SF Weekly

The news that didn’t make the news in SF

0

Every year, the Guardian features the Top 10 Project Censored stories presented by the Sonoma State University project that spends all year analyzing which stories the mainstream media missed. But which stories did not find their way into the mainstream press here in the San Francisco Bay Area?

News outlets other than the Guardian typically ignore Project Censored (unless you count SF Weekly’s snark), so you might say that even Censored tends to be censored. Other than that, we note that issues not hand-delivered via press release or PR campaign might receive less attention than those obvious stories. Using a rather unscientific process of surfing alternative news sites online to find out which stories didn’t get a lot of play in the mainstream, we’ve come up with an assortment of Local Censored stories – though this is by no means a comprehensive list. What other news didn’t make the news?

Local Censored stories:

* What we didn’t hear about when PG&E was pushing Prop 16

Speaking at an informational hearing in Sacramento in February 2010 about Pacific Gas & Electric Co.’s ballot initiative, Proposition 16, former California Energy Commissioner John Geesman noted that the state’s most powerful utility company was using customer money to finance a bid to change the state constitution for its own purposes. Prop 16, which earned a thumbs-down from voters in the June election, would have created a two-thirds majority vote requirement before municipalities could set up electricity services separate from PG&E. While there was no shortage of reporting about the astounding sums of cash that PG&E sank into Prop. 16, hardly anyone aside from Geesman picked up on the more salient point of what PG&E was not spending its money on.

“California’s investor-owned utilities face a Himalayan task in modernizing our electricity system and building the infrastructure necessary to serve a growing economy,” Geesman wrote on his blog, titled PG&E Ballot Initiative Fact Sheet. “They ought to focus on that, rather than manipulating the electorate to kneecap their few competitors.” It is now abundantly clear that PG&E’s aging gas pipelines in San Bruno were badly in need of replacement – and the utility’s neglect opened the door the catastrophic explosion that occurred Sept. 9, resulting in tragic loss of life and destroying homes. “The current leadership at PG&E has lost its way. Nobody is minding the ship,” senator Mark Leno told the Guardian shortly after the blast. “Enough with the self-initiated, self-serving political campaigns. … How about focusing on the current mission — to provide gas and electricity safely, without death and destruction?”

PG&E Ballot Initiative Fact Sheet: http://pgandeballotinitiativefactsheet.blogspot.com/
Huffington Post: http://www.huffingtonpost.com/christine-pelosi/deadly-priorities-why-did_b_713800.html

* What you might not have read about Johannes Mehserle’s murder trial
 
If you looked to Colorlines.com, Blockreportradio.com, the San Francisco Bay View, or Indybay.org for coverage of Johannes Meherle’s murder trial for the fatal shooting of Oscar Grant, then you got a different picture from the one offered by mainstream Bay Area news outlets. There may well be plenty of details about the trial that didn’t make the cut for mainstream news, but one particular point caught our eye as something that should’ve warranted more prominent coverage, or at very least sparked deeper questions from mainstream press. According to the witness testimony of Jackie Bryson, who was with Grant on the train platform the night of the shooting, Grant’s friends immediately urged BART police to call an ambulance after Grant had been shot, but police didn’t do it right away.

Here’s the report from Block Report Radio: “Jack Bryson said he yelled at Oscar after he was shot to stay awake and to the police to call the ambulance. The unidentified officer who was on Bryson declared, ‘We’ll call the ambulance when you shut the fuck up!’ Bryson went on to say that he was never searched on the Fruitvale platform or at the Lake Merritt BART police station, which seems ridiculous if you consider the earlier testimony of former BART police officers Dominici and Pirone, who were involved in the murder and who testified last week that they had felt threatened by Oscar Grant and his friends.” So, if it’s true that Grant’s friends were told to “shut the fuck up” when they were urging BART cops to call an ambulance, and that the supposedly threatening parties weren’t ever searched, why didn’t these points receive as much attention in the media as, say, the claim that years earlier, Grant may have resisted arrest? After witnessing the death of his friend, Bryson said in his testimony, he was detained for hours while wearing handcuffs pulled so tight that his wrists hurt, only to be told afterward that since he had not been read his Miranda rights, he was not under arrest. To be fair, the detail about calling the ambulance did make it into the Chronicle, near the bottom of a blog post, under the subhead, “Friend’s claim.”

Block Report Radio: http://www.blockreportradio.com/news-mainmenu-26/894-jack-bryson-hits-the-stand.html
Colorlines: http://colorlines.com/archives/2010/06/defense_opens_with_gripping_testimony.html

* Homelessness on the rise in San Francisco

The controversy surrounding Prop L, a proposed ordinance to ban sitting and lying down on the sidewalk, has been widely reported on — but there’s a more pressing issue related to homelessness that hasn’t gotten nearly as much ink. An article in New America Media, “Shelters predict homeless count to skyrocket,” highlighted a perceived surge in San Francisco’s homeless population, evidenced by overwhelmed service providers who can hardly keep up with demand. “We’re serving 200,000 more meals per year than two years ago, but we haven’t had the capacity to add staff,” the chief executive officer of the Glide Foundation noted in the article. The drop-in center, she added, no longer had enough seats to accommodate those in need. According to a fact sheet issued by the Coalition on Homelessness in July of 2009, 45 percent of respondents to a COH survey were experiencing homelessness for the first time. The overwhelming majority of respondents, 78 percent, became homeless while living in San Francisco.

New America Media: http://newamericamedia.org/2010/04/shelters-predict-homeless-count-to-skyrocket.php
Coalition on Homelessness: http://www.cohsf.org/en/

* The long wait for Section 8

It isn’t easy for a tenant with a Section 8 voucher to find housing in the San Francisco Bay Area. In San Francisco, there’s a barrier to getting the voucher in the first place, since the waitlist is currently closed. Those who have vouchers are often passed over by landlords, and the string of denials can drive people to unstable housing situations such as extended hotel stays. An article in POOR Magazine features the story of Linda William, a woman who left a San Francisco public housing project with a Section 8 voucher in hand only to embark on a wild goose chase, ultimately winding up in a low-end motel outside Vallejo. “Well whaddya know,” William told the POOR magazine reporter, “I found closed wait lists on almost all the low-income housing units in all of those places and all the rest of the landlords wouldn’t even return my calls when I told them I had section 8.” An article by Dean Preston of Tenants Together that appeared in BeyondChron, meanwhile, spotlights the issue of landlord discrimination against Section 8 tenants.  “In the Section 8 voucher program, participating tenants pay 30 percent of their rent and the Housing Authority pays the balance to the landlord,” Preston writes. “It takes years for eligible tenants to be able to participate in the program. Once tenants get off the wait list, the landlord must sign a payment contract with the housing authority in order to receive the portion of the rent paid by the government. By refusing to sign onto the program, some landlords seek to force rent controlled tenants into situations where they cannot pay their rent.”
POOR Magazine: http://www.poormagazine.org/node/3277
BeyondChron: http://www.beyondchron.org/news/index.php?itemid=8012

* San Francisco’s trashy secret

Despite being thought of as a beacon of sustainability, San Francisco’s not-so-green waste stream is something that didn’t make the front page of many papers – except, of course, this one. Sarah Phelan’s “Tale of Two Landfills,” a Guardian cover story this past June, examined San Francisco’s decidedly unenlightened policy of transporting waste far outside of the city despite a goal of reducing waste to zero in the next 10 years. Here’s an excerpt: “It’s a reminder of a fact most San Franciscans don’t think much about: The city exports mountains of garbage into somebody else’s backyard. While residents have gone a long way to reduce the waste stream as city officials pursue an ambitious strategy of zero waste by 2020, we’re still trucking 1,800 tons of garbage out of San Francisco every day. And now we’re preparing to triple the distance that trash travels. ‘The mayor of San Francisco is encouraging us to be a green city by growing veggies, raising wonderful urban gardens, composting green waste and food and restaurant scraps,’ Irene Creps, a San Franciscan who owns a ranch in Wheatland, told us. ‘So why is he trying to dump San Francisco’s trash in a beautiful rural area?’”

SFBG: http://www.sfbg.com/2010/06/15/tale-two-landfills

* The real unemployment rate

The Bureau of Labor Statistics makes a distinction between so-called “discouraged workers” who have stopped looking for jobs, and the jobless who are actively seeking employment, so the official unemployment rate (9.7 percent in San Francisco, according to the most recent data) may be much lower than the actual unemployment rate.

We haven’t seen any brilliant local reporting on this issue, but the problem is summed up nicely in this YouTube video produced by a personal finance software firm.

http://www.youtube.com/watch?v=Ulu3SCAmeBA&feature=player_embedded

Court denies SF Weekly’s request for rehearing

0

The state Court of Appeal denied Sept 9th a request by SF Weekly and its chain parent for a rehearing in the Bay Guardian’s lawsuit. That allows the appelate decision affirming the Guardian’s trial court victory  to stand.

The court issued a few minor amendment to footnotes in the case, but denied the Weekly’s request that the evidence be reconsidered. That means the decision remains as precedent-setting case law in California.

The court decision was a major victory not just for the Bay Guardian but for small businesses across the state who are facing predatory chains that sell below cost with the goal of harming competition.

 

Small business wins big

1

tredmond@sfbg.com

Six years after the Guardian filed a lawsuit accusing SF Weekly and its chain owner of illegal predatory pricing, the California Court of Appeals has issued a precedent-setting ruling that not only affirms the Guardian’s claims but strikes a dramatic blow for small independent businesses in California.

A three-judge panel concluded Aug. 11 that the state’s Unfair Practices Act protects businesses from cutthroat predators that sell a product below cost with the intent of injuring competition. The judges, Robert L. Dondero, who wrote the decision, and James J. Marchiano and Sandra L. Margulies, who concurred, directly rejected an argument that would have undermined the historic law and concluded that the state of California has every right to provide small merchants with greater antitrust protections than the federal government.

It marked the first time that a state appeals court had weighed in on whether California’s UPA should be enforced under the weaker federal standard. The ruling offers broad protections to small companies trying to survive against the market power of giant chains.

The Guardian sued SF Weekly and the New Times chain, now owned by Village Voice Media, in 2004, claiming that the Weekly was systematically selling ads below cost in an effort to put the local competitor out of business.

Evidence presented in a six-week trial in 2008 showed that the Weekly had lost money every single year since New Times bought the paper in 1995. The Phoenix-based chain poured tens of millions of dollars into propping up the Weekly, while the Weekly’s sales staff sold ads at a fraction of the cost needed to support the operation — all with the goal of taking business away from the Guardian.

“We have before us the case of an ongoing, comprehensive, below-cost pricing scheme instigated and executed conjointly by two parties,” the court concluded.

It was a classic case study in what the UPA, which dates back to 1913, was designed to prevent: a big, wealthy corporation using its deep pockets to cripple a local competitor. The court decision notes that shortly after New Times bought SF Weekly in 1995, New Times Executive Editor Mike Lacey announced that he would use the chain’s deep pockets to assault the Guardian. “The essence of Lacey’s message was that he wanted to ‘put the Guardian out of business,'<0x2009>” the ruling states. “The sales representatives were made aware that advertising could be ‘sold below cost’ if needed ‘in order to make a sale’ and the resources of New Times would cover the loses, even over a term of many years.”

The end result, trial records showed: SF Weekly and the East Bay Express, which New Times bought in 2001, lost a total of $24 million between 1996 and 2007. (The Express was sold in 2007 to local owners.)

