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Wednesday, March 5, 2008

Response from Village Voice Media to Verdict in Bay Guardian Lawsuit

Posted By on Wed, Mar 5, 2008 at 1:28 PM

Today's verdict in Bruce Brugmann's suit was an expensive lesson in laws, lawyers, and lawsuits, and how one man's obsession manipulated the system.

Like Ralph Nader, Bruce Brugmann is out of touch with reality. Feigning obliviousness to the Internet, the dot-com bust, 9/11, the Bush economy — and the $330 million lost by the San Francisco Chronicle to these very factors — Brugmann insisted in court that only SF Weekly threatened his wallet.

Jurors agreed and hit Village Voice Media with more than $15.6 million in damages. Brugmann thus earned in court more than he ever earned in 40 years of publishing.

Instead of competing in the marketplace, Brugmann sought a court-ordered price-fixing scheme. He wants mom-and-pop advertisers to pay higher rates to underwrite a paper that Media Audit shows is losing readers. It is small wonder that although Brugmann has spent more than four decades as a publisher in San Francisco, not a single advertiser testified on his behalf.

Brugmann, a Midwesterner, portrayed us to the jurors as outsiders. We have lived and worked in San Francisco for 13 years, and reject Brugmann as a citizenship czar.

He sold conspiracies and victimization in the courtroom, and accepted no responsibility for his business decisions. While resorting to unpaid interns and staff layoffs, he and his wife purchased a multimillion-dollar office building with government financing in 2002. They lined their pockets at the Bay Guardian's expense. It is no wonder their paper suffered.

Brugmann was able to expand his struggling newspaper into a weekly with $500,000 from a lawsuit settlement with the morning daily. Having squandered that windfall, Brugmann came back to the courthouse slot machine, seeking to extort millions from us.

Where he attacked daily newspapers over four decades for not investing enough, he now sues us for investing too much.

Brugmann, grasping a dog-eared copy of George Orwell's Animal Farm, seeks a court injunction to set and monitor advertising rates.

“We continue to believe that the marketplace sets rates,” said Jim Larkin, Village Voice Media CEO. “We intend to resist any state-sanctioned collectivization of journalism.”

The last thing jurors heard from Brugmann's attorney was that the Guardian was ready to fold without a cash award. With the paper’s imminent demise labeled "inevitable," the jurors were pitched a pity party instead of facts.

The final instructions jurors heard from the court presumed our guilt. Instruction 21 was stunning in its prejudice: “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.

There was never a scheme to put Bruce Brugmann out of business. “We have not sought to injure the Bay Guardian; we just don't want to read it,” said Michael Lacey, Village Voice Media executive editor.

We are confident the judges on the appellate court will agree.

The United States Supreme Court in 1993 held that the Depression-era sales-below-cost statutes do not apply in a competitive marketplace. In Brugmann's own press release announcing this lawsuit, he boasted: "We have had competition every day of our existence, from dailies, weeklies, community papers, and other publications in one of the most media-rich markets in the country."

The highest appellate courts in all five states that have ruled on sales-below-cost claims since the 1993 decision have agreed with the Supreme Court.

On appeal, we look forward to giving California, whose appellate courts have never been asked to consider the question, its first opportunity to concur.

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