Back in May 2008, as sketched out in the Editor & Publisher piece "Battle of the Bay," the Guardian won a lawsuit against the Weekly charging that the latter had sold advertising below cost in an attempt to drive the former out of business. The result: a damages award of around $21 million.
Since then, the Weekly has been appealing the decision, while the Guardian has sought payment -- and yesterday, a Superior Court ruled that the Guardian has the right to half the Weekly's advertising revenue.
Does this decision have an impact on Westword? Is it possible that VVM could be pushed into bankruptcy or forced to sell off publications like this one in order to compensate the Guardian? Andy Van De Voorde, executive associate editor of Village Voice Media Holdings, and a former Westword staffer who continues to be based in Denver, answers those questions with an emphatic "no."
According to Van De Voorde, "That's absolutely untrue. One common mistake that's been made in some coverage of this case has been that people have been loose with the facts and have been mixing up who was and who wasn't a defendant in the lawsuit. The defendants were the SF Weekly and New Times Media" -- the parent company of the Weekly (and Westword) prior to a merger of New Times and VVM. "Village Voice Media and Village Voice Media Holdings were never defendants."
Van De Voorde concedes that "the Guardian has asked a judge to add Village Voice Media and Village Voice Media Holdings to the judgment, but the judge hasn't done that -- and recently, the judge vacated all the dates in regard to the Guardian's motion to amend the judgment. Among other things, she noted that there were serious jurisdictional problems with that effort, especially now that the case has gone to the California Court of Appeal."
At this point, no date has been set for the California Court of Appeal to look at the issue, but Van De Voorde says, "We are encouraged by the fact that the Court of Appeal within 48 hours of the final brief being filed responded with a letter noting that the court had read all the briefs, was familiar with the facts of the case, had conferenced the case, and was ready to set oral arguments. And we definitely want to have oral arguments."
In the meantime, the Guardian continues to seek cash through other courts -- hence the latest ruling, which Van De Voorde characterizes as "yet another example of how the Bay Guardian is jumping the gun. They are attempting to collect money before the California Court of Appeal has even had a chance to rule on the underlying merits of their case.
"It's crazy and it's absurd to allow a situation to exist where the same lawsuit that would get kicked out in summary judgment in a federal lawsuit in San Francisco leads to a $16 million judgment in the state courthouse around the block," he goes on. "It was the same set of facts -- and that's just intolerable. It creates an environment where it's very difficult for people to do business, and there's an incentive on the part of entrenched and established businesses to sue new competitors who might lose money as they attempt to gain market share and carve out a place for themselves in the market."
Before such arguments can be made to the Court of Appeal, rumors about a potential VVM fire sale are circulating in certain quarters -- and Van De Voorde can guess the source.
"The Guardian is trying to drum up headlines and damage our business by creating the entirely inaccurate perception that we're going to start selling off papers in order to meet this judgment. And that's not going to happen."
Below, see the text of a Van De Voorde memo sent to all VVM employees, which touches on many of the points made above:
March 10, 2010
To: All Employees
From: Andy Van De Voorde
By now you may have seen news reports about the fact that a San Francisco court commissioner yesterday issued an order giving the Bay Guardian rights to 50 percent of SF Weekly's revenues.
We have known for weeks that such an order might be issued, and we have a plan in place to deal with it. We also will be appealing the order to the California Court of Appeal.
Despite uninformed speculation in certain publications, SF Weekly is not going out of business. Its day-to-day operations will remain unaffected...
With regard to yesterday's ruling, this latest legal gambit by the Guardian is just another example of that company's flawed and increasingly desperate strategy: to try and collect whatever monies it can before the California Court of Appeal has even had a chance to rule on the underlying merits of the lawsuit.
The near-manic intensity with which the Guardian is attempting to scrape together cash reflects the true nature of this case: That it is the Guardian, not the Weekly, that is struggling to stay in business, and which views these legal proceedings as its last hope.
We fully expect to win the case on appeal, and we are heartened by the fact that the Court of Appeal has already advised us that it has read all of the briefs, is familiar with the facts of the case, has conferenced the case, and is ready to set oral arguments.
The appeal briefs filed in this case make it clear that the Weekly is on the side of consumers -- in this case, local advertisers. The Guardian, on the other hand, is openly and unashamedly advocating against the interests of these consumers, fighting instead for its right to raise prices during one of the worst recessions this country has ever seen.
That is a fight we are happy to wage, and we intend to win it.