A San Francisco jury ruled March 5, 2008 that the Weekly and New Times had violated the law and awarded the Guardian more than $6 million. The statute allows for treble damages, and Judge Marla Miller increased the award to $15.6 million. With interest and attorney’s fees, the verdict now exceeds $22 million.

New Times appealed, raising two central issues. The verdict, the chain argued, was invalid because the Guardian never demonstrated which individual accounts it lost because of which specific below-cost sales. And the law itself was dubious because it doesn’t require a plaintiff to prove that a predatory competitor had the ability to recoup its losses after driving the smaller outfit out of business.

Throughout the trial and afterward, Andy Van De Voorde, VVM’s executive associate editor, repeatedly belittled the suit on the grounds that the Guardian didn’t present individual instances of lost ads. But the court rejected that argument, saying that nothing in the UPA mandated a showing of individual below-cost sales; the fact that the Weekly lost money for 10 years, and that its overall ads prices were far below its total cost of operations, was plenty of evidence of illegal sales. The Guardian, the ruling states, was not “required to prove the precise amounts of damages attributable to the loss of individual customers or sales.” In fact, that standard would make predatory pricing cases of this nature — with thousands of sales over many years, almost impossible to pursue — particularly, the court noted, when “it is the wrongful acts of the defendant that have created the difficulty in proving the amount of lost profits.”

The recoupment argument was critical: New Times wanted the court to force the state to adopt a federal standard that since the 1980s has pretty much gutted federal antitrust law.

The appeals court justices resoundingly rejected that claim, ruling that the state Legislature has every right to pass laws protecting small businesses against acts that the federal courts may be willing to allow. And it’s clear that the UPA contains no mention of recoupment.

“We do not lightly imply terms or requirements that have not been expressly included in the statute,” the ruling states.

New Times argued, both in court and in its published reports, that laws against anticompetitive conduct must protect consumers, not businesses; if one company cuts prices, that helps consumers — and unless there’s evidence that a lack of competition in the future would cause prices to go up, then the law shouldn’t prohibit below-cost sales.

But the Appeals Court took a different approach, concluding that this particular state law was not only designed to protect consumers in the short term, but small businesses (and thus overall competition) in the long term.

That’s consistent with the history of the Unfair Practices Act, which was written during California’s progressive era, when reformers were concerned about large businesses (particularly supermarket chains) driving local markets out of business. It was, James R. McCall, a professor at UC Hastings College of Law, wrote in the Pacific Law Journal, “the first comprehensive modern state predatory pricing statute.”

In a 1997 article, McCall noted that federal courts had undermined much of the power of antitrust laws such as the Sherman Antitrust Act, such that “by 1980, the era of expansive application of antitrust acts in federal courts had ended.” However, the California law, later copied in six other states, “is precisely drawn to eliminate defined commercial practices such as predatory pricing.”

Joseph Hearst, an East Bay attorney and appellate specialist who helped write the Guardian’s appeal brief, noted that the court had taken the questions in the appeal very seriously. “It is obvious the court did an enormous amount of independent research — quoting cases neither side had mentioned in their briefs and demonstrating a mastery of the topic,” he said. “The court was clearly aware of the issues at stake, not only in this case but in future cases involving the Unfair Practices Act. They carefully explored how the UPA is different from federal predatory pricing law and pointed out that the UPA, in some respects, sets a much tougher standard than federal law, which is why they could confidently say that it does not require the federal ‘recoupment’ standard.”

Ralph Alldredge, the Guardian’s lead trial and appellate attorney, noted that “this is the most direct attack upon the viability of the UPA since its constitutionality was challenged unsuccessfully in the 1940s. By rejecting it, the Court of Appeal has confirmed that the UPA cannot be subverted by importing federal standards which have made below cost pricing claims impossible to win in federal court.”

He added: “Think of what that means for big-box retailers, which have used below-cost selling on some products to attract customers away from small, independently owned grocery, hardware, drug, and department stores.”

The Weekly has an entire section of its website devoted to the lawsuit, which it calls “stupid” and “absurd.” The trial, the Weekly argues, was “marred by judicial error and emotional anti-chain arguments.” At one point, the paper even argued that the Guardian was delaying its response to the New Times appeal briefs because we feared losing the appeal.

But as of press time, the Weekly had not published a word on the Appeals Court ruling. It’s the first time anything has happened in the case that the Weekly hasn’t covered. I e-mailed Van De Voorde to ask for comment, but he hasn’t gotten back to me.

PS The Guardian‘s legal team, which did a stunning job at every level, consisted of Richard Hill, E. Craig Moody, and Ralph Alldredge at the trial level, assisted by Joseph Hearst in the appeal and by Jay Adkisson and Travis Farnsworth on the collection efforts.

Court upholds Bay Guardian verdict

11

In a dramatic victory for small independent businesses in California, the state Court of Appeal ruled Aug. 11th that the state’s Unfair Practices Act protects the victims of predatory pricing as long at they can prove that a bigger company sold its product below cost and did so with the intent of damaging the smaller competitor. You can read the decision here.

The ruling in the Bay Guardian’s case against SF Weekly and its chain owner could have lasting implications on anti-competitive conduct in the state.

The Bay Guardian sued the Weekly and New Times, now owned by Village Voice Media, alleging that the chain had systematically sold ads below cost in an effort to harm the locally owned independent paper. In 2008, after a six-week trial, a San Francisco jury agreed with the Guardian, and awarded more than $6 million in damages. Trial court judge Marla Miller then trebled part of the award. Today, with interest and attorney’s fees, the judgment is worth more that $22 million.

The Weekly and New Times appealed, arguing, among other things, that the California law that bars predatory pricing should require proof that the predator would be able to recoup its losses down the road – a nearly impossible standard that has eviscerated federal unfair practices cases.
In an unanimous decision, the three-judge panel rejected that claim and concluded that the state law was designed to protect small businesses from precisely the type of anticompetitive behavior demonstrated by the Weekly.

In the state law, the Court ruled, “the very gravamen of the offense is the purpose underlying the anticompetitive act, rather than the actual or threatened harm to competition.  The intent or purpose of the below-cost sale is at the heart of the statute, and distinguishes the violation from a below-cost pricing strategy undertaken for legitimate, nonpredatory business reasons.”

In fact, the Court concluded:

“The history of the amalgamation of statutes that comprise the UPA “teaches that a primary concern in the enactment of the UPA was the protection of smaller, independent retailers, especially grocers, against unfair competitive practices of the large chain stores.  As a contemporary commentator explained, the prohibitions added in 1933 on secret rebates and unearned discounts (now section 17045) and below-cost sales (now section 17043) ‘are designed to protect the retailer whose more powerful neighbor is attempting to drive him out of business.’ “

We’ll be covering the case in depth in next week’s paper. 

Truce talks

5

news@sfbg.com

All parties are hopeful for peace in the Guardian-labeled War on Fun after oppressive raids on SoMa clubs have stopped and the feuding sides — mainly the San Francisco Police Department and nightclub owners — are sitting down to truce talks brokered in part by the fledgling California Music and Culture Association (CMAC).

“I’m here to work with you,” Kitt Crenshaw, commander of SFPD’s new Entertainment Task Force, told the crowd at a Nightlife Safety Summit on June 30. “I’m not the enemy. I’m not the ‘War on Fun,’ as they call it. I’m not the Antichrist.” The summit was sponsored by the Mayor’s Office, Entertainment Commission, SFPD, Small Business Commission, and CMAC.

Club owners and the SFPD are attempting to find balance between stifling the entertainment industry with heavy-handed enforcement and doing something about the deadly gun violence plaguing neighborhoods around some San Francisco nightclubs. Owners and party promoters don’t want entertainment permitting power to go back to the SFPD, as Mayor Gavin Newsom has suggested. But recent shootings and the Entertainment Commission’s inability to immediately close problem clubs have city officials demanding change.

Board of Supervisors President David Chiu introduced legislation in early June that would give the Entertainment Commission the authority to revoke the entertainment permits of noncompliant clubs that are consistently scenes of violence. Chiu’s legislation would further extend temporary suspension powers the board granted to the commission in 2009.

“There is strong consensus that the Entertainment Commission needs to do its job. And if this is what it takes to give it more tools, then so be it,” Chiu told the Guardian after the June 25 CMAC Insider Luncheon, where he participated in a forum with entertainment industry representatives. Chiu said he was feeling pressure from his constituents in North Beach to “come down like a hammer on the industry” following several shootings around the neighborhood’s nightclubs this year.

Terrance Alan, a longtime industry advocate and entertainment commissioner, told the Guardian he recently requested that the City Attorney’s Office help define when nightclub owners should be blamed for violence occurring near their business. “If we’re going to hold venues and security teams responsible, we have to tell them and make sure it’s legal,” he said. “The line of reasoning that blames the nearest business will force San Francisco to shut down. The first thing we have to do is stop blaming each other.”

Chiu, speaking to a crowd at the Nightlife Safety Summit, recounted a handful of incidents that pushed him to craft the new legislation. Since the last legislation was passed to strengthen the Entertainment Commission’s power to regulate nightclubs, eight people were shot outside the Regency night club Nov. 15, 2009; 44 rounds were fired outside club Suede, resulting in one death and four injuries Feb. 7; a shooting occurred on Broadway outside a strip club in mid-February; and a police officer was shot outside the Mission District’s El Rincon club on June 19. “And so on, and so on,” Chiu said.

Following the shooting at Club Suede, which had long been a site of violence prior to the gang-related carnage in February, officials were stunned to learn the commission did not have the power to revoke entertainment permits. The most it could do was suspend Suede’s permit to play music for 30 days.

“To hold the commission responsible for something it was never envisioned to do and never given the power to do is where the narrative has gone wrong recently,” Alan said of widespread criticism that the commission just didn’t simply “shut down” Club Suede.

Suede remains voluntarily closed as it bargains with the City Attorney’s Office, which filed a complaint against the club after the shootings. Alex Tse, the lead attorney for the city in the case, told the Guardian there was nothing he could legally do to prevent Suede from reopening before Aug. 10, when the court is scheduled to rule on a preliminary injunction (court mandated closing) the City Attorney’s Office filed. But he doesn’t expect them to reopen because Suede and the city are currently working toward settling the case.

If the incidents Chiu described represent a black eye for San Francisco’s entertainment industry, the California Department of Alcoholic Beverage Control and SFPD aren’t necessarily squeaky clean either. “I sat down with [ABC director] Steve Hardy and told him that where the state was focusing efforts in San Francisco was completely misguided,” Chiu said at the CMAC luncheon. “And I’ve spoken to [California Senator] Mark Leno to try to move them in the right direction.”

The break in the crackdowns of 2009, mostly attributed to severe tactics employed by SFPD Officer Larry Bertrand and ABC agent Michelle Ott, followed a widespread backlash to the sometimes brutal treatment legitimate business owners were receiving in the name of public safety. Back-to-back over stories in the Guardian (see “The new War on Fun,” March 23, 2010) and the SF Weekly, calls to the ABC from city officials, the formation of CMAC, and a Racketeer Influenced and Corrupt Organizations (RICO) suit filed against San Francisco and the rogue officers spurred officials to rein in Ott and Bertrand.

Hardy told the Guardian that Ott is no longer assigned to alcohol enforcement in San Francisco. Bertrand has traded in his plain-clothes for a uniform and hasn’t been seen busting into clubs, beating up the help, or confiscating DJ equipment for several months.

