Wednesday, January 23, 2008

Anti-Weekly Lawsuit Set for Trial

Posted By on Wed, Jan 23, 2008 at 3:06 PM

By Andy Van De Voorde

In a hearing Wednesday morning in San Francisco Superior Court, Judge Marla J. Miller denied the SF Weekly's request for more time to wade through reams of documents produced at the last minute by its legal nemesis, the Bay Guardian. Her ruling -- made in part, she said, because a jury pool has already been called -- means the formal voir dire process for jury selection will begin Thursday. Opening statements are expected Monday.

The Guardian's suit, filed in October 2004, alleges that the Weekly sold ads below cost as part of a predatory pricing scheme. Since that time, the Guardian has thrown around varying estimates of how many customers allegedly took their business to the Weekly because of its lower rates. However, as Wednesday's proceedings underscored, the Guardian does not plan to call a single advertiser to testify on its behalf -- despite a nearly three-year discovery process that has allowed it to pore through the confidential financial records of the Weekly, which it claims is its only local competitor.

Guardian attorneys have not yet explained why their client has been unable to produce a single advertiser willing to take the stand and support its "predatory pricing" claims under penalty of perjury.

Instead of calling local businesspeople, the Guardian is relying on a series of documents in which its own employees have characterized the motives of advertisers. In fact, documents produced in the case have shown that the Guardian for years has instructed its employees to look for examples of improper behavior on the part of the Weekly. Guardian attorneys have not yet addressed the question of whether such a mandate provided an incentive for employees to blame their inability to sell ads on the Weekly -- and also gave them an incentive not to try, since their boss, Bruce Brugmann, clearly was hoping to get dirt on New Times Media, his longtime rival. New Times purchased the Weekly in 1995.

To supplement the testimony of its own employees, the Guardian will rely upon hired witnesses such as accountant Clifford Kupperberg, their chief financial expert.

As we previously reported, Kupperberg initially based his estimate of damages suffered by the Guardian in part on a financial report from the Association of Alternative Newsweeklies. His attempt to use the AAN report earned him a stinging rebuke from Seija Goldstein, the New York-based publishing consultant hired by the association to conduct the annual member survey. In a reply filed with the court on January 11, Goldstein noted that in a phone call with Kupperberg, she told the CPA, a longtime professional witness who by his own estimation has testified in an average of more than nine trials per year for the past three decades, that the AAN report was not an appropriate benchmark for profit margins earned by alternative weeklies.

Goldstein also told the court she did not give Kupperberg or the Guardian permission to use the information in the survey for anything other than internal use, and was surprised to see the Guardian try to use its AAN colleagues' confidential financial data in a public court case. Afterward, Kupperberg came up with a new economic model calculating damages using a whole new set of industry data (including sales figures from the Palo Alto Weekly and Pacific Sun).

The Weekly’s attorneys objected to Kupperberg’s last-minute revisions, and asked the judge for more time to analyze them. They also pointed out that Kupperberg's change to his damages theory wasn't the only eleventh-hour shift by the Guardian. On January 18, Weekly counsel H. Sinclair Kerr Jr. told the judge, more than two weeks after the case had initially been set for trial, that the Guardian had sent the Weekly's lawyers a "flash drive" containing details of more than 40,000 customer transactions. Kerr told Miller it was "unrealistic and unfair” to expect he and Weekly cocounsel Ivo Labar to sift through the data in less than a week and then examine Guardian witnesses such as Kupperberg.

Judge Miller asked Guardian attorney Ralph C. Alldredge whether the Guardian was "opening a Pandora's box" by introducing such a large amount of data and expecting its opponents to quickly analyze it. Alldredge argued that most of the information was from the Weekly's own files and didn't constitute an undue burden. He did admit that the new data -- which Labar pointed out fills up seven large banker's boxes, as compared to the roughly three-inch-thick stack of transactions initially provided by the Guardian -- also included information about the Guardian's relationship with the same customers. But Guardian attorney E. Craig Moody told Miller that his clients planned to use the same "universe of customers" identified earlier when the case was under Judge Richard A. Kramer.

Kramer handed the case over to Miller late last year after presiding over it since its filing, an unusual development so close to trial in such a complex case.

And Judge Miller, who has told attorneys for both sides that she has worked hard to learn the details of the case in a short period, indicated she was unwilling to delay the proceedings any further. Miller noted that she had already begun the process of determining which members of the jury pool were eligible for voir dire, and that she didn't want to inconvenience prospective jurors by granting a continuance.

The voir dire process begins at the Superior Court on McAllister Street at 8 a.m. Thursday.

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