San Francisco News Blog

Mike Lacey and Jim Larkin, the co-owners of the media chain operating SF Weekly and 13 other papers have crafted the following official response to the Guardian's ongoing suit and local media coverage of the case: 

From the time it filed a groundless predatory pricing lawsuit against SF Weekly and New Times Media, the Bay Guardian's case has been characterized by exaggerations and inflated rhetoric.

That pattern has continued in recent days, particularly with regard to news reports in the San Francisco Chronicle and other publications regarding a "charging order" approved by a San Francisco Superior Court commissioner.

This is a complicated legal and economic matter, and in its story of January 8, the Chronicle couldn't even get the number of our publications right.

Meanwhile, the Guardian and its attorney are attempting to interfere with our business while delaying getting this case before the appellate court, and before the appeal has even been heard in the case. They are doing this in part by waging a thoroughly misleading public relations campaign, which requires a response.

Here are the facts:

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Fifteen months after Bay Guardian publisher Bruce Brugmann received a staggering $16 million judgment in his predatory pricing lawsuit against SF Weekly and its parent company, it's time he and his paper were brought back to earth, Weekly attorneys argue in an appeal filed this week with the California Court of Appeal.

The appeal follows a six-week trial at which the trial court ignored federal legal precedents as well as precedents established in other states.

The jury responded with a judgment that handed the Guardian millions in "lost profits" despite the fact that Brugmann's paper couldn't find a single advertiser to testify on its behalf -- and in one case attempted to cite a dead man as a "lost customer."

"With this appeal, judicial error, attorney contrivance, expert witness puffery, juror confusion, and statutory imprecision are now cast in the edifying light of reason and clarity," says Michael Lacey, executive editor of SF Weekly's owner, Village Voice Media, formerly known as New Times.

In particular, the Weekly appeal notes that the Guardian's case rests on a precarious claim: the assertion that California stands opposed to both the U.S. Supreme Court and other state courts on a critical element of antitrust law.

Tim Redmond

Editor's note: From the moment SF Weekly published its first issue as a New Times publication in 1995, Bruce Brugmann, Tim Redmond, and their employees at the Bay Guardian made clear their intention to run us out of town. Brugmann famously said that San Francisco would be our Afghanistan. When all else failed, they sued SF Weekly in 2004 for sales below cost. The nearly $16 million verdict is on appeal.

On Good Friday, April 10, Redmond sent us the following announcement making clear his intent to up the ante. We offer you his words in their entirety, and our response.

Dear Mike:
 
I'm working on a story updating the status of our lawsuit. The inferences our lawyers have drawn from the various communications they've received from your legal team post-trial are that:
 
1. You do not intent [sic] to post an appeal bond, and
 
2. You believe that the Bank of Montreal and other members of a banking consortium have a prior security claim on all of your assets and
 
3. With the cooperation of your lenders, you have sufficient asset-protection to render New Times/Village Voice Media in effect judgment proof.
 
I am told by sources that at some point after we filed our lawsuit, you and Larkin transferred a significant amount of money out of the company and into your personal assets. The figure I've heard from sources is around $15 million.
 
Do you consider any of the above statements inaccurate? If so, please clear things up for me. If not, would you care to comment on the ethics of a going concern, a newspaper chain publishing 16 papers every week, using asset transfer and protection schemes and significant transfers of assets out of the company to avoid the payment of a legitimate debt?
 
Have you informed all your other creditors -- say, the printers you use and your landlords, vendors and suppliers -- that they will be unable to collect any money you owe them should you choose not to pay because your companies will hold themselves out as judgment proof (because they have no liquid assets that aren't subject to a Bank of Montreal lein [sic])?
 
Thanks, I look forward to hearing from you by Monday afternoon for publication in next week's paper.

Here's my response:

In final hearing, judge mulls Weekly arguments against anti-competitive Guardian verdict.

By Andy Van De Voorde

The final trial-court hearing in the Bay Guardian’s below-cost pricing lawsuit against the SF Weekly took place Tuesday at San Francisco Superior Court, capping the opening chapter of a bitter judicial battle that has already dragged on for more than three and a half years.