Mark Webb, plaintiff’s attorney in the RICO case, which was moved to the federal court by the City Attorney’s Office, said Bertrand is scheduled to give a deposition for the case July 26. Webb told the Guardian he plans to ask Bertrand questions relating to “a pattern of ongoing and repeated abuses” claimed in the complaint, which includes Newsom and ABC as defendants.

“We’re at a crossroads,” Chiu told the crowd at the Nightlife Safety Summit, adding that if the new power for the Entertainment Commission does not reduce club violence, stronger measures would be taken, whether it’s Newsom’s suggestion to scrap the commission entirely and give permitting power back to the police department or Chiu’s idea to create another “less politicized” body to issue entertainment permits made up of representatives from city department that are affected when nightlife entertainment goes wrong.

“There has been significant dissatisfaction with the Entertainment Commission due to many actual and apparent conflicts of interests,” Chiu said. “Frankly, this is why we may need to move to a different model of who actually makes decisions on permits, because often the people who want to make those decisions are the ones who stand to get the most benefit out of them.”

But club owners and party promoters argue that the police issuing entertainment permits, as they did prior to the Entertainment Commission’s creation in 2002, has a chilling effect on an important part of San Francisco’s economy.

Alan said a civil grand jury found the police department had a conflict of interest in being both the granter and enforcer of nightclub permits, a finding that spurred the creation of the Entertainment Commission.

“I’ve been in the industry long enough to remember when it was in the Police Department’s hands,” said Guy Carson, owner of Café Du Nord and director of CMAC. “Since the advent of the Entertainment Commission, more permits have been issued, which has vitalized the industry.”

Club owners and party promoters don’t want to be blamed for street violence over which they have no control, and they have some political support for that stance. “Clubs don’t create youth gun violence, society creates youth gun violence,” Sup. Bevan Dufty proclaimed to the crowd at the Nightlife Safety Summit, drawing thunderous applause from the room.

“There is a street scene and a club scene, and they do intersect. But a lot of the violence occurs in the street scene,” Carson said. “A lot of shootings that happen relate to people never inside the clubs. That’s a conversation CMAC looks forward to having — to have a little more accurate discussion.”

While he asserts that some nightclubs attract violence to the city from out of town, Crenshaw said he was pleased and surprised at the level of collaboration emerging between entertainment representatives and SFPD. “I got so much positive feedback from it [the Nightlife Safety Summit]. It was a bit overwhelming,” he told us. “I think the industry itself is tired of being labeled as a pariah. They want to change their image.”

Brit Hahn, owner of City Nights and SFClubs, agreed that working with district captains was in the best interest of any club looking to remain profitable. “When something bad happens at a nightclub anywhere in San Francisco, he said at the Nightlife Safety Summit, “it’s bad for all of our businesses.”

Us vs. SF Weekly: the next step

0

tredmond@sfbg.com

The California Court of Appeal heard oral arguments on the Guardian’s lawsuit against SF Weekly and its chain parent June 11, and the discussion focused almost entirely on the Weekly’s assertion that it’s too easy to prove predatory pricing under California’s Unfair Practices Act.

Justices James J. Marchiano, Sandra L. Margulies, and Robert L. Dondero peppered the Weekly’s lawyer, Dennis Maio, with questions as he attempted to argue that state law needed to be brought in line with federal standards.

The Unfair Practices Act bars companies from selling products below costs with the aim of harming a competitor. The Guardian sued the Weekly and its parent company, New Times, under that statute, claiming that the chain had deliberately sold ads below cost with the aim of driving a smaller, locally-owned competitor out of business.

In March 2008, a San Francisco jury found in favor of the Guardian and awarded more than $6 million in damages. Judge Marla Miller trebled some of the damages, and with attorney’s fees and interest, the judgment is now close to $23 million.

Maio argued that the intent of the law was to protect consumers, and that below-cost sales are often beneficial. “Low prices are good,” he said. “Below-cost prices are even better, because they’re cheaper.” He compared the Village Voice Media chain, which owns SF Weekly, to Costco, suggesting that the justices might shop there for better prices.

The thrust of Maio’s claim — and the heart of the Weekly’s appeal — is the argument that the Weekly shouldn’t have been held liable for predatory pricing unless the Guardian could prove that the chain would be able to recoup its losses after its competitor was gone. The federal courts have adopted that approach — and the result has been the effective end of predatory pricing suits in federal court.

But there’s nothing in California law that requires so-called “recoupment” proof, and the justices focused on that in their questions to Maio.

Maio argued that antitrust law was all about protecting consumers, and that the only danger of below-cost sales is if they lead to higher prices later, when a monopoly company has driven away competitors. “Causing a competitor to lose money isn’t a violation,” he said. “The purpose of the statute is to protect the public.”

Under questioning, Milo admitted that there’s no mention of recoupment in the Unfair Practices Act, and no discussion of it in the legislative history.

In a somewhat bizarre diversion, Maio tried to argue that the UPA had anti-Semitic roots because it could have been devised to hurt Jewish-owned chain stores. Then he compared below-cost pricing to pro bono legal work — although it’s hard to make any rational argument that SF Weekly owners were attempting to do a charitable act by putting the Guardian out of business.

Ralph Alldredge argued the Guardian’s case. “This is,” he said, “a plain and simple matter of statutory interpretation.

“This is black-letter law,” Alldredge continued. “You can’t take the preamble to a law and use it to add things that aren’t there — especially to add things that are completely inconsistent with the terms of the statute.”

When Dondero asked why there are so few cases under the California Unfair Practices Act, Alldredge explained that until 1987, federal antitrust law took the same approach as the state, so most cases went to federal court. The federal judges added the recoupment standard — “and essentially closed the door to these cases,” Alldredge said.

“And that’s what they’re asking this court to do.”

Alldredge pointed to a number of cases where state antitrust law goes beyond federal law. He also said that the standard or proving below-cost sales and intent to harm a competitor has been tested in other cases “and the Unfair Practices Act has sailed through all those tests.”

Maio then tried to bring up the issue of whether New Times, now part of Village Voice Media, could be held liable for the actions of the Weekly, but the justices cut him off, saying they’d already read all the relevant briefs and testimony.

A ruling is expected in several weeks.

VVM’s Executive Associate Editor Andy Van De Voorde, whose coverage of the trial has been nasty, bitter, and personal, took a remarkably muted approach to the Court of Appeal hearing. The Chronicle’s Bob Egelko turned in a typically clean, accurate account of the proceedings.

Court hears Weekly’s appeal in Guardian suit

12

 


The California Court of Appeal heard oral arguments on the Bay Guardian’s lawsuit against SF Weekly and its chain parent June 11, and the discussion focused almost entirely on the Weekly’s assertion that it’s too easy to prove predatory pricing under California’s Unfair Practices Act.


Justices James J. Marchiano, Sandra L. Margulies and Robert L. Dondero peppered the Weekly’s lawyer, Dennis Maio, with questions as he attempted to argue that state law needed to be brought in line with federal standards.


The Unfair Practices Act bars companies from selling products below costs with the aim of harming a competitor. The Guardian sued the Weekly and its parent company, New Times, under that statute, claiming that the chain had deliberately sold ads below cost with the aim of driving a smaller, locally owned competitor out of business.


In March 2008, a San Francisco jury found in favor of the Guardian and awarded more than $6 million in damages. Judge Marla Miller trebled some of the damages, and with attorney’s fees and interest, the judgment is now close to $23 million.


Maio argued that the intent of the law was to protect consumers, and that below-cost sales were often beneficial. “Low prices are good,” he said. “Below-cost prices are even better, because they’re cheaper.” He compared the Village Voice Media chain, which owns the Weekly, to Costco, suggesting that the justices might shop there for better prices.


The thrust of Maio’s claim — and the heart of the Weekly’s appeal — is the argument that the Weekly shouldn’t have been held liable for predatory pricing unless the Guardian could prove that the chain would be able to recoup its losses after its competitor was gone. The federal courts have adopted that approach — and the result has been the effective end of predatory pricing suits in federal court.


But there’s nothing in California law that requires so-called “recoupment” proof, and the justices focused on that in their questions to Maio.


Maio argued that antitrust law was all about protecting consumers, and that the only danger of below-cost sales is if they lead to higher prices later, when a monopoly company has driven away competitors. “Causing a competitor to lose money isn’t a violation,” he said. “The purpose of the statute is to protect the public.”


Under questioning, Milo admitted that there’s no mention of recoupment in the Unfair Practices Act, and no discussion of it in the legislative history.


In a somewhat bizarre diversion, Maio tried to argue that the UPA had anti-semitic roots, because it could have been devised to hurt Jewish-owned chain stores. Then he compared below-cost pricing to pro-bono legal work — although it’s hard to make any rational argument that the SF Weekly owners were attempting to do a charitable act by putting the Guardian out of business.


Ralph Alldredge argued the Guardian’s case. “This is,” he said, “a plain and simple matter of statutory interpretation.


“This is black-letter law,” Alldredge continued. “You can’t take the preamble to a law and use it to add things that aren’t there — especially to add things that are completely inconsistent with the terms of the statute.”


When Dondero asked why there are so few cases under the California Unfair Practices Act, Alldredge explained that until 1987, federal antitrust law took the same approach as the state, so most cases went to federal court. The federal judges added the recoupment standard — “and essentially closed the door to these cases,” Alldredge said.


“And that’s what they’re asking this court to do.”


Alldredge pointed to a number of cases where state antitrust law goes beyond federal law. He also said that the standard or proving below-cost sales and intent to harm a competitor has been tested in other cases, “and the Unfair Practices Act has sailed through all those tests.”


Maio then tried to bring up the issue of whether New Times, now part of Village Voice Media, could be held liable for the actions of the Weekly, but the justices cut him off, saying they’d already read all the relevant briefs and testimony.


A ruling is expected in several weeks.


PS: Andy Van De Voorde, whose coverage of the trial has been nasty, bitter and personal, took a remarkably muted approach to the Appeals Court hearing. The Chron’s Bob Egelko turned in a typically clean, accurate account of the proceedings.


 

The Bay Citizen makes a strong debut

2

The Bay Citizen, a well-funded newsroom that is the most anticipated of several new media experiments in San Francisco, officially launched today with some solid, interesting stories that include an investigation of toxic pesticides being illegally applied to local marijuana crops and a look at how Prop. 13 has obscenely benefited the wealthiest San Francisco residents.

The organization also announced today that it has raised an additional $3.5 million in donations to supplement the $5 million in seed money that local investment banker Warren Hellman provided to the start-up. Meanwhile, another new media start-up that we profiled this week, SF Streetsblog – one of The Bay Citizen’s many local partners — has issued a fundraising plea for $50,000 that it needs by July 1 to continue its award-winning coverage of local transportation issues.

But today is a day for The Bay Citizen to bask in its initial success, which it will do tonight starting at 7:30 with a launch party at the Great American Music Hall. And then tomorrow, once the hoopla is over and the stories that have been in development for weeks or months are replaced by fresh content, San Franciscans will begin to learn whether The Bay Citizen represents a new journalistic powerhouse or just a well-funded website with some powerful friends.

I’ve heard some detractors in the local media grumble that their presentation seems “banal” and unworthy of their big budget, but I don’t agree. Personally, I think The Bay Citizen strikes the right tone and balance, emphasizing solid journalism rather than flashy gimmicks, while also drawing on multimedia tools such as the video of yesterday’s protests against President Obama’s visit to SF.

