The lawsuit says the employees, 10 ban- 3uet captains and another employee, were legally required to share their banquet tips with others who did not "customarily and regularly" receive tips. While tip pooling is a legal and common practice throughout the service industry, the plaintiffs claim they're getting stiffed by how it's practiced at the Duquesne Club. The law says tip pools cannot involve management or employees who don't normally receive tips, such as cooks and dish washers. Employees who do qualify get their share of the total pool, which is parceled out usually on some sort of pro rata basis.

Though the law requires that tip pools be voluntary, the courts have held that an employee who accepts a job where a tip pool already exists is also accepting the pool. The plaintiffs claim that tips are being parceled out to employees who aren't entitled to them under the law, in particular maitre d's. According to Olson, the workers are complaining about banquet tips being pooled and shared by several groups of employees "all of whom contribute to the success of the banquet, including nonunion employees who perform traditional maitre d' duties." He says the practice already has been the PNC, in deal with Ford, boosts mortgage business CJY ft tll 1 of the ABRY deal, Edwards also received an option to purchase managing rights to WvTV, a second-tier station in Milwaukee owned by Gaylord Communications. Scripps, which declines comment, didn't object to Edwards so much as it did his relationship with Sinclair Broadcast Group, owner of a rival Baltimore station. Scripps believed that Sinclair was using Edwards to circumvent a federal law that prohibits ownership of more than one station in the same market.

It was Edwards' unusually close business relationship with Sinclair in Pittsburgh that fueled Scripps' suspicion. The heart of the alliance was a 1991 transaction that catapulted Edwards from station manager to owner of Sinclair's WPTT (Channel 22) with a down payment of only $10. Sinclair and Edwards wanted to ex- SEE EDWARDS, PAGE D-7 Vmce Musi Eddie Edwards, shown in a 1 991 photo, aims to become one of the most powerful African-Americans in U.S. broadcasting. WPTT owner seeks to buy more television stations STEVE CREEDY TECHNOLOGY Simon says: Smart computers must get smarter The first thing you see when you enter Herb Simon's Carnegie Mellon University office isn't the computer whirring quietly in the corner.

Dominating the room is the kind of huge table that easily could double as an aircraft carrier flight deck if it wasnt crammed with books and papers. The man credited as the father of artificial intelligence, it seems, has succeeded no better than the rest of us in achieving the paperless office, But to the Nobel laureate, the table's foot-high piles of literature are illustrative of a modern problem. "You know, we talk about information superhighway," he says, leaning back in his chair as he savors his favorite topic. "If you think a little bit about it, the real problem of information is not how we get more of it. The real problem with information is how we can get time to tend to the information that's there." Simon believes the focus of the information superhighway should not just be to design a system that delivers reports to an executives' desk; it should also keep irrelevant reports off that desk.

"And to do that, the computers have to be smart," says Simon. Smart computers are something that have held a lifelong fascination for Simon. It's a fascination that led to the 1955 breakthrough that allowed Simon and colleague Allen Newell to claim they had invented "a thinking machine." Then a senior professor with the Graduate School of Industrial Administration, Simon was studying the way business decisions were made research that eventually culminated in his 1978 Nobel Prize in economics when he teamed with physicist and mathematician Newell. Experiments with chess, logic and geometry eventually led to a mathematical theorem that a machine could use to arrive at the correct proof. The proof showed at least one human thought process could be duplicated by a machine.

At 77, the genial and peripatetic academic is still investigating human thought processes and pondering their relationship with computers as the university's professor of computer science and psychology. He still believes that if we understand the human mind, we can simulate it on a computer. "I really haven't believed there are limits," he says. Some areas of computer development, such as language translation, have moved faster than Simon thought they would. There are already, he says, computers that can compose music and generate art But simulating those functions that combine the senses and motor actions to interact with the environment the kind of areas robotics is tackling proved more difficult than first expected.