Although Superior Court Judge Marla J. Miller has offered preliminary rulings at previous hearings, she remained mute Tuesday on the question of how she would decide the Weekly’s motion for a new trial and its request that she overturn a jury verdict that awarded the Guardian $6.4 million in damages.

Tuesday’s hearing was punctuated with routines familiar to anyone who sat through the six-week trial: Guardian attorney Ralph C. Alldredge’s cell phone going off while he was making an argument; his colleague Richard P. Hill turning in his chair to glower at the gallery; and a perpetually overwhelmed court reporter complaining that attorneys for both sides were talking too fast.

Newspaper asks court to reverse Guardian verdict

By Andy Van De Voorde

Hoping to derail a runaway case that could have sweeping repercussions for the newspaper industry in California, SF Weekly has asked a judge to overturn the verdict in the Bay Guardian’s below-cost sales lawsuit.

Barring such a ruling, the Weekly asked Superior Court Judge Marla J. Miller to order a new trial.

The motions filed earlier this week argue that the Guardian received a huge money verdict despite not having offered any actual evidence of an illegal below-cost pricing conspiracy. They also make the case that, if allowed to stand, the unprecedented $15.9 million verdict violates the Weekly’s First Amendment and due process rights. Further, the Weekly argues that the trial was riddled with legal error that unfairly shifted the burden of proof onto the defense and allowed the Guardian to make grossly exaggerated damage claims.

Court grants Brugmann ten-year halo of protection

By Andy Van De Voorde

As expected, the judge in the Bay Guardian’s predatory pricing lawsuit against SF Weekly and its parent company has issued an injunction designed to protect the Guardian against any “injury” from its longtime rival.

In a decision handed down on May 19, Superior Court Judge Marla J. Miller ordered the Weekly not to sell any advertising below cost unless it is ready to go to court and prove that its pricing decisions weren’t intended to harm the Guardian.

First Amendment arguments get short shrift from judge in Guardian v. Weekly lawsuit

By Andy Van De Voorde

Apparently unsatisfied with a $15.6 million jury verdict in its predatory pricing lawsuit against SF Weekly, the Bay Guardian Friday asked a judge to give it even more.

During a post-trial hearing, Guardian attorney Ralph C. Alldredge told Superior Court Judge Marla J. Miller that his client wanted the entire $6.4 million verdict trebled rather than only the portion of the damages incurred within one year of the filing of the complaint.

The effect would have been to turn a $15.6 million verdict into a $19.2 million verdict.

As expected, Guardian boss wallows in his trial-court victory.

By Andy Van De Voorde

The dust has barely settled at Superior Court following the jury verdict last week in the Bay Guardian’s predatory pricing lawsuit against the Weekly.

But already Guardian boss Bruce Brugmann is doing what The Snitch expected him to do: Loudly encouraging others to use his successful (for now) shakedown effort as a model for other businesses to employ against their competitors.

Brugmann must be angling for a bronze statue down at the courthouse — or in Red Square.

In a story published Tuesday in the Boston Phoenix, Brugmann tells Phoenix media writer Adam Reilly precisely how he wants to see his $15.6 million verdict against the Weekly and its parent company New Times (now Village Voice Media) interpreted.

“Everyone can use our suit as a model and template for any big chain that’s coming in and trying to predatory-price them,” said Brugmann.

Golly.

Creating a “model and a template” for a flood of anticompetitive litigation that will inevitably lead to fewer newspapers and higher prices for the mom ‘n’ pop business owners who buy most of the ads in alternative weeklies.

Such a legacy to leave for a self-professed defender of the little guy.

Guardian hits jackpot—but don’t count the money yet, Bruce.

By Andy Van De Voorde

The Bay Guardian hit the lawsuit lottery for the second time in its history Wednesday, winning a $15.6 million judgment against SF Weekly and its parent company, New Times (now Village Voice Media) and it’s former sister paper the East Bay Express. The jury awarded the Guardian $1.79 million for damages from Oct. 2001 to Oct. 2003, and $4.6 million for damages from Oct. of 2003 to present, but that second amount could be trebled.