San Francisco needs relevant, well-presented, serious journalism more than the snarky, juvenile stories we see in design-heavy local start-ups such as The Bold Italic, where The Bay Citizen’s culture writer came from, or the often out-of-touch, sneering, or self-important stories that we see in corporate-run papers like SF Weekly, San Francisco Chronicle, and San Francisco Examiner.

Instead, our first peek at The Bay Citizen seems to show that it might just be up to the important task of providing relevant content for the New York Times’ twice-weekly Bay Area section – which has also demonstrated a tin ear for San Francisco values since it launched last year – providing an important new forum for those who believe in speaking truth to power.

Receiver appointed to investigate assets of SF Weekly and parent chain

0

 The California Superior Court has appointed a receiver to investigate the finances of SF Weekly’s parent company and develop a plan to pay the Bay Guardian the $22 million that the chain owes as a result of our predatory pricing lawsuit. 


 On May 25, Commissioner Everett A. Hewlett, Jr., entered an order appointing professional receiver David Summers to investigate the assets of New Times Media LLC and its subsidiary, SF Weekly LP.


 


New Times Media LLC is the holding company for the nationwide Village Voice chain of alternative weekly newspapers.


  


Summers has been ordered to develop a plan for the disposition of the company’s assets so the Bay Guardian can get paid.


 


“This is a very significant step forward in our collection efforts,” said Bruce B. Brugmann, Bay Guardian editor and publisher.


 


After a six-week trial in 2008, a San Francisco jury found that the Weekly and New Times had intentionally sold ads below cost in an effort to damage the independently owned local competitor.


  


The jury awarded the Bay Guardian $6.39 million, and Judge Marla Miller trebled part of the damages and added on attorney’s fees. With interest accruing at 10 percent a year, the judgment is now more than $22 million.


 


New Times and SF Weekly Have appealed the judgment. The California Court of Appeal has set oral argument for 9 a.m. June 11.


 


Earlier this year, a lending syndicate lad by Bank of Montreal declared the Village Voice chain to be in default of their $77 million loan arrangements. Bank of Montreal claims to be daily sweeping the moneys earned by the Village Voice chain into a special account so as to protect the lenders’ interests.


 


The banks in the syndicate that are holding the VVM debt (as of March, 2009) are Bank of Montreal, U.S. Bank, Wells Fargo, WestLB AG, Rabobank, BNP Paribas, and Brown Brothers Harrimann.


 


The Bay Guardian has already seized two of SF Weekly’s vehicles and the rent that the paper’s subtenants pay. The California Superior Court has previously ordered half the SF Weekly’s advertising revenues diverted into an independent bank account, and placed a lien on New Times’ interests in its subsidiaries to protect the Bay Guardian’s interests.


 


Andy Van De Voorde, spokesperson for VVM, didn’t respond to an email requesting comment. 

Ammiano property tax bill passes key committee

12

A bill by Assemblymember Tom Ammiano that would have a huge impact on the state’s budget and close a serious loophole in Prop. 13 cleared the Revenue and Taxation Committee today. AB 2492 won approval on a strict party-line 6-3 vote, with every Democrat in favor and every Republican opposed.


The measure is brilliant: It doesn’t undo Prop. 13 (which a lot of us would love to see, but is politically almost impossible). Instead, it simply defines property transfer in a way that forces commercial property owners to play by the same rules as everyone else.


It would bring in billions for the state — and has a great political twist. Homeowners, for better or for worse, are a powerful voting bloc — and although there hasn’t been much talk about it, over the years, residential property has had to shoulder more and more of the total tax burden. So if Ammiano can keep this debate alive, those more conservative homeowners who would never accept a change in Prop. 13 that might undermine their precious tax break might slowly come to realize that the law, as it’s written, is screwing them. (It’s particularly screwing people who brought property at the height of the boom, and are paying taxes far higher than their neighbors who bought a few years earlier.)


Ammiano told me he was encourged by the vote. The bill now goes to Appropriations, which shouldn’t be a problem since it won’t cost the state anything. And in a few weeks, it will be on the Assembly floor.


I don’t expect this governor to sign it, but if he vetos, it could be a great campaign issue — the Republicans are on the side of big landlords — and against homeowners.


By the way, our old pal Matt Smith at SF Weekly decided to take a swipe at me and the Guardian for our support for AB 2492, arguing that somehow it would benefit those of us who own homes. It’s a refrain I’ve heard from Smith before, and in the caption on his blog picture he talks about “getting in the game early and pulling up the ladder behind you.” I guess that’s about my opposition to more condos for millionaires, which has nothing to do with anything and no basis in reality. Building market-rate housing isn’t going to do anything to help middle-class people (and I assume Matt Smith falls in that category) buy homes in San Francisco.


The point of his blog is that we’re somehow pushing to protect our privileged position under Prop. 13. But anyone who knows me (and reads the Guardian) knows that’s nuts: I have long advocated the complete repeal of Prop. 13, and I’m one of the few people in town who wants higher taxes on myself. Besides, the Guardian’s owners, Bruce Brugmann and Jean Dibble, also own the commerical office building where we do business. So anything that could raise taxes on commerical landlords would directly affect the paper –and we still support it.


I called Smith today to give him a hard time about his item; you can accuse me of a lot of things, and attack my political positions (that’s easy; there are a lot of them, and some are pretty far out there). But don’t say I want to preserve my own (relatively) low property taxes, because that’s demonstrably wrong.


I’ll give Smith credit — he listened to me and reported my comments. But we could have avoided all of this if he’d just called me first.

SFPD’s Capt. McDonough defends rogue cops

15

The San Francisco Police Department has steadfastly tried to ignore back-to-back cover stories in the Bay Guardian and SF Weekly that detailed the campaign of harassment and brutality against nightclubs and parties in SoMa by a pair of undercover cops.

The fact that those two cops – SFPC Officer Larry Bertrand and state agent Michelle Ott – have reportedly been absent from the scene in recent weeks might indicate that the department has heeded the outcry and put a leash on them. But now, in the “Captain’s Comments” in today’s Southern Station Newsletter, Capt. Daniel McDonough – who, along with Commander James Dudley, is believed by nightlife advocates to be behind the crackdown – has issued a full-throated defense of the pair’s actions.

Despite the fact that those actions (including repeated and selective harassment of certain clubs, illegal property seizures, threats and retaliation against complainants, and unnecessary force) have resulted in multiple legal actions against the city, McDonough claims they have somehow prevented unspecified “problems” and “violence and disorder.”

That negative claim is impossible to prove or disprove, but it’s certainly true that it was the arrival of aggressive cops at a January party that we wrote about that precipitated the “violence and disorder” that night.

McDonough writes, in full: 

There has been a recent deluge of articles about Nightlife in the Southern District.  The articles particularly focused on two fine individuals, Officer Bertrand of Southern Station and Agent Ott of the Alcoholic Beverage Commission. (ABC) 

One thing the articles didn’t have to focus on was the amount of violence occurring in the District at the late night venues.  This I believe has been directly related to the good work of these dedicated Officers.  In conjunction with the members of Southern Station, Officer Bertrand and Agent Ott would regularly inspect nightclubs and bars to ensure compliance with laws and codes that have been enacted to have an orderly establishment and to also stop the rampant amount of unpermitted parties that would arguably cause problems.  Because of their diligence and professionalism the amount of violence and disorder has been reduced.  Establishments that routinely would have numerous calls for services started to take responsibility to handle the influx of people and establish security procedures.  The benefits reaped by the citizens of San Francisco by the actions of Officer Bertrand and Agent Ott are measured in the lack of homicides shootings and knifings that haven’t occurred because of their good work.  They are to be commended.  I would also like to thank all of those establishment owners who communicate to me their positive relationships with those two officers.

Community Meeting 

Wednesday April 21 2010 6pm

Community Room

South Beach Harbor Pier 40

Judge sets hearing on contempt order for SF Weekly’s bank

7

Superior Court Presiding Judge James McBride April 1 granted a motion by the San Francisco Bay Guardian to set a hearing for the Bank of Montreal, the lead bank for the SF Weekly and its parent chain, to show cause why it should not be held in contempt of court for interfering with a judge’s order in the Guardian’s attempt to collect on its $2l million plus judgment in a 2008 predatory pricing trial.


McBride set the hearing for April 30 and said that he would not hear the case but would assign another judge to hear it.


He said at the beginning of his remarks that the Guardian in its briefs had established a prima facie case for a hearing.
After hearing oral arguments from Guardian attorneys Richard Hill and Jay Adkisson, and Bank of Montreal attorney
Dan Falk, McBride ruled in favor of the Guardian’s motion.


The motion addresses the latest twist in the efforts by the Weekly’s parent company, Village Voice Media, to duck payment of the judgment. For more than two years, since a jury ruled in the Guardian’s favor, VVM and the Weekly have been hiding behind a complex corporate structure and a cozy relationship with a banking syndicate and have refused to pay the debt.


The Guardian has seized two of the Weekly’s vehicles and the rent that subtenants pay the Weekly, and on March 9th, Court Commissioner Everette A. Hewlett Jr. ordered the Weekly to turn over half of its ad revenue to the Guardian.


The Guardian contacted the Weekly’s advertisers and advised them of the order. But, according to the Guardian brief, “after BMO received notice of the 9 March 2010 order, it began contacting all of the advertisers subject to the Assignment Order and instructed them to disregard that order and make payments directly to BMO.”


The Bank of Montreal, which heads a banking syndicate that has helped finance VVM’s expansion over the years, argues that VVM owes $77 million on a loan, and on March 12th, the syndicate declared the loan in default. That, the bank argues, means that BMO gets all of VVM’s money and that the Guardian is second in line.


However, the chain was valued just two years ago at $191 million, and under California law, BMO is required to marshal the assets of VVM – that is, to do an inventory of what the company owns and what it’s worth – so that other debtors can be paid.


“I have three times requested in writing to BMO that they marshal the assets of SF Weekly LP and New Times Media LLC, however BMO has never responded,” Adkisson stated in his court filing.


Hewlett has already said in open court that “it is possible that [BOM is] in contempt of court.”


The Guardian will be back in court April 14th asking that a receiver be appointed to take control of SF Weekly’s finances.


The banks in the syndicate that are holding the VVM debt (as of March, 2009) are Bank of Montreal, U.S. Bank, Wells Fargo, WestLB AG, Rabobank, BNP Paribas, and Brown Brothers Harrimann. You can read Adkisson’s filing here (PDF)

Newsom wants more authority for party-crashing cops

12

At a time of rising concern about police crackdowns on San Francisco nightlife – including the use of unprovoked brutality, selective harassment, and punitive property seizures – it would seem a strange time to call for abolishing the Entertainment Commission and returning its authority to the San Francisco Police Department. But Mayor Gavin Newsom has now called for doing just that.

Newsom last week refused calls to get involved with mediating a nasty dispute between the SFPD and nightlife workers and advocates, who have filed claims and lawsuits against the city alleging improper police behavior, including a racketeering lawsuit and another lawsuit alleging police retribution against promoter Arash Ghanadan for complaining about mistreatment, for which Police Chief George Gascon is scheduled for a video deposition on April 8 (other depositions involving Gascon and the undercover partners Officer Larry Bertrand and ABC agent Michelle Ott will follow in coming weeks).