The way I like to put it is that it's easier to simulate a college professor than a bulldozer driver," he says. Simon has a theory on why this is. He believes the eyes and the ears take the complicated signals from the outside world and simplify them into a network of nodes and links the brain can digest. It's analogous to an industrial process that takes raw materials with impurities and reduces them to something more uniform for processing. Researchers trying to crack that homog-enization process have made enormous progress but it's been a struggle, he says.

Another bottleneck has been creating a big internal data base. Writing a novel, for example, requires the author to know "an awful lot of things about people and nobody has cranked up to build a memory of that scale with that kind of information in it," Simon says. Yet he's confident these problems will be solved, particularly given the extent to which computers have permeated society in the past decade. It's not enough, he says, to develop experts "who are real deep and sharp. Experts can be the cutting edge but you need a broad base to develop a technology that Eenetrates society as broadly as computers ave.

"What desktop computers did was suddenly and enormously broaden the base of people who had a glimmer of what computers are all about," ne says. "That has made a real difference in how rapidly things have moved, particularly on how rapidly the ap- plications have moved." But unlike some earlier predictions, Simon is not putting a timeframe on the arrival of a "human computer. ''We're not talking about something that's going to happen all of a sudden," he says. "We're talking about something that's happening all the tune. Each year you see new applications, new dimensions." The Post-Gazette Business section today inaugurates a technology column by staff writer Steve Creedy that will run every other Wednesday.

On intervening Wednesdays, staff writer Cristina Rouva-lis will write on advertising. By Steve Massey Post-Gazette Staff Writer In a further expansion of its booming mortgage business and another sign of the industry's rapid consolidation PNC Bank Corp. yesterday said it had signed a letter of intent to acquire a $10 billion mortgage portfolio from a Ford Motor Co. finance unit for about $117 million. The transaction, which is expected to close later this month, would boost PNC's mortgage servicing business to $46 billion, up from $9 billion a year ago, making it the nation's 10th largest mortgage servicer based on industry figures through March.

The Pittsburgh-based banking company emerged as a major player last year, when it took over a $27 billion servicing portfolio as Cart of its $328 million acquisition of Sears lortgage Banking Group. Its proposed acquisition of the residential portfolio from Dallas-based Associates Corp. of North America, part of Ford's financial services group, is the second major mortgage purchase by a bank in less than a month. In May, Chemical Banking Corp. agreed to buy Margaretten Financial Corp.

for about $330 million. The business of both servicing and holding mortgages has become a huge field in commercial finance. The past decade has seen the emergence of a whole new market in which banks and thrifts pool and sell their loans to investors. The mortgage service business also has become more of a profit center. Mortgage servicers collect monthly payments from home owners and distribute them to investors for a fee.

In recent years, larger players have been gobbling up smaller ones, thereby boosting profits by processing significantly higher volumes of business through existing operations. For example, flush with the Sears business, PNC earned $35 million in pre-tax income from mortgage servicing in this year's first quarter, up from $6.3 million a year ago. PNC likes mortgage servicing for two reasons: fees from the business represent a steady source of profits regardless if interest rates are rising or falling, and mortgage servicing customers represent a new source of clients for investment and credit products, such as mutual funds and credit cards. With commercial loan growth sluggish and competition cutting into profit margins on the loan business that is available, PNC has been emphasizing the cross-selling of products to customers. It has been adding sales staff and telemarketing services to do just that Associates portfolio represents 110,000 mortgage holders, a ripe market for other PNC wares and services.

PNC currently services mortgage loans for about 460,000 customers, 350,000 of whom were added in the Sears acquisition. The Associates transaction calls for PNC to pay the Ford unit 117 basis points on the outstanding mortgage balance at closing. Based on those terms, the acquisition has an indicated value presently of $117 million. A basis point is equal to one one-hundreth of a percentage point. For Ford, the divestiture marks another step away from banking.