Village Voice Media vows that Guardian publisher Bruce Brugmann will have a difficult time cashing his ticket.

The verdict came despite the fact that the Guardian produced no direct evidence of a predatory pricing conspiracy aimed at harming the Guardian and called not a single advertiser to the stand to testify on its behalf.

The Snitch packs his things and leaves the courthouse.

By Andy Van De Voorde

It was a packed house Wednesday at Superior Court when the jury announced its verdict in the Bay Guardian’s predatory-pricing lawsuit against the Weekly.

The Snitch had been lurking around the courthouse for the past four days when word came down from an informant there would be a jury verdict at noon.

That was actually delayed slightly when the court reporter, whose inability to keep up with witnesses as they testified had become legendary, decided she needed a break after working on another trial during the morning.

As a result, there were 15 minutes during which the owners of both the Weekly and the Guardian waited together in the courtroom, sitting in the gallery.

The minutes passed painfully as the second hand on the courtroom clock plodded its way around the orb.

As time slowly dragged on, increasing numbers of Guardian employees and hangers-on filed in.

The Snitch had anticipated more of the snickering and chortling that he had heard so much of during the trial.

Instead, Bruce Brugmann, Tim Redmond, Guardian co-publisher Jean Dibble, and controller Sandy Lange, among assorted other hangers-on, watched quietly as the jury foreman handed them their early Christmas gift: damages in the amount of more than $15 million.

According to evidence presented at trial, that figure is far more than the Guardian has earned throughout its history.

The panel voted 11 to 1 that the Weekly, its former sister paper the East Bay Express, and their parent company, New Times (now Village Voice Media) intended to injure the Guardian and had done so.

When The Snitch heard the verdict, he was disappointed but not surprised.

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.

Another day and still no verdict in Guardian v. Weekly tilt.

By Andy Van De Voorde

It was another uneventful day Tuesday in the Bay Guardian's predatory pricing lawsuit against the Weekly.

The jury wrapped up its third full day of deliberations at the courthouse on McAllister Street without rendering a verdict.

Though the panel has sent out notes in past days, nary a peep was heard on Tuesday, leading attorneys on both sides to speculate about the possible significance of the silent treatment.

Plus: The Chronicle Awakens!

By Andy Van De Voorde

It was a long weekend down at the courthouse bureau, where The Snitch whiled away the hours playing Nerf basketball, reading the papers and generally trying to kill time as he awaited a verdict in the Bay Guardian’s predatory pricing lawsuit against the SF Weekly.

The hours move slowly when contemplating the fact that you’ve been sued under a Depression-era “below cost pricing” law that requires a remarkably low burden of proof from plaintiffs—and the fact that in this case the plaintiff did everything but cry on the stand in an attempt to play the hometown victim for a jury whose members had admitted in large numbers pre-trial that they didn’t much like “big media.”

(That verdict still hasn’t come, by the way—the jury opted to knock off at 1:30 p.m. Monday without rendering a decision.)

The tedium was broken, though, when your faithful correspondent saw that the San Francisco Chronicle had finally deigned to weigh in on the case.

Jury still out in Guardian v. Weekly suit

By Andy Van De Voorde

After deliberating for five hours Friday, the jury in the Bay Guardian's predatory pricing lawsuit against the Weekly knocked off without a verdict. The panel will take the weekend off and will take up the case against Monday morning at 8:30 at the courthouse on McAllister Street.

Under the law, the Guardian needs nine votes from the twelve-member panel to win a verdict. The Weekly needs nine to receive a verdict in favor of the defense. Anything in between represents a hung jury, meaning the Guardian would not win, but could in theory ask the judge to allow it to refile the case.

The Snitch survives courthouse encounter, awaits further thrashing.

