By Noah Hubbell
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Prior to August 2001, Jesse Morreale's experience with law-related matters was primarily limited to scanning concert contract riders for gratuitous requests -- sussing out, for example, whether or not performers really needed eight pounds of jelly beans delivered to their dressing room before a show. But over the past year, along with Doug Kauffman and Chris Swank, his partners in concert-promotions firm Nobody in Particular Presents, Morreale has received a proxy education on the rigors of the legal realm.
"I think after it's all over, I'll be able to hang some kind of law degree on the wall of my office," he says, laughing.
One year ago, NIPP made waves, papers and history by filing a federal anti-trust lawsuit against Clear Channel Communications, the giant San Antonio-based media company that, among other things, boasts the largest collection of radio stations, concert promotions companies and music venues in the world ("Taking on the Empire," August 4, 2001). The NIPP vs. Clear Channel saga has intrigued those who enjoy little-guy-versus-big-guy stories, and for good reason: An article that appeared in the March 4 issue of Fortunecompared the two companies on six points, and Clear Channel kicked serious NIPP butt each time. Consider, for example, this minor difference: Clear Channel annually produces 26,000 shows (to NIPP's 700) and reports a revenue of $7.9 billion (to NIPP's $5.5 million).
The conglomerate is also a bit more fluent in legalese: Most recently, it was slapped with another anti-trust suit in June, this time by the Spanish Broadcasting System, Inc., the nation's largest Hispanic-owned radio operator. For the Denver suit, CCC has busted out aggressive anti-trust litigator Phillip A. Proger, who has friends in pretty high places: In June 2001, Charles James, Proger's former partner and another Clear Channel attorney, was named to head the Department of Justice's anti-trust division.
But despite all of the above, the underdogs have just won the first round.
On July 19, United States District Court Judge Edward W. Nottingham rejected Clear Channel attorneys' ten-month-old motion to dismiss the case -- and accepted the face-value legitimacy of each of its nine counts. "Viewed as a whole...the Complaint in this case alleges facts sufficient to give rise to the inference that Clear Channel possesses monopoly power in the concerts promotion business and submarkets in the Denver area," the judge said. Nottingham suggested that Clear Channel's own fiscal reports and Web site provide evidence supporting the validity of NIPP's arguments: "'The opportunities for synergies among Clear Channel's various business divisions are explosive and are in the very early inning,'" he read from a company document.
Nottingham, a tough and longtime resident of the federal bench, spoke as if he expected the case to go to trial. If it does, lawyers on both sides should know better than to try to drag things out: Nottingham once held hearings at 6:30 a.m., as a punishment for in-court delay tactics. ("I guess if they try any shenanigans, we're going to be getting up early," Morreale says.) During the NIPP/CCE hearing, Nottingham stressed that a case in his court would move swiftly. "I don't take very long to try these cases," he said. "I don't believe in trials that go on for months and months. It's ridiculous.... If you're looking at more than a month, take another hard look at it."
No doubt both sides are doing just that: The case's discovery phase ends in late September, and a trial date could be set as early as late fall. Although the parties have met for preliminary settlement meetings, a routine procedure, no offers for an out-of-court resolution have been put forth -- although, if NIPP's allegations are correct, Clear Channel might view it as an attractive option. It's impossible to predict what kind of company information would be aired in open court in a trial setting; so far, Clear Channel critics have been almost uniformly reluctant to come forward and speak out. Subpoenas and sworn testimony could change all that.
Lee Larsen, regional vice president of Clear Channel Radio's Rocky Mountain region, won't comment on whether Clear Channel is looking to settle. (He does offer Backwash a pointer for covering the case: "I hope you're young, because this is going to be a long one.") But he's not surprised the motion to dismiss didn't fly: "It's just something that you do in the process as you go along," he explains. (In other words, it couldn't hurt to try.) Nor does he expect NIPP's victory to repeat. "We are still very confident that once all of the facts come out, it will be very clear that we have never engaged in the activities we are accused of," he says. "We operate legally and fairly, and all that they are alleging never happened."
Morreale says he and his partners aren't interested in any kind of big payoff. They want their business back.
"Basically, we're looking to have our issues resolved and be able to operate in the marketplace on a fair and level playing field," he says. "We tried doing that through the normal channels, through the market, and it didn't work, which is why we're here doing what we're doing. If there's another resolution other than a trial, I'd like to hear it. But all indications are that this is the only way it's going to happen."