March 5, 2008
SF Bay Guardian Wins Case Against SF Weekly
With regard to the SFBG vs. SF Weekly (VVM) lawsuit -- you know, the one where the Guardian sued the Weekly and its parent company for predatory pricing practices? where the Guardian's Publisher, Bruce Brugmann, claimed that the competition was so unreasonable that it could force the Guardian out of business? -- our sources confirm that:
Word just came that Guardian won the lawsuit and were awarded 6.3 million [the Gate is claiming $15M] in damages.
Wow. We would be fibbing if we said we weren't surprised by the verdict.
Appeals? For sure. Will this nonsense drag on? You bet. Village Voice Media responds:
Response from Village Voice Media to Verdict in Bay Guardian LawsuitToday'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 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 after more than four decades as a publisher in San Francisco, not a single advertiser testified on Brugmann's 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.
For more information, contact Michael Lacey at [numbers removed at the request of SF Weekly]
More to come.
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6.3MM? That doesn't seem like much of a payday for all this brouhaha.
Interesting verdict. Have to admit surprise at this decision.
@brittney - I couldn't agree more. Very surprising.
Wonder where that 6.3M in damages number originated.
Whatever. The Bay Guardian is a piece of shit. No one cares anything about it except for club listings and stuff.
The SF Weekly will appeal and they'll win. The Bay Guardian's lawyers steered a San Francisco jury to a pity party and handed them millions of dollars.
It won't be upheld on appeal.
If only Brugmann were correct and the SFBG were about to fold. If only.......
@brittney - I had the same question. Interestingly, SFWeekly says that it was "more than $15.6 million" in damages. Also according to the SFWeekly, plaintiff's damages expert put SFBG lost profits at $4.4 million to $11.8 million. The CA unfair competition law at issue also permits treble damages, so it will be interesting to get more info about the real number and the calculation. (Maybe $5.2 mil times 3?)
http://blogs.sfweekly.com/thesnitch/2008/02/whats_your_damage.php
Jeez, either it's huge companies manipulating the system or is one guy's obsession. Doesn't seem like much of a system!
When I first arrived in SF I grabbed a copy of the SFBG and the SF Weekly. One week later I decided that the SF Weekly was the superior rag. Although I do wish that snooty food critic Meredith Brody would be eaten alive by rabid tarantulas.
neither paper really breaks any news anymore, and it's not like alt-weeklies are the only way to find out what's going on or read opinions not in the mainstream media.
I'm glad for this win because it tells out-of-state corporations that you can't sell a product for less then it costs to produce it just to undercut competition. The SF Weekly was charging a fraction for their advertising even though they had larger expenses, subsidizing their loss from their other papers. This is illegal, and i hope it will deter other big corporate conglomerates from doing the same thing. The SFBG is a uniquely San Francisco paper. I don't read newspapers that often anymore, but i like the idea of keeping our local papers local.
SF Weekly was not selling ads for less than the market would bear. Rather, the Guardian argued its competitor "sold below cost" because expenses outweighed income. Key to SF Weekly's cost structure is the fact it employs more than twice as many full-time reporters as the Guardian, and pays more than twice what Guardian reporters earn. As a result of this investment, SFW stories have provoked California Assembly hearings on defrauding the elderly, exposed abuses by local labor bosses, exposed the Navy's Hunters Point nuclear activities, exposed the SF Giants' illegal toxic dumping, uncovered and halted an illegal SFO plot to siphon public funds to Honduras, and so on. Lacking space, I name a mere fraction of SFW stories that have elevated San Francisco public life. The Guardian seeks an injunction to slash this investment in journalists and journalism. This is Brugmann/Redmond's idea of social justice? For whom?