The police crackdown, the subject of recent cover stories in both the Guardian and the SF Weekly, has been underway for more than a year and nightlife advocates say it is reminiscent of the arbitrary police enforcement against disfavored clubs and parties in the late 1990s that led to the creation of the Entertainment Commission in the first place.

Making Newsom’s new stance even more puzzling, the commission has been responsive to the overhyped criticism of the commission by nightlife critics, some politicians, and the San Francisco Chronicle and Examimer. The commission voted last night to suspend Suede for shooting out front, a decision that Board of Supervisors President David Chiu (whose North Beach constituents have put pressure on him to rein in problem clubs) cast as a litmus test for the commission, and one it apparently passed. In addition, Commissioner Terrance Alan, who had been criticized for his conflicts of interest, last week announced that he will be stepping down from the commission when his term expires in June. 

“Isn’t anyone paying attention? It’s really got me baffled,” Alan said of the continuing calls to kill the commission. “I don’t know what this is about.”

He isn’t the only one. Commissioner Jim Meko, who had been critical of the commission’s industry-heavy makeup and reluctance to take aggressive action against problem clubs, told the Chronicle that turning permitting and enforcement over to the cops would be much worse.

Sen. Mark Leno, who as a supervisor created the commission back in 2002, agrees. He told us that he opposes the change proposed by Newsom.

“I strongly believe the original reasons for the creation of the commission, an inherent conflict in having the same body that enforces licensing to also issue those licenses, remains,” Leno told us.

Leno also noted that it was only in November that the Board of Supervisors voted to give the commission more authority to suspend the licenses of problem clubs, which they used with Suede, delivering the maximum penalty possible: a 30-day suspension.  

“If they just gave them additional authority, let’s give it a little time to work out before we talk about disbanding them,” Leno said. He also noted that it’s strange to see the mayor and supervisors criticizing the industry-heavy makeup of the commission considering that they’re the one who make those appointments: “That’s in the hands of the board and the mayor.”

Neither Chiu nor Newsom have returned our calls seeking comment, but several Guardian sources with long involvement in the conflict between the SFPD and the nightlife community say the cops – particularly hardasses like Commander James Dudley, who has often made comments critical of nightlife and its promoters — have long sought to have more power over nightclub, private parties, and the citizens who attend them.

But until there is a fair airing of and resolution to the trend of overzealous and belligerent enforcement actions by the SFPD, any move to give that agency more authority to kill the fun in San Francisco is likely to be met with heavy opposition.

 

UPDATE: David Chiu just got back to me, saying Newsom hadn’t consulted him before taking his stand and telling us, “I don’t agree that we need to abolish the commission.”

But as the supervisor from a sometimes-rowdy district that includes a couple of clubs where violence has occurred, Chiu does want to make some changes in how nightlife is governed in San Francisco, seeing a conflict between the Entertainment Commission’s role promoting nightlife and regulating it: “The Entertainment Commission has conflicting missions.”

Chiu said he would like to see nightclub permitting turned over to a body like the Interdepartmental Staff Committee on Traffic and Transportation (ISCOTT), which handles street closure permits and has representatives from several city agencies. It would exist alongside the Entertainment Commission, whose work Chiu said has become “overly politicized” in recent months.

At the same time, Chiu said, “I generally agree with” the Guardian’s coverage of the War of Fun, and said that he’s helped facilitate meetings with SFPD to deal with issues like the inappropriate police seizures of DJ’s laptops: “From my perspective, I want to make sure people’s civil rights aren’t being violated.”

But Chiu said the problem seems to lie more with the California Department of Alcoholic Beverage Control than the SFPD: “It appears the ABC has been inappropriately cracking down on the mainstream venues that are trying to do the right thing.”

Chiu said there isn’t a pressing need to act quickly on the Entertainment Commission issue and said that he would work with Leno on the solution, something Leno confirmed, telling us, “I have had some conversations with David Chiu and I’m going to get more involved.”

Us and the Weekly: It wasn’t personal

4

I really liked The Stranger’s article a couple of weeks ago about our battle with SF Weekly and it’s corporate parent, Village Voice Media. Eli Sanders is a good reporter, and he got most of it right.


But he did the same thing that a lot of people covering this legal battle have done, and it’s starting to get annoying. Everyone seems to want to play this as a battle of egos between Guardian Editor and Publisher Bruce Brugmann and VVM Executive Editor Mike Lacey. It’s as if we filed suit against them — and endured years of litigation and now collection efforts — just out of spite. It’s as if we were willing to go through all this just because Bruce didn’t like Mike Lacey.


Here’s Sanders’ spin:


These two men have hated each other for decades, but with increasing venom since 1995, when Lacey showed up in San Francisco in cowboy boots to announce that he and his partners had just purchased the tiny SF Weekly and planned to make a huge success of it.


The thing is, Bruce and Mike haven’t hated each other for decades. They weren’t terribly close, but they got along fine — and sometimes, they were political allies. In 1997, three years AFTER Lacey’s company bought our competitor, SF Weekly, the two joined forces at an Association of Alternative Newsweeklies convention in Montreal to help push a bylaws measure that kept daily newspapers out of our trade association. And as the picture above shows, they were almost, sorta, kinda pals. At least for a few minutes.


The last thing we wanted to do was sue these guys. It wasn’t personal; we had no choice. Sure, the Guardian and VVM have very different approaches to journalism and politics, but we’d have been happy to compete with them — the way newspapers with different viewpoints should, on a level playing field. And for all the rhetoric on all sides, the legal animosity only started when the Weekly actively tried to put us out of business by selling ads below cost.


I dunno; the VVM people have been awfully rude to me of late, and I guess they like this mano-a-mano shit, but the reality is: We sued to stop illegal conduct that was threatening our business. That’s the real story.


 

Lawsuit could expose SFPD-ABC collaboration

43

Imminent legal actions against San Francisco, its Police Department, and the California Department of Alcohol Beverage Control could reveal whether a pair of undercover agents went rogue in harassing nightclubs and aggressively busting parties or whether they were acting at the direction of top officials.

Attorney Mark Webb – whose work on a racketeering lawsuit against the policing agencies was the subject of cover stories in the Guardian and the SF Weekly – told us that on Monday, he plans to file that racketeering claim against the city (which will then become a lawsuit if the city rejects it, as it routinely does) and a related lawsuit in Superior Court involving the rough, unnecessary arrest of bartender Javier Magallon and harassment of Mike Quan, owner of The Room, Playbar, and Mist. Narrated surveillance video associated with the case was posted on YouTube yesterday.

Central figures in the lawsuit are SFPD Officer Larry Bertrand and ABC agent Michelle Ott, plain-clothes partners in an aggressive crackdown on nightlife over the last year. Webb said he plans to immediately seek police records and communications and to depose Bertrand and Ott to try to determine who ordered the crackdown, why, and when higher-ups became aware of their aggressive tactics.

“I would like to know if Bertrand is being sent places or if he’s just a lone wolf, and the CADs will show that,” Webb said, referring to computer-assisted dispatch reports that track activities and communications involving individual officers. Those and other records that Webb can access through the court-ordered discovery process could finally shed light on what’s behind the crackdown.

Webb had sought to have Mayor Gavin Newsom mediate this dispute before the cases were filed, saying the racketeering lawsuit will be expensive and divisive, and all the nightlife community really wants is an end to the harassment and assurance that it wouldn’t restart once the media attention passes. And Webb did have conversations with top Newsom aide Mike Farrah and with Nicolas King, Newsom’s liaison to the SFPD, but neither indicated that Newsom was willing to get personally involved. Newsom spokesperson Tony Winnicker also told us Newsom preferred to let Police Chief George Gascon handle the matter.

So Webb said he now plans to move forward with litigation. “If they’re not answering the call at City Hall, let’s get into the arena,” Webb told us.

Webb is an experienced litigator who has won multi-million judgments and who started his career in New York City helping prosecute Racketeer Influenced and Corrupt Organizations (RICO) Act cases against the mob, and now he plans to use RICO laws against what he says is a city-state enterprise to interfere with lawful nightlife activities in San Francisco.

“Webb gets it. It’s a weird mentality, the really good trial attorneys, and Webb is that,” said attorney Mark Rennie, who has spent decades working with the city’s entertainment industry and has helped advise Webb on the case.

Among the parties involved in the RICO claim are those involved in Webb’s other lawsuit against the city, as well as Club Caliente, its owner Maurice Salinas, Azul, its owner John Bauer, New York nightclub owners Phillipe Rieser and David Brinkley, Vessel, and Siobhan Hefferman, who was arrested by Bertrand and Ott at a private party. Others may be added soon.

Great American Music Hall, Slims, and DNA Lounge also claim to have been harassed by the ABC and have been involved in several meetings that led up to Webb’s lawsuit, but they’re not taking part in the lawsuit yet, partially because they fear retribution from the ABC.

“I probably would have jumped in, but I don’t want to walk into a hearing suing the ABC,” Slims and GAMH general manager Dawn Holliday told us, referring to Slims’ April 1 appeals hearing stemming from noise complaint citations triggered by one particularly cranky neighbor.

DNA Lounge, which has regularly documented the harassment campaign on its blog, decided to wait with the other two clubs before joining the suit. “We thought it was important to stand as a community and there were too many venues that were worried about retribution from the police or ABC if they joined the suit,” DNA general manager Barry Synoground told us. 

But Synoground said he’s anxious to see what Webb’s suit unearths, noting that Bertrand and Ott haven’t been visible in recent weeks as complaints against them went public, and saying he thinks Commander James Dudley and other top SFPD brass are really driving this crackdown: “We may have taken one of his tools off the street, but he’ll find another.”

Synoground said most SFPD officers are very professional and they have no problem working with them, but Bertrand and Ott have unnecessarily and aggressively interfered with their business. Holliday goes even further in praising the SFPD, saying she has a good relationship with Bertrand and everyone in Southern Station, blaming her clubs’ troubles on the ABC and the unwillingness of top city officials to stand up for them.

So the internal SFPD communications, and those between the city and the ABC, could prove revealing. “On April 17, I can send out subpoenas to the cops and I can take Bertrand’s deposition 30 days from Monday,” Webb said, citing statutory response periods.  

Webb expressed confidence in his case and said the police shakedowns and harassment fit well with the RICO statute, which has been used against a wide variety of enterprises over the years, including government agencies.

In fact, an American Bar Association book, “Civil RICO: A definitive guide,” by Gregory P. Joseph, seems to support Webb’s confidence. “Any person injured in his business or property by reason of a violation of Section 1962 of this chapter may sue therefore in any appropriate United States district court and shall recover threefold the damages he sustains and the costs of the suit, including reasonable attorney fees.’ This simple sentence has generated an avalanche of litigation,” the book begins.

It makes clear the intent of Congress that RICO laws “shall be liberally construed to effectuate the remedial purposes” of targeted individual seeking protection from harassment. A 1981 U.S. Supreme Court ruling (U.S. vs. Turkette) made clear even legitimate enterprises such as government agencies could be sued, and a 1994 ruling (NOW vs. Scheidler) settled a long dispute over whether the racketeering needed to be economically motivated, finding that it doesn’t.

Racketeering was defined by Congress as simply committing any of a long list of “predicate acts,” which include violence or the threat of violence, kidnapping (including false arrest), extortion, physical interference with business, malicious prosecution, and abuse of authority, all of which Webb says apply in his case. He is also reviewing the Guardian’s Death of Fun coverage from the last four years to find more examples of predicate acts involving the SFPD.