By Andy Van De Voorde

While covering the Guardian’s lawsuit against the Weekly, your faithful courthouse correspondent has noticed a pattern:

Though Bruce Brugmann’s paper enjoys slagging people in print — take, for instance, its hysterical 2005 stories blasting the Clear Channel concert promotion firm as “evil” because the company had the audacity to take its business to the Weekly — the publication gets a mite snippy when subjected to scrutiny itself.

Guardian’s closing ranges from the assassination of JFK to Alice in Wonderland.

By Andy Van De Voorde

In long-awaited closing arguments Thursday, the Bay Guardian told jurors in its predatory pricing case against the Weekly that it will go out of business if it doesn’t receive a favorable verdict.

“If this continues, it’s inevitable,” said Guardian attorney Ralph C. Alldredge, who referred to his client as “a shadow of the company it formerly was.”

The mild-mannered Alldredge began his argument by telling jurors not to expect “Obama-level eloquence.”

But if his argument lacked fire, it didn’t lack for melodrama.

As closing arguments near, The Snitch has time to ruminate.

By Andy Van De Voorde

As The Snitch was killing time at his one-desk courthouse bureau, tidying up the place while awaiting tomorrow's closing arguments in the Bay Guardian's predatory pricing lawsuit against the Weekly, he noticed that the Guardian was already speaking of the case in momentous tones.

Guardian executive editor Tim Redmond wrote Tuesday that the "outcome could impact the future of the alternative press," and claimed that alt-weekly publishers across the land were eagerly awaiting the verdict.

Golly.

This is a convenient fiction for the Guardian: The notion that it is leading some sort of communal crusade rather than simply trying to cash in by sinking its hand into what it repeatedly calls the "deep pockets" of Weekly parent company Village Voice Media (formerly New Times).

The Snitch hasn't heard of a single alt-weekly publisher who's tuned in to the trial, other than Brugmann pal Bill Johnson of Palo Alto Weekly fame, who sat through much of the case and then on Tuesday made his bed with the Guardian by calmly suggesting that predatory pricing schemes happen "all the time."

After five weeks, testimony concludes in anti-Weekly suit.

By Andy Van De Voorde

The last witness testified Tuesday in the Bay Guardian’s predatory pricing lawsuit against the Weekly, meaning the only thing left is closing arguments.

Those won’t come until Thursday, however, because Superior Court Judge Marla J. Miller is giving attorneys for both sides Wednesday off to prepare final exhibits for inspection by the jury.

As a result, the case should go to the jury late in the day Thursday, meaning a verdict conceivably may not be returned until next week.

Plus: Brugmann told student journos back in 1979, "You people are about the scum of the earth"

By Andy Van De Voorde

The Bay Guardian's predatory pricing lawsuit against the SF Weekly is on hold today as the attorneys haggle over jury instructions with Superior Court Judge Marla J. Miller, a break which left your McAllister bureau chief time to continue his pastime of perusing what others have written about the case.

For the first time on Monday an outsider weighed in — though one wonders if Editor & Publisher correspondent Mark Fitzgerald can be called an impartial observer, given that his story openly admits he is a personal friend of Bruce Brugmann's and not long ago was seen hoisting shots with the Brute in a South American cantina.

In a short story posted today, Fitzgerald draws a broad outline of the case not by studying the evidence but by remarking upon the blogs that have been posted by the Snitch and his ponytailed counterpart, Guardian executive editor Tim Redmond.

Those writings, said Fitzgerald, "recall the great newspaper feuds of yesteryear."

Plus: “Curse words” aimed at the Weekly

By Andy Van De Voorde

Under California law, attorneys are allowed to ask hypothetical questions of expert witnesses. But Bay Guardian attorney Ralph C. Alldredge outdid himself Friday when certified public accountant Everett P. Harry took the stand in the Guardian’s predatory pricing lawsuit against the Weekly.

Harry is the financial expert called by the Weekly to refute the outlandish damage estimates submitted by Clifford Kupperberg, the $500-per-hour Guardian witness who on Thursday discussed fourteen different “damage models” ranging from $4.4 million up to $11.8 million.

