By Matthew Hirsch The Recorder March 6, 2008
A San Francisco jury handed the San Francisco Bay Guardian newspaper a victory worth $15.6 million Wednesday in a predatory pricing suit against two weekly competitors and their parent company.
Jury verdict forms show all 12 jurors agreed that SF Weekly offered to sell advertising space below cost. Eleven jurors concluded that the below-cost ad sales were meant to injure or destroy competition, and that those ad sales by SF Weekly were a substantial factor in causing harm to the Bay Guardian.
The jury reached similar conclusions about SF Weekly parent company New Times Media (now called Village Voice Media), and the East Bay Express. Village Voice Media sold the Express last year.
The Bay Guardian took the case to trial on a little-used unfair business practices law, California Business and Professions Code §17043.
Village Voice Media posted a response to the verdict on SF Weekly's Web site early Wednesday afternoon.
"Today's verdict in [Bay Guardian publisher] Bruce Brugmann's suit was an expensive lesson in laws, lawyers, and lawsuits, and how one man's obsession manipulated the system," said the company's release, posted on a section of the Web site called "The Snitch."
"I think The Snitch is giving us a little more credit than is there," Brugmann replied in an interview, noting that the law has been in effect since the early 1900s. "It's been settled law now for a long time. All we did was use it."
Village Voice Media's statement also suggested that its three-year court battle with the Bay Guardian may be far from over. It points the way toward at least one avenue it might follow on appeal.
The company attacked the jury instructions used in the case by San Francisco Superior Court Judge Marla Miller, claiming the instructions rested on a presumption of wrongdoing.
"Instruction 21 was stunning in its prejudice," the company said, quoting from the instruction in its release: "'If you find that any defendant sold advertising space below cost, and any below-cost sale injured the Bay Guardian as a competitor, it is presumed that defendant's purpose was to injure competitors or destroy competition .'
"We beg to differ," Village Voice Media continued, and "we are confident the judges on the appellate court will agree."
H. Sinclair Kerr Jr., a partner at the San Francisco firm Kerr & Wagstaffe, represented the defense at trial.
Ralph Alldredge, himself a publisher of the Calaveras Enterprise in the Sierra Nevada foothills, represented the Bay Guardian. Alldredge, who was traveling Wednesday and could not be reached for comment, worked on the case with San Francisco attorneys Richard Hill and E. Craig Moody.
Jurors found the Bay Guardian lost $1,719,997 due to the defendants' conduct between October 2001 and October 2003, and another $4,603,639 for conduct between October 2003 and the present. Kerr explained that the $15.6 million total assumes treble damages for the latter figure.
All told, the actual damages came in on the low end of Alldredge's $4 million to $11 million estimate following last week's closing arguments in Bay Guardian v. NT Media, 435584.
Brugmann said Wednesday that the Bay Guardian would go back to court and seek an injunction to stop SF Weekly from continuing to sell ads below cost.
"What we're hoping to do is set a highly visible case, perhaps a precedent, for small businesses [and] small newspapers to defend themselves against predatory chains and predatory practices," he said.
In a Village Voice Media press release, company CEO Jim Larkin said the defense already plans to oppose court monitoring of its newspaper ad rates: "We continue to believe that the marketplace sets rates. We intend to resist any state-sanctioned collectivization of journalism."
http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1204716642536
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