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Unfair Lawsuit Act 

SF Weekly moves to dismiss the Guardian's lawsuit, which is light on witnesses and evidence

Wednesday, Jul 4 2007
After New Times Media bought SF Weekly in 1995, Mike Lacey came to town to talk to the staff. Lacey, the co-founder of New Times, a chain of alternative newsweeklies across the country, was known as a guy who didn’t mince words. He grew up in New York and was famously unafraid of a fight in life or business.

What Lacey purportedly told his new employees that day wouldn't surprise anyone who knew the guy: He talked harshly about San Francisco's other main alt-weekly, the Bay Guardian, owned by the cantankerous Bruce Brugmann. For decades, Lacey and Brugmann, two pioneers of the alternative press, had been at philosophical odds.

While both men might have agreed that a weekly newspaper should raise hell, the two had very different visions of how to go about doing that: Brugmann preached a leftist brand of political purity, and his politics drove the paper’s news coverage; Lacey believed his reporters should write provocatively and have no sacred political cows (Full, if obvious, disclosure: Lacey is my boss.)

Aside from letting Weekly employees know his feelings about Brugmann at the 1995 gathering, Lacey also reportedly said he wanted his San Francisco paper to be "the only game in town," according to a former sales rep at the meeting.

Those alleged statements from 12 years ago are now front and center in the Bay Guardian’s lawsuit against this paper and its corporate parent, Village Voice Media (VVM), which merged with New Times last year. The unfair business practices lawsuit, which accuses the alternative newspaper chain of selling ads below cost in the Weekly to put the Guardian out of business, is coming to a head with a trial scheduled for October.

In order to win its case, the Guardian must do more than show that the Weekly sold ads below cost, because that in itself isn't evidence of an illegal scheme; businesses sell products under their cost all the time, especially in a competitive market. Under the state's unfair practices act, it must persuade a jury that the Weekly did so with the intended purpose of destroying the competition. In other words, the Guardian needs a legal smoking gun — a memo from a company executive directing ad reps to low-ball prices specifically in order to kill the competition, or they need an insider witness who switches sides (like Russell Crowe’s character in The Insider).

Jennifer Lopez is the Guardian’s insider, albeit not a very persuasive one. Lopez was an ad rep for the Weekly at the time New Times bought the paper; shortly afterward, she went to work for the Guardian. In her deposition, Lopez conceded that she couldn’t remember Lacey’s exact words the day he met with the Weekly staff, but she claimed she could "recall what I took as his meaning." "They were going to do what they could to put the Guardian out of business," she recalled Lacey saying.

Lopez also remembered Lacey throwing an issue of the Guardian on the ground and stomping on it. "[P]erhaps this was in a dream," she allowed, "but I don’t think so." Remembered visions usually aren’t allowed in as testimony.

Lacey, for his part, says his company has never had a plan or policy to put the Guardian out of business. As for what he said that day all those years ago, Lacey concedes there was probably some smack-talking about the Guardian, but that was by no means an indication of some on-going, evil business plan. He says he just thought the Weekly could journalistically beat a paper devoted to "the political obsessions and manias of Bruce Brugmann." "I thought we could put out a much better newspaper than theirs," says Lacey.

In Oct. 2004, the Guardian sued the Weekly and VVM’s predecessor, New Times — which then owned 11 newsweeklies around the country — for violating the state’s unfair practices act, written in the Depression era. The law prohibits businesses from selling product, such as ads, below cost for the "purpose of injuring competitors or destroying competition." The Guardian's lawyers accused the Weekly of selling ads below the average total cost of a printed page — a figure that includes a newspaper's overhead including reporters' salaries — even though the New Times paper was losing money. The implication: Profits from the chain’s other papers were keeping the struggling Weekly afloat while it tried to put the Guardian out of business by purposefully undercutting its sales.

"We don't dislike competition. We thrive on it," Brugmann said in a statement at the time. "But we believe that competitors should play fair — and New Times, like many big corporate chains, is breaking the law and using its considerable national resources in an effort to destroy a locally owned competitor so it will have the San Francisco alternative market to itself."

Last week, the Weekly filed a motion for summary judgment asking San Francisco Superior Court Judge Richard Kramer to dismiss the Guardian’s lawsuit before it goes to a jury. (The East Bay Express, which VVM sold in May, is also named as a defendant.)

The Weekly's motions argue that the Guardian hasn’t met the burden of proof for showing a conspiracy to put it out of business because there never was one. And while the Guardian blames the loss of 65 advertisers on the Weekly’s alleged predatory pricing scheme, that is a only a fraction of the 7,639 individual advertisers who bought space in the Weekly or Express since 2001, Village Voice Media’s attorneys say. Some of those ex-Guardian advertisers never even bought ads in the Weekly or the Express.

There’s no question the Weekly and Guardian have overlapping ad markets: Beer companies, record stores, concert promoters, pot clubs, escorts. But as Brugmann would have it, the market in which his paper competes is a duopoly consisting of the Guardian and the Weekly. The advertising market here is much more broad and competitive, but calling it a duopoly sounds good and it conveniently plays into Brugmann’s case: Village Voice Media is trying to put him out of business so the evil corporate giant can have a local monopoly.

About The Author

Will Harper


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