In its best year ever, the Guardian made a 5 percent profit. So how does its damages expert imagine a world in which the Guardian has a 75 percent profit margin?

By Andy Van De Voorde

As The Snitch was sipping his coffee and checking the morning line at Bay Meadows today, he took time to surf past the Bay Guardian’s Web site and check in on the competition.

Your faithful courthouse correspondent always likes to see how the Guardian is covering its predatory pricing lawsuit against the Weekly, in part because he appreciates the rhetorical dexterity necessary to cast a patina of logic onto a case that seems to spin further into the ether with each passing day.

As an aside, it would appear that Guardian publisher Bruce Brugmann checks up on the competition as well. On Thursday morning, the big brute was standing next to The Snitch waiting to go through the metal detector at the courthouse on McAllister Street when the two journalists (your Superior Court bureau chief uses the word loosely, of course) happened to arrive at the gate simultaneously.

Brugmann gestured, almost as if in a curtsy, to signal The Snitch through.

Thank you, said The Snitch, who while growing up in the witness protection program was always taught by his mother to be polite, especially to six-foot-five bullies capable of holding you upside down by the ankles and shaking free all the change in your pockets.

Expert's Flawed Analysis: Weekly Owes Brugmann More Than the Guardian Has Made In Its Entire 40-Year History

By Andy Van De Voorde

Bay Guardian expert witness Clifford Kupperberg continued his testimony Thursday in the paper’s predatory pricing lawsuit against the Weekly, and continued to cling to his visions of huge damages for his client in the face of mounting evidence that his projections are divorced not only from market reality but from common sense.

Kupperberg is the certified public accountant hired by the Guardian to calculate how much money it should receive from the Weekly, which it accuses of wrongfully wooing advertisers with “below-cost” prices.

During cross-examination Wednesday by Weekly attorney H. Sinclair Kerr Jr., Kupperberg admitted that his wildly varying damage estimates of the Guardian's "lost profits"—they range all the way from $4.4 million to $11.8 million—represent more money than the Guardian has earned in its history.

How to create profits? Hire yourself a soothsaying CPA.

By Andy Van De Voorde

Damages expert Clifford Kupperberg continued his testimony on behalf of the Bay Guardian Wednesday, telling the jury his calculations of how much the Weekly should pay his client are based on a remarkable assumption: that the boom economy of 2000 would have continued forever if not for the Weekly.

Every one of Kupperberg’s “damage models”—the CPA presented six of them, ranging from $4 million to $11.8 million and told the jury to take its pick—begin with the assumption that the Guardian’s financial results from 2000 would have been repeated for the next seven years if not for its competitor.

That means the Guardian wants to calculate its losses from the Weekly’s alleged below-cost pricing based on the best year it ever had—and to ignore the fact that, prior to the glory days of the dot-com boom, it barely managed to keep up with inflation.

Plus: Brugmann's expert witness talks about imaginary profits and damages

By Andy Van De Voorde

SF Weekly publisher Josh Fromson returned to the witness stand Tuesday in the Bay Guardian’s predatory-pricing suit against his paper and spent most of his time — and most of the day — undergoing a contentious cross-examination by Guardian attorney Richard P. Hill.

In a familiar pattern, Hill returned early and often to a series of internal Weekly e-mails in which its publishers talked about their interest in beating the Guardian.

Guardian attorneys have shown those e-mails to the jury as many as five times, and continue to refer to them in an effort to bolster their claim that the Weekly has been intentionally selling ads below its costs for the past thirteen years as part of a plot to put the Guardian out of business.

And now a few words in defense of sanity

By Andy Van De Voorde
Executive Associate Editor, Village Voice Media

With the trial on hiatus yesterday, The Snitch found time to reflect on events of the past week — in particular, a peculiar blog post from the Guardian’s Tim Redmond that appeared last Friday.