Earlier this year, it sold its San Francisco-based savings and loan subsidiary, First Nationwide Bank, for $1.1 billion. Phar-Mor duplicity By Steve Halvonik Post-Gazette Staff Writer WPTT-TV owner Eddie Edwards carries a 10-page Federal Communications Commission ruling around in his briefcase. It's vindication, he says, of his attempt to buy a Baltimore television station, a bid he contends was thwarted by media giant Scripps Howard Broadcasting Co. "I don't like it when a conglomerate like that interferes with the progress of minority participation," Edwards asserts. "We don't need people like Scripps Howard interfering for their own personal gain." The feud between Edwards and Scripps began last August when Edwards agreed to buy WNUV, a second tier television station in Baltimore, for $37 million from ABRY Communications of Boston.

Scripps already owned a dominant television station in Baltimore, WMAR, an NBC affiliate. As part Tape points to By Cristina Rouvalis Post-Gazette Staff Writer CLEVELAND A federal jury yesterday heard a tape with ousted Phar-Mor chairman Michael I. "Mickey" Monus referring to a secret account that concealed the company's losses. The tape is considered crucial evidence for the government as it tries to show that Monus ordered his accounting staff to alter the books in a $499 million fraud and embezzlement scheme at the Youngstown-based discount drugstore chain. The tape, played in U.S.

District Court, was the last conversation between Monus and Patrick Finn, the ousted chief financial officer and the federal government's star witness. Finn testified that he taped the call he made to Monus on July 28. 1992, right after the massive fraud scheme erupted and later plunged the retailer into bankruptcy. Finn testified earlier that Monus "bucket" company's they statements. In Monus knew we gross it That's Finn we're Monus, counts, Finn, sentence scheme against Finn first to cover chain's covered inflating A USS fails in court bid to prevent National from luring managers By Len Boselovic Post-Gazette Staff Writer U.S.

Steel's bid to block rival National Steel from hiring more of its key employees was shot down by an Indiana judge Lake Countv Sunerior Court Judge Jefferv J. Dvwan issued court was recorded in April of 1992 during a meeting between Monus, Finn, comptroller Stan Cherel-stein and accountant John Anderson. The group was talking about ways to make money to offset the losses hidden in the "bucket." Monus says, "I mean, huh, well, we're not in a good spot here. Obviously, keep our fingers crossed and get through it (the audit), and get the number down." Finn choked back tears during his second day of testimony yesterday as he described how he regretted all of his deceit "I feel guilt" he said. "I think the guilt will stay with me the rest of my life." Finn says he looked up to Monus as brother," but that he took responsibility for his actions.

But Monus' attorney, Gerald Messerman, painted Finn as a well-educated man who lied convincingly to bankers, investors, accountants and Phar-Mor board members. directed him to start a or a subledger that recorded the difference between the real losses and the lies entered in their financial the taped conversation, tells Finn, "I'm gonna say I had a bucket to cover the profit and we weren't covering and it got away from us. all I'm going to say." replied, "Man, I just feel just cooked." 46, faces 129 criminal including conspiracy, money laundering and fraud. 36, is serving a 33-month for his part in the in exchange for testifying his former boss. has testified that Monus directed him to fix the books up the fact that the profit margins were decreasing.

The accounting staff up the losses mostly by the value of the inventory. second tape introduced in the ruling at the end of two days of testimony and arguments. His decision casts doubt on the future of the lawsuit U.S. Steel filed last week after V. John Goodwin, manager of U.S.

Steel's flagship Gary, Works, and five of his top managers abruptly announced they were leaving to take jobs at National. U.S. Steel had asked Dywan to issue a temporary restraining order that would have, among other things, prevented National and the six managers from luring more U.S. Steel employees to National. Lawyers said that in order to get a favorable ruling from Dywan, U.S.

Steel had to prove it would suffer irreparable harm and that other departures were imminent unless a restraining SEE STEEL, PAGE D-8.