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Wednesday, February 6, 2008

The Longest Day, Revisited

Posted By on Wed, Feb 6, 2008 at 5:13 PM

What’s being tried here? How about the jury’s patience?

By Andy Van De Voorde

Executive Associate Editor, Village Voice Media

After yesterday’s fireworks from Bruce Brugmann, Guardian attorneys returned to their plodding ways Wednesday, subjecting the jury to an entire day of testimony from witnesses who weren’t there.

Brugmann, who treated the court to a three-hour display that included spluttering, shouting, and fist-pounding yesterday, sat quietly in the gallery as his lawyers put on a noticeably dull performance that had at least two jurors visibly napping at times.

This time, Guardian attorneys Ralph C. Alldredge and Richard P. Hill took turns portraying the absent witnesses. Alldredge starred in the role of former Weekly and East Bay Express publisher Chris Keating, while Hill made his dramatic debut playing New Times chief financial officer Jed Brunst.

The attorneys did not explain to the jury why they chose to read deposition testimony between themselves rather than simply call Keating and Brunst to the stand. They legally could have subpoenaed both men, and, in fact, both are expected to testify in person when the Weekly puts on its case.

Of course, the Weekly can’t do that until the Guardian wraps up its case, which at this point seems to consist primarily of repeated references to emails and internal documents the jury has already seen, sometimes three times.

It was expected that Guardian controller Sandy Lange would testify Wednesday, followed by Weekly publisher Josh Fromson and New Times executive editor Michael Lacey, who the Guardian plans to call as part of its own case. Instead, the Guardian chose to keep Lacey and Fromson waiting, and in their place put on the Alldredge and Hill show.

Hill’s questioning of Keating yielded few surprises as the attorney walked the former Weekly publisher through a handful of by-now-familiar trial themes: the fact that the Weekly produced regular “Guardian Reports” that tracked advertising in its competitor; the fact that the Weekly lost money in consecutive years; the fact that the Weekly sometimes offered customers discounts in an effort to win their business; and the fact that Weekly employees sometimes used chest-thumping language in internal e-mails.

For the second time since the trial started, Alldredge and Hill displayed for the jury an e-mail written by a former Weekly sales trainer in which the man noted, “The Bay Guardian is ripe for the picking and I am excited for the opportunity to lead the charge.”

Hauling out the document a second time was apparently the only point; the single question Hill asked about it was whether Keating had approved the man’s hire.

Another Weekly e-mail receiving an encore performance was a March 30, 2005 missive from Keating to one of his employees. “What do we need to do to get them out of the Guardian?” Keating asked. “Frontal assault,” replied the salesman. “We’ll discuss.”

The Guardian’s distaste for aggressive competition — as opposed to the “cordial” relationship Guardian witnesses have said the paper enjoyed under the Weekly’s previous owners — has already been underscored in the trial, perhaps no more so than yesterday, when Hill, in questions to Brugmann, bemoaned the fact that his client was no longer “in complete control of his own survival.”

“Complete control” of one’s future in a business setting is rarely contemplated outside totalitarian societies. But a number of Hill’s questions to Keating seemed to convey disapproval at the fact the publisher occasionally targeted his opponent as a source for business.

For instance, Hill asked about an October 26, 2005 e-mail from Keating in which the publisher responded to a query about “what kind of rate break” he could give to Absolut if the vodka maker would purchase an ad.

“SF/EB will give the most amount of rate break to get the business over the Guardian,” Keating wrote. “If that means I net $18 an inch, I’ll take it.”

Hill also brought up an April 28, 2005, e-mail by former Express saleswoman Allison Gill. In that note to Keating, Gill described her interaction with the agent for a prospective client.

“I told them I got their Guardian insertion order and that I was very surprised to see the rate they are paying for half-pages: $1,558!” Gill wrote. “She was quite surprised when I told her they could have halves in both of our papers for that rate, but said they have been running in the Guardian forever and she didn’t know why.”

Just how would Gill have gotten a Guardian insertion order, Hill wanted to know.

Keating said it was his understanding that the prospective customer simply got a copy and passed it along.

