Business

Editor’s note: A story following up on this one was published on Sunday afternoon and can be found here.

A small crowd gathered Saturday night watching as a fire ate through the building that houses Haines’ Quick Shop, Outfitter Liquor, Outfitter Sporting Goods, Mike’s Bikes & Boards, and four apartments.

No one reported any injuries and, at first, it seemed as though Haines Volunteer Firefighters were going to be able to contain flames.

But as the fire got larger and more involved, the crowd swelled. Dozens sat in the small boat harbor parking lot or along Front Street, watching as the fire grew massive and the building started to collapse in on itself.

The trouble started just before 9:30 p.m. while Dan Mahoney was working at the front counter of the convenience store when a man living in an apartment above the shops came downstairs to alert him about a fire.

[I] smelled smoke right after,” he said.

Mahoney said he called 911 and then his boss Mike Ward, though he had some trouble getting through to the latter.

“I was out sleeping,” said Ward as he paced up and down the sidewalk watching his businesses burn late Saturday. “I hauled a**”

This isn’t the first time the building has caught fire. Ward said it also burned in 1994, but that fire was relatively small and he was only closed for a few hours at that time.

Ward said he has insurance.

“I have good insurance. I’ve got business interrupt insurance – if I shut down I’ll get money,” he said.” “I’ve never had to use it. But it looks like I’m going to have to this time. “

But even with insurance, Ward said sometimes things are hard to replace.

“On the drive to town, I was thinking about my inventory file,” he said. “I don’t keep a backup off site.”

That could make it tricky to account for everything for insurance purposes.

“I’ve got a million dollars in inventory there,” he said. “I wasn’t ready for this. I feel like I’m losing part of my life here.”

In addition to Ward’s business losses, there were two families and two men living in apartments above the shops.

By all reports at the scene of the fire, they all got out safely – but it’s not clear how much warning they had or what they were able to get out of their homes.

Haines police officer Michael Fullerton was off-duty but called in to help out with the fire. He spent his time reminding onlookers to keep back far enough from the flames to avoid potential injury. In addition to the toxic smoke billowing off of the building, there was a very real potential for an explosion given the fire’s proximity to a several hundred gallon diesel tank and the volume of ammunition inside of the sports shop.

He said he was told that all tenants had been accounted for and were being helped by the Salvation Army.

“Local resources have already been secured for the evening as far as putting people who are displaced like in hotels,” Fullerton said.

He praised firefighters for making “extraordinary efforts to secure and save the building.”

As he spoke, a call went out for help from the Klehini Valley Volunteer Fire Department in Mosquito Lake some half an hour away.

“The whole valley will assist when necessary,” he said. “It’s unusual. I’ve never, in my nine years of being here, been aware that there has been a situation like that to require that kind of assistance.”

Fullerton said investigators would be digging into what happened to spark the fire.

“We’ll be investigating this fire until we’re satisfied that this is a normal fire,” he said. “Until we’re certain of that.”

An array of businesses, fishing companies and investors are objecting to a pending proposal to sell the assets of a struggling Alaska seafood company to Rodger May — one of the original investors in the company before it entered a bankruptcy-like process called receivership.

The financial firm that’s overseeing Peter Pan Seafood’s receivership proposed last week to sell the company’s three processing plants and an array of other assets to May, an entrepreneur and fish trader who narrowly outbid another processing company, Silver Bay Seafoods, in an auction.

A hearing on the proposal is set for Thursday in a Seattle courtroom, where a judge will consider the wide-ranging objections filed in court last week by opponents of the sale.

Those opponents include the investors who originally partnered with May to buy Peter Pan from a Japanese seafood conglomerate in 2020.

The investors — including affiliates of Los Angeles-based Renewable Resources Group and Anchorage-based McKinley Management — split with May in their filing, calling him an “insider whose inequitable conduct has both depressed the market for, and eroded the value of, Peter Pan’s assets.”

They say that Silver Bay is a better fit to buy the assets given opposition by the “Alaskan fishing community” to May’s continued involvement in Peter Pan.

They also argue that May shouldn’t be allowed to apply $12 million in credit to his bid based on money he loaned Peter Pan. That’s because another businessman, Los Angeles-based John Ketcham, also loaned $10 million to the company last year on the condition that he would be repaid before May, according to the investors’ filing, which Ketcham also signed onto.

Ketcham has teamed up with Silver Bay and wants to use his loan as credit to buy one of Peter Pan’s three plants, in the remote Alaska Peninsula area called Port Moller.

May didn’t respond to a request for comment this week.

Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.

In a first-of-its-kind ruling, the Alaska Supreme Court said Friday that the COVID-19 pandemic does not qualify as “physical loss” or “damage” under common commercial insurance policies.

The decision likely means that insurance companies will not have to pay most claims related to business losses caused by COVID-19.

The ruling came in response to an unusual “certified question” request from Alaska’s U.S. District Court. All 49 other state supreme courts have considered similar questions about COVID-19 liability, but until Friday, Alaska’s had not.