The hardest part of proving his case could be to show that it interfered with interstate commerce, although Webb said that’s met by efforts by Bertrand and Ott to prevent Rieser and Brinkley from transferring a liquor license from New York. But “Civil RICO” also said caselaw has established that “RICO requires no more than a slight effect upon interstate commerce,” citing the 1989 case U.S. vs. Doherty.

Like many who have had run-ins with Bertrand and Ott, Webb said he’s anxious to see what he finds in discovery: “What’s fascinating about this is you can uncover the whole system.”

The new War on Fun

46

news@sfbg.com

For several years, the Guardian has been running regular stories chronicling what we’ve dubbed the Death of Fun, a trend of official crackdowns and shakedowns on people who throw parties and festivals in San Francisco. In the last year, that trend has started to morph into an often brutal War on Fun, with a growing list of atrocities and casualties associated with this overzealous new approach to killing the city’s entertainment industry.

Why this is happening is baffling to those most affected: nightclub owners and workers, party promoters, DJs and VJs, fundraising activists, and people just out to have a good time without being harassed by a cop. But in recent months, we’ve learned much more about what’s happening and who the main perpetrators are.

Two undercover enforcers have been at the center of just about every recent case of nightclubs or private parties being raided without warrants and aggressively shut down, their patrons roughed up (see “Fun under siege,” 4/21/09) and their money, booze, and equipment punitively seized “as evidence” (see “Police seize DJs laptops,” 11/24/09) even though few of these raids result in charges being filed in court.

Officer Larry Bertrand of the San Francisco Police Department’s Southern Station and Michelle Ott, an agent with the California Department of Alcoholic Beverage Control, are plainclothes partners who spend their weekends undercover, crashing parties, harassing disfavored nightclubs, brutalizing party-goers, and trying to send the unmistakable message that they’re in charge of San Francisco nightlife. Neither responded to our interview requests.

Isolated incidents of intolerant cops and NIMBY citizens who repeatedly complain about certain clubs or festivals has been a problem for years (see “Death of fun,” 5/24/06 and “Death of fun, the sequel,” 4/24/07). Top city officials have opted to cancel events such as Halloween in the Castro District rather than try to manage them better, and the nightlife community has tried to organize in defense of its interests (see “Fighting for the right to party,” 7/1/08) with mixed results.

But the personal War of Fun by Bertrand and Ott seems to have galvanized and united the nightlife and festival community like never before, leading to the creation of a new California Music and Culture Association and prompting threats of a federal lawsuit alleging the ABC-SFPD collaboration is a racketeering scheme designed to harass, disrupt, and extort people engaged in otherwise lawful activity.

The myriad horror stories associated with Bertrand and Ott have also finally begun to draw attention from the Mayor’s Office, which has quietly pushed the SFPD to rein in Bertrand and change its policies on raiding parties and seizing property. State Sen. Mark Leno also has gotten involved, brokering a March 12 meeting between club owners and Steve Hardy, director of ABC (which, in addition to cracking down on nightclubs — see “Busting bars,” 6/23/09 — has recently announced a campaign against fruit-infused liquor).

“They were going to see how they could unwind this a bit,” Leno told us, adding that he was “infuriated” by stories of abusive treatment of the public. “The fear that it spreads through the community is unacceptable.”

The question now is what Hardy, Mayor Gavin Newsom, and Police Chief George Gascón — who has ordered some crackdowns and wants greater authority to discipline problem officers — is going to do about it.

 

CHAOS AT A STUDENT PARTY

It was after midnight on Jan. 31 when Krystal Peak, a journalist with San Francisco State University’s Golden Gate Xpress, received a call from her managing editor. There was a commotion and a swarm of police cars outside a student party at Seventh and Minna streets near her home, and she was asked to investigate.

She came upon the aftermath of a melee between police and partygoers that had taken place after a fundraising event at a SoMa warehouse art space was upended. The benefit was organized to raise legal funds for students who staged a building occupation at the University of California at Berkeley, in defiance of budget cuts.

The event was clearly chaotic, and it’s hard to sort out exactly what happened and when. City officials say the partiers were throwing bottles and firecrackers at the police; people at the event say the cops started it all.

But the tales partygoers tell about the behavior of Bertrand and Ott, the undercover enforcers, are similar to a series of other stories involving the pair, stories published in the Guardian and elsewhere.

There had been multiple arrests by the time Peak arrived on the scene. Numerous witnesses asserted that things were going along without incident until a fire marshal arrived in response to a complaint, and in short order, two officers who’d been there in plainclothes for hours — Bertrand and Ott — began shouting, tackling people, and kicking in doors.

Police Chief George Gascón acknowledged that the department has been targeting underground parties. “We get a lot of resident complaints about it,” he said in a recent Guardian interview. “We’re talking about a lot of the underground parties, or the parties where the promoters are exceeding their authorities to a number of people.”

Several hundred attended this particular party. Of the 11 people arrested, eight were either detained or cited and released. None faced underage drinking or drug charges. At least five were charged with resisting arrest. One individual was charged with vandalism, two were charged with battery on an officer, and two detained for being drunk in public.

Peak began photographing the scene: busted-up chairs, uniformed officers guarding the entrance, police cars everywhere. She zoomed her lens to capture the wreckage inside. None of the uniformed officers seemed to have a problem with her — but when she spotted the undercover officers with exposed badges, that changed.

The cops broke through the door, yelling. “They said, ‘This is an investigation, you’re not allowed to be here.'<0x2009> she said. “We told them we were with the press.” They threatened to arrest her.

Shortly after, the plainclothes officers crossed in front of her to an unmarked car. She took another picture. Bertrand, a tall guy with a shaved head, allegedly turned and grabbed her arm, and both officers shouted at her. “[Ott] said to me, ‘Your flash has impeded my investigation,'” Peak recounted. She was cuffed and arrested on the spot, and her camera was confiscated.

She was cited for obstruction of justice, but the charges were dropped. And she got her camera back — but says the SD memory card, where all the photos were stored — was missing.

“I flipped [the camera] open … and found the SD card was missing,” she said. She asked Bertrand where it was. “He said, ‘I don’t know what you’re talking about,'” Peak recalled. Bertrand, she recalled, then looked around at a group of officers watching the exchange, and announced, “This woman is refusing to leave. I’m going to have to re-arrest her.” Ott appeared, according to Peak, and insisted that there was no evidence the memory card had been in the camera in the first place.

“My camera will not ignite a flash unless there’s a memory card in there,” Peak explained. In the end, she left empty-handed — without photos of the undercover officers.

 

BUSTING DOORS

Earlier, when the party was in full swing, a 24-year-old California State University, Fullerton student visiting from Los Angeles says when the fire marshal entered, Bertrand flashed his badge, yelling at everybody to get out. “It was really aggressive from the get-go,” said the Fullerton student, who spoke on condition of anonymity because he had a pending legal case. “It’s very hard for me to describe the intensity to which this guy was busting down doors.”

Later, the young man from L.A. said, he was following people who left in a rush, and ran to catch up. “Shortly after, I felt a blow to the back right of my head,” he said. “My glasses flew off, and I was tackled to the ground. My forehead was being pushed straight into the ground and they were holding my hair. I kept repeating … please, I can’t see — I’m legally blind. I thought three or four officers were on top of me, and they were saying, ‘Fuck you, you little anarchist punk.'<0x2009>”

That’s when he said he felt a sensation like “a bunch of really intense bee stings on my left side, just above my hipbone.” He thought he was Tasered — and photos he showed us depict a skin burn. SFPD officers are not authorized to carry Tasers.

“It sounds like a stun gun, not a Taser gun,” Ken Cooper, a firearms and Taser instructor based in New York, noted when the incident was described to him.

When we shared the photos with SFPD’s media relations department, Lt. Lyn Tomioka noted, “I can tell you that we do not have any tool that would produce the type of wounds shown in the picture that you attached, or produce a stinging sensation.”

The L.A. visitor said he was delivered this explanation from an officer while in the holding cell: “One of your anarchist buddies must’ve had a Taser, ran over to you trying to get one of our officers, got you instead, and ran away.”

Cooper Brislain, a Web developer from Santa Cruz, told us his iMac was destroyed that night. A friend of the owners of the art space, he was there doing video mixing for the party, he explained. After the trouble started, he began carrying his computer and mixing equipment toward the door. “The uniformed officers were going to let me go. I told them, ‘I just came here to perform.’ They seemed OK,” he said. Then he encountered Bertrand.

He … grabbed me by the collar, led me over toward the wall, and sat me down,” Brislain told us. He says Bertrand and Ott seized his computer. Brislain says no charges were filed against him.

The morning after, he found that his computer had been smashed up. His friends found it in pieces at the bottom of the stairs. To this day, he says he has not been able to retrieve his ID, which was seized that night. “I tried calling [Bertrand] on his extension to leave a message and never heard back,” he says. “They told me he probably wouldn’t return voicemails.” The District Attorney’s Office has a different perspective. D.A. spokesperson Brian Buckelew said the partygoers were drunk and “going nuts on police.” People were throwing firecrackers, he said. “It obviously got out of hand, and people were throwing bottles at police,” he said.

The student from L.A. allegedly shoved a female officer, Buckelew said. According to the report, he said, police officers were taking someone into custody, and he tried to pull them free.

Nevertheless, even Chief Gascón agrees that it’s not okay to destroy someone’s personal property. “If in fact the allegations were proven to be the case that an officer took somebody’s laptop and threw it down the stairs,” Gascón told us, “that would be inappropriate, and that officer would be sanctioned accordingly.” He noted that he met with an attorney from the Electronic Frontier Foundation about a recurring trend of officers — Bertrand in particular — seizing DJ laptops at underground parties. “We’ve met with them and we’ve agreed to actually tighten up the protocols in how this would be handled,” Gascón noted.

 

A RICO SUIT

The list of local nightclub clubs that have been recently targeted by Bertrand and Ott or subjected to ABC sanctions is long. It includes Great American Music Hall, Slim’s, DNA Lounge, Mist, Whisper, the Room, Vessel, Azul, Butter, and Club Caliente (which closed down after its mostly Latino customers were scared away by repeated raids).

“Using the now familiar pattern and ruse of ABC authority, these raids have been without warrant and without probable cause, under the pretext of finding liquor violations,” attorney Mark Webb wrote in a claim against the city, describing the harassment of Caliente owner Maurice Salinas and later adding, “Despite numerous raids, the invading officers [Bertrand and Ott] managed to ‘uncover’ a single infraction: one customer used his brother’s ID card, claiming he was over 21 to gain entry. For this reason, Mr. Salinas was cited and fined, bullied, intimidated, and yelled at on the spot.”

Webb said such behavior isn’t legitimate police work, but unlawful harassment. In fact, this experienced litigator said it’s far closer to the shakedowns and extortion rackets familiar to him from the start of his legal career in the late 1970s prosecuting organized crime cases in New York City.

That’s why he’s threatening to bring a novel lawsuit against the city and ABC under federal Racketeer Influenced and Corrupt Organization (RICO) Act, a law designed go after the mob, but which has since been adapted to target entities ranging from the tobacco industry to the Los Angeles Police Department.

Webb told us that interference with legitimate business operations, such as running a nightclub, is the essence of RICO suits. As part of the case, Webb plans to submit a surveillance video that shows Bertrand kneeling on the neck of bartender Javier Magallon from The Room and twisting his arm. Webb gave us a copy of the video.

