​For more than a century, the California Supreme Court has interpreted antitrust law as protecting consumers from high prices, not protecting the profits of entrenched market leaders who fear competition. The Supreme Court's refusal yesterday to follow Justice Joyce Kennard's wishes and hear this appeal turns a century of pro-consumer California antitrust law on its ear.

No one disputes that, on identical facts, this case would have been dismissed in summary judgment in federal court, where nearly all California antitrust cases are litigated.

The only advertiser who testified in this trial testified on behalf of SF Weekly. There was no evidence -- none -- to dispute that Bay Area advertisers, large and small, benefited from the Weekly's lower prices. There was no evidence that the Weekly ever charged a dime less than a glutted market was willing to pay for advertising. And there is no dispute that by employing professional journalists with health and other employee benefits, instead of freelancers and student interns, the Weekly was punished under the below-cost sales statute.

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Twenty-seven months after a San Francisco jury levied a gargantuan $16 million judgment against SF Weekly and its parent company for allegedly trying to "injure" the Bay Guardian, the California Court of Appeal heard oral arguments in the case Friday morning.

The brief session before a three-judge panel at the courthouse at 350 McAllister began with Presiding Justice James J. Marchiano's observation that the panel had paid careful attention to what he called "this interesting case."

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​Not so long ago, the Bay Guardian was drumming up sensationalistic headlines by claiming it might force SF Weekly parent company Village Voice Media Holdings into bankruptcy in order to collect on a $21 million judgment in its below-cost pricing lawsuit against the Weekly.

The Guardian even got a gullible reporter at Bloomberg News to bite on the claim that the legendary Village Voice in New York City might fall prey to the legal machinations of Bruce Brugmann.

The Voice is doing just fine these days; in fact, yesterday, one of its writers was named a Pulitzer finalist.

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A Delaware judge has put the brakes on the Bay Guardian's efforts to take half of the SF Weekly's advertising revenues.

After ruling that the Guardian's collection efforts pose the threat of irreparable harm to the Weekly and its lender, Bank of Montreal, the Hon. Donald F. Parsons, Jr., Vice Chancellor of the Delaware Chancery Court on Wednesday issued a temporary restraining order barring the Guardian from contacting Weekly advertisers, or from requesting or demanding that they make payments directly to the Guardian.

Attorneys for the Weekly's lenders had sought the ruling earlier this week after the Guardian began sending the Weekly's customers letters threatening them with sanctions or contempt of court if they didn't immediately start sending half of their payments to the Guardian's Newport Beach attorney.

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​The Bay Guardian's total disregard of SF Weekly's lenders' senior lien rights have led those banks to ask a Delaware court to issue a temporary restraining order and injunction that would end Bruce Brugmann's increasingly frantic efforts to bleed money from the Weekly.

The lawsuit filed against the Guardian by the Bank of Montreal on behalf of a group of institutional lenders also asks a judge to force the newspaper to return any cash it may have already received as part of its attempts to collect on a $21 million below-cost pricing judgment now before the California Court of Appeal.

The Weekly has asked the appeals court to throw out the judgment, and the case is awaiting oral arguments. But rather than wait for a ruling, the Guardian has delayed the appeal as long as possible while at the same time plowing ahead with its collection efforts.

For months now, the Guardian has openly dared BMO to declare a default on its lending arrangement with the Weekly and step into the legal arena if it wishes to protect its interests.

What it got in return late last night is a lawsuit designed to prevent the Guardian from taking so much as a penny from the Weekly before the bank's interests have been satisfied.

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​That's word from our bosses. Sorry, Brugmann -- it's still too early to declare "mission accomplished" on your plan to use an obscure state antitrust law to snuff out the competition. (Oh, the irony!)

Earlier this week, a San Francisco Superior Court commissioner ordered SF Weekly to give half of its future ad revenues to the Bay Guardian. While some publications have seized on this as new evidence that the end is nigh for our paper, the truth is that the legal process in this case is far from over. We have appealed the original trial court verdict, and we are going to also appeal this latest order regarding our ad revenues.

While no one can guarantee what the courts will do, we feel confident that we'll prevail on appeal. The Guardian exploited an impossibly broad law and persuaded a jury that, if not for those meddling kids at SF Weekly, it would have enjoyed its highest profits ever --  even during an unprecedented downturn in the newspaper industry.

Oh, and memo to the news media covering this case: Guardian owner Bruce Brugmann even testified during the trial that the Internet didn't affect his business during the past decade. If you think that's a credible statement, we have some shares in the San Francisco Chronicle we want to sell you.    

Here's a memo sent out yesterday by Andy Van De Voorde, the executive associate editor of our owner, Village Voice Media, reassuring company employees that we're not going anywhere:
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The filing is the last written document that will be entered into the record as part of SF Weekly's appeal.

In the brief, SF Weekly attorneys squarely define the issue before the court: Whether a larger, entrenched market player like the Guardian should be allowed to use state consumer protection laws to drive out a smaller competitor, thus allowing that larger player to raise prices for consumers and realize greater profits.

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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.

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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:

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