Hill also seemed curious exactly how the Weekly was able to produce a “Guardian Report” with such details as the fact that “the Guardian had a half-page ad in the auto after-market.”

By reading the Guardian, Keating replied.

Ever since opening statements, the Guardian has tried to score points by bringing up the “Guardian Report,” implying it provides proof that the Weekly was “out to get” its rival.

But witnesses have already testified that the Guardian kept its own Weekly reports as well, which seems to undermine the argument. And a number of exhibits Hill displayed Wednesday belied the notion that the "Guardian Report" was reflective of a well-oiled attack machine.

Several e-mails from New Times chief executive officer Jim Larkin noted that Keating hadn’t even been sending the reports regularly. Another missive from the CEO noted that all Larkin really needed was an abbreviated version of the document, which tracked ads by category.

“I look at the ‘Quarter’ tab, I don’t use the rest,” Larkin wrote to Fromson and New Times chief operating officer Scott Tobias. “I don’t use the rest, and unless you do we shouldn’t waste time compiling this every week.”

Keating also told Hill that he found the Guardian report unreliable, in part because it was impossible to tell if ads appearing in the Guardian had been paid for or were being given away for free.

In an attempt to frame the Weekly’s financial losses as circumstantial evidence of a predatory-pricing conspiracy, Hill also stressed that the Weekly and the Express (which New Times sold in 2007), regularly lost money.

Hill stressed to the jury that a June 2005 New Times document indicated the Bay Area papers were the only members of the chain at that time that weren’t making money.

The attorney seemed especially interested in an e-mail Keating wrote in February 2006, just as he was on his way out the door at the Weekly. “I strongly suggest going for less volume and more rate,” he wrote. The idea, he explained, was to settle for fewer ads but charge more for them.

However, Keating went on to tell Hill that it isn't always a good idea to assume real-world results will stem from internal emails.

“The practicality of it is different than putting it on paper,” he admitted to Hill, who clearly had seen reason for hope in the fact that Keating effectively was telling his bosses they were selling ads too cheaply.

“If you’re willing to walk away from more volume, that’s fine,” continued the former publisher. “But it’s a risk because your paper size could shrink. I could say, ‘My rate is $30 an inch and I could turn down anybody who says no.' And I could end up with ten ads.”

Hill inadvertently provided an example of that precise phenomenon when he asked Keating about an August 10, 2005 e-mail exchange between the publisher and Joe Larkin, a sales manager for New Times’ national advertising arm.

Referring to a page rate suggested by Keating, Larkin wrote, “$1,700 is ridiculous. The Ruxton rate … is $3,255 net.”

Replied Keating, “If you have been pitching $3,255 versus the Guardian’s cheap rates, we now know why we haven’t been getting the business for the last four years.”

The fact that Keating at times seemed more interested in raising rates and at other times seemed more interested in building volume also seemed to bother Hill — perhaps because it didn’t jibe with the notion of a company coolly executing a scheme to drive its longtime rival out of business.

“Wasn’t there any guidance from New Times management on what deals were acceptable and what were not?” the attorney wanted to know.

“No,” said Keating.

“So literally that authority was left to you?”


Chief financial officer Brunst, played by Hill, testified for only about twenty minutes before Superior Court Judge Marla J. Miller called the day’s proceedings to a halt. A good portion of his time on the stand was absorbed by Alldredge’s halting attempts to maneuver hard-to-read charts across the face of the court’s overhead projector.

Those charts were mainly financial projections Brunst had created for the Weekly and the Express back in 2005. And if the jury was paying close attention, it would have noted that one of the costs Brunst expected to decrease over time was “litigation expenses.”

Those expenses are relevant because a substantial portion of the Weekly’s losses since 2004 — yes, the same losses cited suspiciously by the Guardian — are attributable to the cost of defending itself against Brugmann’s lawsuit.

The trial resumes Thursday morning at 8:30. The Brunst deposition reading is expected to wrap up quickly, meaning Lange will likely take the stand early in the morning, and that Fromson and possibly Lacey will also have time to testify.

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