“Even with our insured-friendly approach to interpreting insurance contracts, we conclude that neither the presence of the COVID-19 virus at an insured property nor operating restrictions imposed on an insured property by COVID-19 pandemic-related governmental orders is ‘direct physical loss of or damage to’ property. ‘Direct physical loss of or damage to’ property requires a tangible or material alteration of property,” wrote Justice Susan Carney on behalf of the court.

The court’s decision, rendered unanimously, has major financial implications: If the court had decided differently, the ruling could have allowed businesses to collect millions of dollars from their insurance policies to cover the costs of COVID-mandated closures and health restrictions.

In an amicus brief, the American Property Casualty Insurance Association said insurance premiums would rise as a result if insurers were required to pay out more.

The Supreme Court was asked to rule after Baxter Senior Living filed suit two years ago against its insurance company, Zurich American.

Baxter operates a senior home in Anchorage and spent money to enact anti-COVID procedures that also limited its operations. Local anti-COVID rules also restricted its operations. The company filed a claim in 2020 with Zurich American, but the company denied the claim.

At the time, Zurich American said Baxter’s policy covered “direct physical loss of or damage to” property, and it argued that “(n)either the mere presence of the COVID-19 virus … or any generalized threat from its presence constitutes the ‘direct physical loss of or damage to’” Baxter’s property under the policy.

Baxter challenged the denial in state court, and the insurer moved the case to federal court, which then asked the Alaska Supreme Court to decide whether the presence of COVID-19 constitutes “direct physical loss” or “damage” to property, and whether governmental orders pertaining to COVID-19 also constitute that loss or damage.

“Our answer to both questions is ‘no,’” Carney wrote in Friday’s published order.

Explaining at length, the order says that meeting the policy’s standard language requires “a physical alteration of property,” and COVID-19’s presence on a surface doesn’t alter its property.

“An analogy between the COVID-19 virus and water illustrates this point,” Carney wrote in Friday’s order. “COVID-19 is to property what water is to a plastic sheet: water does nothing to a plastic sheet but at most, it stays on it or attaches to it. But water transforms, alters, or changes the state of dry paper into a wet “mush” or makes it much easier to tear.”

“We conclude that ‘direct physical damage’ requires physical alteration of property. But because COVID-19 does not physically alter property and merely attaches to it, the presence of COVID-19 on property does not constitute ‘direct physical damage.’”

Friday’s order marked the first time since 2021 that the court had been asked to consider a certified question from the state’s federal court.

With the question resolved, the case returns to federal court for further proceedings.

The newsroom at the Anchorage Daily News, the most widely read newspaper and news website in Alaska, plans to unionize.

At the top of the would-be union’s list of goals is better pay.

Sixteen out of 20 eligible newsroom employees – that’s 80% of reporters, photographers and editors not in management – recently signed cards supporting the formation of a union, according to a news release from the proposed union, dubbed the Anchorage News Guild.

The signed cards are part of a petition to the National Labor Relations Board for a union election and a request for Daily News management to voluntarily recognize the union, the statement says. The Anchorage News Guild says it plans to join the Pacific Northwest branch of the NewsGuild-CWA, which describes itself as a national union of more than 25,000 members, founded by newspaper journalists in 1933.

It would be the only union-organized newsroom in Alaska and likely the first of its kind in the state.

There’s been continuous turnover among newsroom employees for the last few years, said business reporter Alex DeMarban, who has been with the ADN or its prior iteration, the Alaska Dispatch, for about 15 years.

“A key thing for everyone is a desire for fair wages and regular wages that can keep up with the cost of inflation,” DeMarban said. “And so we just want to be able to pay the bills that keep going up, and also to help make the paper more sustainable, so that we can basically get paid enough to continue working there and continue producing, you know, the high-quality product that Alaskans want.”

The union’s members would also seek better transparency in regards to pay and a sustainable workplace environment, the news release says.

Anchorage Daily News management, including its publisher and top editor, did not immediately respond to requests for comment.

The Anchorage Daily News went bankrupt in 2017 under the Dispatch masthead, and the Fairbanks-based Binkley family bought it out of bankruptcy court.

Then, in 2020, the ADN won its third Pulitzer Prize for Public Service, the most prestigious award in American journalism.

The paper cut its printing schedule to two days a week this August to allow it to focus on its digital products, publisher Ryan Binkley said at the time. It was not a sign that the newspaper was struggling, he said.

In its statement Tuesday, the Anchorage News Guild said members of the unionization effort, part of a national trend for local newsrooms, still love working at the newspaper and remain honored to produce award-winning journalism.

“We do recognize that the company’s leaders, they’ve gotten us to this point. We appreciate that. We respect them a lot,” DeMarban said. “But at the same time, we believe there has to be a way to find some wage increases with some regularity and some better benefits.”

Gov. Mike Dunleavy has vetoed a bill that would have required the operators of large warehouses to provide their employees with a written work quota and would have forbidden them from instituting quotas that are so high that an employee would lack time to use the bathroom.

