Guardian poised for legal victoryJudge Marla Miller appeared poised May 9th to finalize a $15.6 million award to the Bay Guardian and to issue an injunction barring SF Weekly from continuing to sell ads below cost.
In a post-trial hearing on the Guardian’s lawsuit against the Weekly and its chain parent, Miller said she was inclined to rule that some, but not all of the damages a jury awarded to the Guardian in March should be trebled. And she said in a tentative ruling that she was prepared to issue an order forbidding the Weekly from engaging in further predatory behavior.
The ruling hit the front page of Sfgate this afternoon with the headline "SF Weekly loses big, again."
The Guardian’s lawsuit charged the Weekly and Village Voice Media with violating the California Unfair Practices Act, A Progressive Era law that bars companies from selling a product below the cost of producing it with the intent to harm a competitor or reduce competition.
On March 5th, a San Francisco jury found that the Weekly had engaged in predatory pricing and awarded the Guardian $6.39 million in damages. The law allows for treble damages.
Judge Miller opened the May 9th hearing by stating that, on the basis of legal briefs filed by the two sides, she was inclined to treble $4.6 million of that, leaving a final judgment of $15.6 million.
Although Guardian attorney Ralph Alldredge argued that the entire verdict should be trebled, the outcome wasn’t a big surprise: From the day of the verdict, we’ve been reporting that the likely final award would be around $15 million.
The Guardian is also eligible for attorney’s fees and court costs.
A new lawyer representing the Weekly, Forrest Hainline III, argued vociferously against any injunction, claming that the court would be wading into troubling First Amendment territory. He argued that the only way the Weekly could comply with an injunction would be to cut editorial expenses – and that would have an impact on the paper’s right to free speech.
But Alldredge pointed out that courts have always found that newspapers have to obey basic business regulations. What, he asked would happen if the Weekly were found guilty of dumping toxic printing-press waste into the Bay? Would the paper argue that paying the clean-up costs would violate the First Amendment?
The argument wasn’t new – the Weekly tried the same First Amendment claim early in the trial, when the paper filed to have the lawsuit dismissed. Judge Richard Kramer, who handled the first stages of the suit, rejected the argument. The Weekly sought an appeal of Kramer’s ruling, but the appeals courts denied that as well.
Judge Miller seemed to imply in her questioning of Hainline that an injunction would only require the Weekly to do what it should be doing anyway. “Would you advise your client to go ahead and violate the law?” she asked.
Among the more interesting part of Hainline’s argument was the claim that the Weekly would never be able to survive in San Francisco unless it could sell ads below cost. He essentially implied that the Weekly can’t make a profit on its own, and is in business only because its corporate parent is underwriting it.
He said that he didn’t see how the Weekly would be able to sell ads at a price that covered its operating costs.
An injunction that would force the paper to operate like a normal business, and live within its means, would threaten the Weekly’s very existence, Hainline argued, proclaiming that Miller was threatening to “silence a First Amendment voice.”
Alldredge pointed out that it was silly to say the Weekly would be forced out of business. After all, he said, the Guardian is selling ads at a price that allows it to cover costs
Miller took the matter under consideration and will issue a final ruling within ten days.
The Guardian's lawyers are Ralph Alldredge, Richard Hill and E. Craig Moody.
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Comments (2)
ok ok
you won
the site looks a little better
PLEASE improve the content and PLEASE start uncovering scandals so we don't have a Newsom-esque board in 2009.
PLEASE.
Use the money to hire some investigators and PLEASE DO IT NOW? PLEASE!\
Posted by please_stop | May 9, 2008 07:05 PM
Hey, the "free speech" SF Weakly would not post my scintillating comment on their lamo lawsuit defeat story. So here it is:
It is preposterous for New Times to suggest that the jury and judge's sanctioning of their predatory pricing practices is a first amendment issue. This is no more a freedom of the press issue than Father Bernie Ward's bogus claim that he was doing research for a book while enjoying child porn was of Constitutional weight. Or Microsoft illegally using power of monopoly to dominate its rivals. New Times got caught red-handed and now it has to pay. Grow up cry-babies. If you need cash, sell the Village Voice.
Posted by Peter Byrne | May 9, 2008 09:20 PM