Another element of making a RICO case is the use of intimidation and retaliation against those who complain — which was central to a March 17 SF Weekly story about promoter Arash Ghanadan being inappropriately singled out for arrest by Bertrand as retaliation for filing a complaint against the officer with the Office of Citizen Complaints.

Webb says he has a strong case that he intends to file soon, but that most of his clients just want the SFPD to rein in Bertrand and stop facilitating ABC actions. “I want to have a sit-down with Gavin Newsom,” Webb said. “I am calling on Mayor Newsom to come in and mediate what would be an expensive, divisive fight that will generate national interest … I think this thing can go way quickly without litigation.”

Newsom press secretary Tony Winnicker, who said Newsom has brought concerns about Bertrand to the chief’s attention, didn’t immediately embrace Webb’s offer. “The mayor would rather leave it to the chief,” Winnicker said.

So the question for Gascón is whether he’s willing to take on the cowboy cops within the SFPD’s ranks. After all, Bertrand is also on the San Francisco Police Officers Association Board of Directors.

The nightlife community is organized like never before and plotting its next move in fighting a war it didn’t initiate and barely understands. Whether that war continues now seems to be a question for the party crashers and their supervisors.

End the nightlife crackdown

0

Harassing parties and clubs shouldn’t be a priority for a cash-strapped city’s police department

EDITORIAL Police Chief George Gascón has asked for more authority to crack down on rogue cops, and has vowed to clean up the small handful of bad actors who are giving the department an ugly reputation for violence and abuse. But before San Franciscans are going to trust the chief, he’s got to show some evidence that he’s serious — and cleaning up the mess that is Southern Station’s crackdown on nightlife would be a great place to start.

As Rebecca Bowe and Steven T. Jones report in this issue, the SFPD seems to be waging war on parties, clubs, and events, particularly in the SoMa area. And it’s not pretty. Undercover cops sneak into events then call in the troops, who make multiple dubious arrests and, according to widespread accounts, seize or destroy laptops and other DJ equipment and beat up and abuse participants.

It’s a pointless waste of law enforcement resources. In a city where a significant number of murders remain unsolved, where merchants complain about street-level crimes that could easily be addressed by foot patrols, and where the chief complains that he lacks the funds to address all the problems he’s facing, we can’t fathom why stopping nightlife is a top police priority. At the very worst, some participants and promoters might be guilty of holding an event without the proper permits — but nobody’s getting robbed, assaulted, or killed.

And the tactics used by the officers are needlessly violent, sometimes brutal. According to lawsuits and eyewitness accounts, SFPD officers have smashed laptops, kicked and beaten partygoers, and arrested people with little cause. A San Francisco lawyer is preparing to file a RICO Act lawsuit against the city, charging that the police are conspiring with state liquor-control officials to harass people engaged in lawful activity.

The policy directives behind this appear to come from Cdr. James Dudley, the former captain of Southern Station, and the officer most directly responsible for the crackdown is Larry Bertrand. Paired with an officer from the state Department of Alcoholic Beverage Control, Bertrand attends parties in plain clothes, sometimes dressed as a raver.

Complaints about Bertrand and the crackdowns are piling up. We’ve been writing about it for months. SF Weekly picked up the story last week. There are complaints filed with the city’s Office of Citizen Complaints and lawsuits pending. The chief may not have known about the problems at the crime lab, but he has to be aware of what Bertrand is up to.

Gascón should direct Dudley and Bertrand to back off — to halt the undercover work, end the seizure of personal property such as laptops and DJ gear (it’s not a crime to own a computer or speaker system), and work with the clubs and the nightlife community to devise reasonable systems for dealing with permit issues. And he needs to do it publicly, to let San Franciscans know that he’s addressing the issue.

Mayor Gavin Newsom needs to get involved too, and make a clear public statement that harassing parties and clubs isn’t the top priority for a cash-strapped city’s police department.

End the nightlife crackdown

5

EDITORIAL Police Chief George Gascón has asked for more authority to crack down on rogue cops, and has vowed to clean up the small handful of bad actors who are giving the department an ugly reputation for violence and abuse. But before San Franciscans are going to trust the chief, he’s got to show some evidence that he’s serious — and cleaning up the mess that is Southern Station’s crackdown on nightlife would be a great place to start.

As Rebecca Bowe and Steven T. Jones report in this issue, the SFPD seems to be waging war on parties, clubs, and events, particularly in the SoMa area. And it’s not pretty. Undercover cops sneak into events then call in the troops, who make multiple dubious arrests and, according to widespread accounts, seize or destroy laptops and other DJ equipment and beat up and abuse participants.

It’s a pointless waste of law enforcement resources. In a city where a significant number of murders remain unsolved, where merchants complain about street-level crimes that could easily be addressed by foot patrols, and where the chief complains that he lacks the funds to address all the problems he’s facing, we can’t fathom why stopping nightlife is a top police priority. At the very worst, some participants and promoters might be guilty of holding an event without the proper permits — but nobody’s getting robbed, assaulted, or killed.

And the tactics used by the officers are needlessly violent, sometimes brutal. According to lawsuits and eyewitness accounts, SFPD officers have smashed laptops, kicked and beaten partygoers, and arrested people with little cause. A San Francisco lawyer is preparing to file a RICO Act lawsuit against the city, charging that the police are conspiring with state liquor-control officials to harass people engaged in lawful activity.

The policy directives behind this appear to come from Cdr. James Dudley, the former captain of Southern Station, and the officer most directly responsible for the crackdown is Larry Bertrand. Paired with an officer from the state Department of Alcoholic Beverage Control, Bertrand attends parties in plain clothes, sometimes dressed as a raver.

Complaints about Bertrand and the crackdowns are piling up. We’ve been writing about it for months. SF Weekly picked up the story last week. There are complaints filed with the city’s Office of Citizen Complaints and lawsuits pending. The chief may not have known about the problems at the crime lab, but he has to be aware of what Bertrand is up to.

Gascón should direct Dudley and Bertrand to back off — to halt the undercover work, end the seizure of personal property such as laptops and DJ gear (it’s not a crime to own a computer or speaker system), and work with the clubs and the nightlife community to devise reasonable systems for dealing with permit issues. And he needs to do it publicly, to let San Franciscans know that he’s addressing the issue.

Mayor Gavin Newsom needs to get involved too, and make a clear public statement that harassing parties and clubs isn’t the top priority for a cash-strapped city’s police department.

 

Banks declare SF Weekly and parent company in loan default

7

The Bay Guardian’s lawsuit against SF Weekly and its parent company took a dramatic turn this week when a banking syndicate announced that Village Voice Media has defaulted on its $77 million loan.


San Francisco Superior Court Commissioner Everett A. Hewlett, Jr. also ordered that all of the Weekly’s advertising income be sequestered in an account designated by the Guardian and held there until April 5, when the Guardian will ask the court to appoint a receiver to take control of the Weekly’s assets.


The Weekly and its parent owe the Guardian more than $21 million as the result of a 2008 lawsuit verdict. A San Francisco jury found that the Weekly had sold ads below cost in an effort to damage the Guardian.


The case is on appeal, but the Weekly and Village Voice Media haven’t posted an appeal bond — essentially an insurance policy that would guarantee payment of the judgment. So the Guardian has the legal right to collect the money.
VVM has been hiding its money behind a complex corporate structure,
but in recent weeks the Guardian has won a series of court decisions that have allowed us to seize two Weekly vehicles, all of the income that the newspaper’s subtenants pay for leasing office space, and 50 percent of the Weekly’s ad revenue (and 100 percent of the revenue from credit card payments).


In an effort to block us from collecting that revenue, the Weekly filed a motion March 16 seeking a restraining order that would have stopped the Guardian from contacting Weekly advertisers. The court refused to issue the order – but as part of its application, VVM disclosed some rather dramatic facts.


Among the exhibits filed in court: A March 12 letter from the Bank of Montreal, which leads a banking syndicate that has helped VVM expand and advance its alternative newspaper empire. The letter, signed by Managing Director Thomas McGraw, states that because of the “recent economic downturn and the resulting financial difficulties,” VVM had been “unable to meet its amortization payments” and had been forced to renegotiate the loan in June, 2009. That new agreement had required that VVM send all of its profits — that is, “all revenue above its costs, plus a minimal operating cushion” — directly to the bank.


And now that the Guardian has been awarded a lien on all of the Village Voice papers and the right to half the Weekly’s income, the bank had declared VVM in default on the entire loan, which now stands at $77 million.


The default allows the bank to claim that it has the first right to any Weekly ad revenue, and VVM lawyer Randall Farrimond tried to make that argument to Commissioner Hewlett. But Hewlett was skeptical: “The Court never determined that the Bank of Montreal had any rights that had been adjudicated yet,” Hewlett said at a March 16 hearing. In fact, after hearing that the bank had sent its own letters to Weekly advertisers ordering them to send payments directly to the bank, Hewlett noted:


“Now, I’m not terribly sympathetic with Bank of Montreal doing what they did. “I mean it is possible that, absent some adjudication of their interests, that they are in contempt of court by interfering with the Court’s order.”


Hewlett said he had no intention of granting the restraining order or changing the essence of his earlier ruling — that the Guardian had the right to half SF Weekly’s income stream. But to save the advertisers from confusion over who to pay, he ordered that all money collected from advertisers be placed in a bank account chosen by the Guardian, in a bank that was not part of Bank of Montreal’s syndicate.


The Guardian will be back in court April 5 to ask for the appointment of a receiver, who would take control of the Weekly’s business operations and, under court guidance, divide any revenue between the Guardian and any other creditors.
In the meantime, VVM and the Bank of Montreal have asked a judge in Delaware – where SF Weekly is formally incorporated – to block collection efforts in California.


At a surprise hearing where the Guardian’s lawyers were given only five minutes warning and had no opportunity to present any evidence, the Delaware Chancery Court was nonetheless very skeptical of Bank of Montreal’s claims, and essentially ruled only to maintain the status quo until the Court could make a more informed decision.


The case continues to draw extensive news media interest; the Stranger, a Seattle alternative paper, ran a lengthy, detailed story on the case March 17.


You can read the key documents (including a declaration from Weekly publisher Josh Fromson and the bank letters) in the recent filing here. (PDF)

SF Weekly owes us half its ad revenue

6


 


The San Francisco Superior Court ruled March 9th that SF Weekly must begin making payments on the Bay Guardian judgment by turning over half of the revenues it receives from advertising sales.


 


Commissioner Everett A. Hewlett, Jr., entered an Assignment Order that requires the SF Weekly and all of its advertisers to immediately begin remitting advertising revenues to the Bay Guardian. The Assignment Order also requires SF Weekly’s credit card processing company to remit 100% of the credit card payments directly to Bay Guardian rather than to SF Weekly.


The Assignment Order is effective immediately. Additionally, SF Weekly has until Wednesday to turn over to the Bay Guardian a list of all its advertisers and the amounts that they currently owe to SF Weekly.


At a hearing on February 11, attorneys for SF Weekly opposed the assignment by arguing that if the court were to enter the Bay Guardian’s proposed Assignment Order, it might cause the Bank of Montreal to declare a default on a $80 million loan balance that SF Weekly and its parent company have guaranteed. Bank of Montreal is the primary lender on a $120 million credit line available to the Village Voice chain. SF Weekly has repeatedly attempted to use the Bank of Montreal loan as a shield to defeat Bay Guardian, however, the Court has repeatedly rejected that argument.


