'Bay Guardian' suit advances

SUPERIOR COURT JUDGE Richard Kramer moved the Bay Guardian's predatory pricing lawsuit against SF Weekly, East Bay Express, and the corporate owner of the two papers several steps forward in the third case-management hearing, Sept. 27.

Kramer pointed out that in a typical predatory-pricing case, the parties would initially be arguing over what the cost of the product was and whether any below-cost sales had actually occurred. In this case, the judge said, SF Weekly, the Express, and New Times Media have admitted a number of instances of pricing ads below full cost.

Therefore, the judge said he wanted to focus the parties, in a next discovery phase, on the evidence going to the issue of intent as to why New Times priced certain of its ads below cost.

New Times, an 11-paper chain headquartered in Phoenix, Ariz., owns both the Weekly and the Express.

The Bay Guardian has charged, in a suit filed Oct. 29, 2004, that SF Weekly and East Bay Express are selling ads below cost in an effort to put the locally owned independent paper out of business.

As one step toward discovering evidence of intent, the judge ordered New Times to produce operating financial statements for the Weekly and Express, as well as the operating costs of the parent company.

Kramer also ordered the Bay Guardian to supply the defendants with a list of l00 major advertising accounts for the period from 1999 to 2005. He ordered New Times, in turn, to disclose the ad prices its two papers have charged for each of those accounts, whether any of those prices have been below full cost, and, if so, why.

The judge also ordered the Bay Guardian to produce, at the end of this next discovery phase, a list of currently identified witnesses who might testify as to knowledge of the defendants' intent with respect to the survival of the Bay Guardian as a competitor. Attorney Gregory Evans, representing New Times, the Weekly, and the Express, argued that to discover intent the court must "look into the hearts and minds of these good people who are running this business in this competitive environment."

Evans is from the San Francisco office of Orrick, Herrington and Sutcliffe.

The Bay Guardian is represented by E. Craig Moody and Richard Hill of San Francisco's Moody and Hill law firm.

The next hearing is scheduled for 9:30 a.m. Dec. 2.