The Alaska Legislature passed House Bill 88 this year with bipartisan support.

Rep. George Rauscher, R-Sutton, wrote the bill and said in April that it was a matter of fairness and transparency for workers. He had worked in a warehouse, he said, and the issue was personal to him.

Dunleavy vetoed the bill Aug. 29, but the veto message wasn’t published until this week.

In the message, Dunleavy said he vetoed HB 88 “because it creates excessive regulation of state businesses, thereby thwarting business development and economic opportunities in Alaska.”

Through a spokesperson, the governor’s office declined additional comment.

HB 88 would have been limited to warehouses that employ 100 or more people, and there are only a handful in the state, but the number is growing, particularly in the vicinity of Anchorage Ted Stevens International Airport, one of the world’s busiest air cargo terminals.

Also this year, Amazon Inc. opened a warehouse facility with more than 100 people in Anchorage to serve the company’s e-commerce business in Alaska.

That company has previously been criticized for setting work quotas so high that employees felt forced to go to the bathroom in bottles. The company has since revised those quotas.

By phone on Thursday, Rauscher seemed resigned to Dunleavy’s decision.

“The governor can do what he wants, right?” Rauscher said. “I guess I have to find out if there’s another way to make something similar happen. I think that’s what you do with any bill that doesn’t make it.”

The Alaska Legislature could seek to override the veto of HB 88 and other bills if they call a special session, but Rauscher and multiple other lawmakers say they don’t believe there’s an appetite to do that.

The veto was Dunleavy’s seventh for a policy bill in 2024 and 12th since being elected in 2018. He has since signed two other vetoes, for a total of 14 during his two terms in office. Those figures do not include his annual budget vetoes.

Since Dunleavy took office, legislators have never overridden one of his vetoes.

In a written statement published on social media Thursday, Teamsters Local 959 said it was disappointed by the governor’s veto.

The union, one of the state’s largest, said it will continue to advocate for workers’ rights.

A bellwether trial is set to begin Monday in a fight over whether the parent companies of two Alaska grocery chains can merge.

The Federal Trade Commission wants to block Kroger from buying out Albertsons. Together, they own 35 stores in Alaska under the Fred Meyer, Carrs and Safeway brands, plus Crow Creek Mercantile in Girdwood. Most Alaskans live in a community where the stores directly compete with each other.

Across the country, the two grocery giants own about 5,000 stores.

The case is before a federal judge in Oregon. It’s the first of four overlapping legal challenges to reach the trial stage. The judge in this case is supposed to rule on whether or not to halt the merger while more substantive arguments go before an administrative law judge in Washington, D.C. The trial is expected to last three weeks.

The Oregon judge’s decision won’t necessarily make or break the merger. But if the FTC wins, the cost to the companies of continuing the legal fight, uncertainty and delays may lead them to abandon the merger.

“We stand prepared to defend this merger in the upcoming trial in federal court,” Kroger CEO Rodney McMullen said in a statement this week. “The merger between Kroger and Albertsons is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs.”

Kroger and Albertsons want to merge so they can be more competitive with even bigger retailers, and other retailers that have expanded into groceries. To avoid creating local monopolies, they intend to sell off hundreds of their competing stores to a separate grocery wholesaling company to operate. That includes 17 Carrs and Safeways in Alaska, plus the store in Girdwood.

The companies claim the deal will improve competition without the loss of any frontline workers’ jobs or store closures. This month, Kroger doubled its previous commitment to invest in lower prices if the merger goes through, up to $1 billion from $500 million. The companies have also promised to spend $1 billion to improve worker benefits and $1.3 billion to improve stores. However, there isn’t anything in place to hold them to their promises.

The Federal Trade Commission, consumer advocacy groups, grocery labor unions and a lot of elected officials and regular people don’t believe the companies. They think the merged company would be too powerful, and will end up hurting regular shoppers and workers.

Until recently, there was one local chapter of a grocery workers’ union to come out in support of the merger. United Food and Commercial Workers Local 555 which represents 35,000 workers in Oregon, Idaho and Washington, publicly backed the merger in February.

But amid labor negotiations that soured this month, Local 555 withdrew its support.

“Kroger’s continued failure to not live up to their commitments in current contracts while being given every opportunity is disappointing,” Local 555 President Dan Clay said in a statement. “Their obnoxious decisions at the bargaining table have let down both their workers and their customers.”

More legal challenges are pending. In a Washington state court, a trial is scheduled to begin Sept. 16. A Colorado state judge last month imposed his own order to pause the merger, pending a legal challenge there. That trial is scheduled to begin Sept. 30.

Kroger filed a legal action of its own on Monday against the Federal Trade Commission in a federal court in Ohio. Kroger argues that the FTC’s dual challenges – the federal case in Oregon and the executive branch proceeding before the administrative law judge in Washington, D.C. – violates the company’s constitutional rights.