“We consider this to be a very significant step towards the collection of our judgment,” said the Bay Guardian’s Bruce Brugmann. “The Village Voice folks first claimed that we would never collect anything, then they claimed that we would never collect more than a few thousand dollars, but the amount that we will now be collecting is certainly very significant.”


Since the Village Voice chain has refused to post an appellate bond which would guarantee payment if the judgment is upheld on appeal, the Bay Guardian has continued to actively pursue the collection of the amount due as permitted by law where no bond has been posted.  Extraordinary attempts by the Village Voice chain to avoid the judgment, including filing a  lawsuit in Delaware that sought to stop all California collection proceedings, have  been unsuccessful in blocking the Bay Guardian’s collection efforts.


In recent weeks, the Bay Guardian has succeeded in collection efforts that involved auctioning off two of the SF Weekly’s vans, seizing monthly income that the SF Weekly was receiving from its subtenants, and placing a lien on the approximately 14 newspapers owned by New Times Media LLC nationwide.  Additional collection proceedings will be heard by various courts during the next couple of months unless the judgment of more than $20 million is paid.


 

SF Weekly mangles Mexican politics

1

The SF Weekly, in its continuing effort to make everything the progressives in San Francisco do look stupid, just stepped in a major turd. A piece by Matt Smith seeks to trash the supes for passing a resolution supporting Mexican electricity workers against an effort by the Mexican government to privatize the nation’s electricity system.

He notes:

However, the government of Mexico felt this one to be so egregious as to warrant fact-checking. As it happens there was no privatization. The government transferred Luz y Fuerza del Centro to a much larger power utility called the Comision Federal de Electricidad — which is, you guessed it, also government-run.

 His single source for that information? The (utterly unbiased, of course) Mexican consulate.

Well, John Ross, our Mexico City correspondent, who has lived there more more than 25 years, has written several books on Mexican politics and is nationally known an expert in the area, has written about this issue extensively. I just sent him Smith’s blog post, and here’s how he responded:

Consul general Carlos Felix Corona’s response to the Board of Supervisors resolution re Felipe Calderon’s efforts to break the mexican electricity workers union (SME) is disingenuous. The Luz y Fuerza Company was forced to buy electricity from the federal electicity commission (CFE) at an exorbitant price, with the costs then passed along to the consumer by presidential fiat. The CFE itself now buys a third of the electricity it generates from private corporations — in violation of the Mexican Constitutionl, which ascribes electricity generation as a state function, thus privatizing electricity generation in Mexico City and five other states in the center of the country. According to the SME, whose workers were forced out of the generating plants and which the Mexican Labor Commission has now stripped of its authority to represent the workers, Luz y Fuerza lines will now be sold off to W Communications, a Madrid-based transnational represented in Mexico by two ex-energy secretaries (Calderon himself is an ex energy secretary). W Communications is expected to install fiber optic cables on the old Luz y Fuerza lines. The Calderon administration will no doubt wait several months to seal this deal until the clamor about priviatization recedes. But the contracts have been signed, so don’t be fooled by the consul’s disingenuous response that Luz y Fuerza has not yet been privatized. Now that US unions and the SF Board of Supes have expressed their solidarity with the electricity workers, Felix Corona, a shill for calderon, seeks to bamboozle San Franciscans that all is honky dory South of the border and that protest marches that regularly turn out a quarter of a million Mexicans are just the work of a few malcontents  

So there’s another side to this story, Matt, and the consulate is hardly a trustworthy source.

 

We go after the Weekly’s ad revenue

0


The Bay Guardian will be in court Thursday morning, Feb. 11, to ask a San Francisco judge to force SF Weekly to hand over half its advertising revenue as partial payment on a $21 million judgment.


The paper also filed a motion Feb. 9th asking Judge Marla Miller to add two of the corporations that make up SF Weekly’s parent company to the judgment.


The judgment came as the result of a Guardian lawsuit charging SF Weekly and the national chain that owns it with predatory pricing — that is, selling ads below cost in an effort to harm the locally owned, independent competitor. A San Francisco jury awarded the Guardian $6.3 million, which Judge Marla Miller increased to $15.6 million. With attorneys fees and interest, the judgment is now worth more than $21 million.


But Village Voice Media, the SF Weekly’s owner, has refused to pay — hiding in part behind a complex corporate structure (pdf).


The motion that will be heard Feb. 11 before Judge Paul Slavit marks the latest effort by the Guardian to collect some of the money. The paper has already seized two SF Weekly vehicles and the rent the company gets from subtenant.


The other motion, which will be heard March 12 in Judge Miller’s court, seeks to amend the May, 2008 judgment to include Village Voice Media LLC and Village Voice Media Holdings LLC.


VVM is arguing that that the Weekly has no unencumbered assets and that New Times Media LLC, which owned the weekly at the time we filed the suit, is just an empty holding company.


The Guardian’s lawyers argue that VVM and New Times are essentially the same company, with the same directors and same owners, and that VVM is a successor to New Times because of a 2006 merger.


There’s a good report on the issue in the Stranger.


The motion for assignment of ad revenue will be heard at 10:30 a.m. in San Francisco Superior Court, Dept. 610.


 


 

Work for the Guardian

0

ADVERTISING ACCOUNT EXECUTIVE

Anxious to stay connected with the food and beverage industry without spending all your time waiting tables or hunched over a bar? Then come work as a San Francisco Bay Guardian account executive and help us grow our Food + Drink section.

The ideal candidate is a hard-working, energetic individual who wants to help local restaurants, bars, clubs and merchants of all types develop successful advertising and marketing campaigns. We are looking for someone whose customer service skills have made them successful in hospitality but who is now interested in reclaiming their evenings and weekends.

As a media account executive at the San Francisco Print Media Co., you will also be able to sell into the SF Examiner and SF Weekly. Compensation potential is $50,000-60,000 in your first year with San Francisco’s leading media company.

But you should be motivated not only by personal success, but also by a desire to help clients grow their businesses. Advertising account executives can deploy a wide array of tools to assist their clients, from conventional print advertising to web banners, mobile ads, email blasts, social media and other promotional opportunities.

We offer a competitive base salary, plus commission incentives, with opportunities for career advancement and a full benefits program that includes Medical, Dental, Vision, 401(k), and a company sponsored Life/AD&D/Disability program. Applicants must be eligible to work in the United States for any employer. The Examiner is an EEO Employer.

Between our three publications, the Guardian, Weekly and Examiner reach more readers than any other media outlet and have their finger on the pulse of Bay Area culture, dining, drinking and nightlife. If this opportunity appeals to you, please e-mail us a resume and a passionate cover letter explaining why you’re the right person for the job. 

 


 

PROMOTIONS TEAM MEMBER PART-TIME

The San Francisco Print Media Co. is looking for motivated, energetic and outgoing individuals to join our Street Team. This is a part-time, entry level position that does require some early mornings, nights and weekends. The ideal candidate will be organized, hard-working, responsible and capable of multitasking in a fast paced environment. Individuals who excel as Street Team members may be asked to stay on in other capacities.

The Street Team members will act as San Francisco Examiner, The SF Bay Guardian and The SF Weekly brand ambassadors at on-site promotions, in addition to other in-office duties as needed within the San Francisco Print Media Co.’s Marketing Department. On-site responsibilities include but are not limited to assisting with events, set-up/tear-down of equipment, distributing promotional material, interface with clients, readers and the general public. Duties within the Promotions Department will include but are not limited to assisting with event preparation (packing event materials, gassing and loading car), and other general office duties as needed.

The ideal candidate will be a team player who possesses excellent written, verbal, computer and communications skills, with an interest in marketing and promotions. Street Team members must demonstrate a positive attitude, be cheerful and cooperative at all times in order to maintain a productive work environment.

Other requirements:
– Must be 21 or older with a High School Degree or GED
– College students preferred but not required
– Must maintain a flexible schedule and be able to work days/evenings/weekends/holidays
– Valid driver license and a clean driving record is required
– Proficient in Microsoft Office
– Social Media Savvy
– Maintain a professional appearance

Applicants should be able to work evenings, weekends and holidays, and be eligible to work in the United States for any employer. The San Francisco Print Media Co. is an EEO employer that supports diversity in the workplace.

To apply for this position, please email your resume and a cover letter to advjobs@sfexaminer.com. No phone calls, please.

Us v. SF Weekly et al: The real story

0

By Tim Redmond

The latest chapters in our ongoing legal battle with SF Weekly and its parent company have generated a lot of national press. We got Bloomberg News, The Wall Street Journal The San Francisco Chronicle and more.

The best coverage has been in the Stranger, the Seattle newsweekly, where Eli Sanders has been all over the twists and turns of the story.

Here, for the record, is what’s really going on. The Guardian has won the right to put a lien on the assets of the 16 papers owned by Village Voice Media. And we’re moving forward aggressively to collect the roughly $21 million the chain owes us.

Mike Lacey, the executive editor of VVM, has gone pretty ballistic over the latest court rulings and over our statements about the case. He argues that the judgment is still on appeal, which is true. Typically when a judgment like this is appealed, the party that’s on the hook for the money posts a bond; that guarantees that in the end, when all the appeals are exhausted, the creditor will get paid.

Lacey argues that his company can’t manage that:

The absurd amount of the judgment in the Guardian’s predatory pricing lawsuit means that an appeal bond would have to be secured with a staggering $30 million in assets. Neither of the two remaining defendants in the suit, SF Weekly or New Times Media, has assets even approaching that amount.

But what Lacey is really doing here is hiding behind VVM’s complex corporate structure. He claims that SF Weekly doesn’t have $30 million in assets, which is almost certainly true – but New Times Media owns the various limited liability companies that control all of the papers (and other assets). You can see how it all works here (pdf document introduced in court).

So it’s crazy to say that New Times can’t come up with the assets to cover a $30 million bond. The empire was valued at the time of trial at roughly $190 million. Lacey could get a bond if he wanted one. And let’s not forget – whatever the LLCs, LPs and other corporate instruments, everyone knows that Village Voice Media, New Times and all of the 16 papers are part and parcel of the same company, with the same management, same headquarters and same ownership.

In fact, Lacey’s position is schizophrenic: On the one hand, he says the company has no assets and can’t pay the judgment – and on the other hand says the company has plenty of assets and can fight off involuntary bankruptcy.

What Lacey is really doing here is exactly what our entire collection effort has been about – he’s using the VVM corporate structure to try to avoid paying. The jury in our case found that the Weekly was guilty of predatory pricing, and that the predatory intent came all the way from the top. Now Lacey wants to say that because there’s a complicated structure, the chain doesn’t have to pay its subsidiary’s debt.

He also claims that

Instead of aiding in an expeditious appeal, the Guardian has repeatedly sought to delay that process, asking for extensions of the deadline by which it must file its brief

Yeah, we’ve asked for some extensions – but Lacey fails to note that his own company lawyers took 150 days – five months – beyond the usual 30 days to file their opening appeal brief. If they were in such a rush for a speedy appeal, why did that opening brief take so long?

See, here’s what I think is really going on. VVM doesn’t intend to pay – now, or after the appeals are over. That’s why there’s no bond – it would guarantee that if we win the appeal we’d get the money. These guys want to drag this out, hide the money and refuse to pay until the end of time.

That’s why we’re mounting an aggressive collection effort. Because we have to.