In that post, Redmond — at least The Snitch assumes it was Redmond, and not “Brugmond,” the journalistic entity that comes to life when Redmond puts his byline on trial stories actually reported by his boss, Bruce Brugmann — lashed out at Dr. Joseph P. Kalt, a Harvard economist and expert on pricing in markets who was in town to testify on behalf of the Weekly.

Redmond’s chief complaint? (Click 'More' To Continue Reading SENSE)

Plus: Salt and lime with that tequila?

By Andy Van De Voorde

SF Weekly publisher Josh Fromson took the stand Friday in the Bay Guardian’s predatory pricing lawsuit against his publication, and answered a key question: Just why does the Weekly’s parent company continue to invest so heavily in a city where it has lost millions of dollars?

Guardian attorneys have repeatedly posed that question during the trial, and have suggested that the only plausible explanation is a plot to drive their client out of business with below-cost pricing.

But Fromson told the jury recent positive trends at the paper have it on line for profitability next year.

“Down the road we believe our revenues will increase, as they have since I got here,” said Fromson, who took the helm at the Weekly in 2006.

One reason he’s so confident, said Fromson, is the paper’s positive on-line growth. His paper received $80,000 in Web sales revenue in 2006, he said. That grew to $285,000 in 2007, and is projected to hit $420,000 this year.

“But we’re creaming it,” Fromson added. “We’re way ahead of that.”

Plus: More evidence of Brugmann’s “brain vomit”

By Andy Van De Voorde

The Bay Guardian ’s predatory pricing lawsuit against the Weekly makes no sense, a Harvard professor testified Thursday.

Dr. Joseph P. Kalt, appearing as an expert witness for the Weekly, said the very idea a newspaper company would price its ads below cost for years on end in an effort to injure a competitor struck him as ludicrous.

“The basic claim is not consistent with a rational, profit-seeking business,” said Kalt, who specializes in analyzing market pricing.

But not for the Guardian…

By Andy Van De Voorde

The first advertiser to testify in the Bay Guardian’s predatory pricing lawsuit against the Weekly and its parent company, New Times, took the stand Wednesday.

She testified not for the plaintiff but for the defense.

Despite filing a lawsuit about advertising rates, the Guardian has not called a single advertiser, local or national, to testify.

Jennifer Vernon, a national vice president for the Live Nation concert promotion firm, told the jury about a sponsorship deal between the Weekly and Live Nation’s predecessor company, Clear Channel Concerts, involving the Warfield Theater.

Her testimony put the deal in a far different light than has been suggested by the Guardian.

Why so sensitive, boys?

By Andy Van De Voorde
Executive Associate Editor, Village Voice Media

The Bay Guardian’s predatory pricing lawsuit against the Weekly is on hold for Lincoln's birthday, which gives The Snitch a chance to pause and reflect on a few things.

For instance, in a blog post last Friday, Guardian executive editor Ted Redmond noted up front that he was not in court when New Times executive editor Michael Lacey testified, but had posted a story about it under his byline nonetheless.

Odd though this may seem to the average reader, who has grown accustomed to reporters actually showing up at events they are covering, this is a common practice for Redmond, who has written several other articles about the trial through apparent journalistic osmosis.

But after having been dinged by The Snitch in the past for his questionable habit of providing absentee coverage, Redmond felt the need to explain himself.

"If the SF Weekly 's hit man, Andy Van De Voorde, wants to take a swing at me for posting information on the testimony, fine: I'm smiling, Andy," he wrote.

This was before the story even started.

Plus: Guardian’s attempts to wash its “unclean hands”

By Andy Van De Voorde

New Times chief financial officer Jed Brunst took the stand Monday as the Weekly continued its defense in the predatory-pricing lawsuit filed against it by the Bay Guardian.

Despite having been the larger, more profitable paper in San Francisco over time, the Guardian is alleging that the Weekly and its former parent company, New Times, now known as Village Voice Media, tried to drive it out of business by intentionally selling ads below cost.

But the New Times CFO's testimony suggested that financial losses suffered by the Weekly have been caused by a difficult economy, competition from the Internet, and the New Times tradition of investing heavily in its editorial operations.