Volume 42 Number 34

Judge hits SF Weekly with injunction


› tredmond@sfbg.com

SF Weekly and its parent chain Village Voice Media are legally barred from selling ads below cost for the purpose of harming the Guardian, Superior Court Judge Marla Miller ruled May 19.

Miller issued an injunction in the Guardian’s lawsuit against the Weekly forbidding the paper and its “officers, managers, agents, affiliates, parents [and] subsidiaries” from engaging in further predatory pricing. Unless the injunction is overturned by a higher court, it will be in effect for 10 years. Miller retains jurisdiction over the case.

Miller also issued a final ruling on damages, entering a $15.9 million judgment for the Guardian. That includes more than $300,000 interest going back to the date of the March 5 verdict.

The Guardian will also get attorneys fees and costs, although that amount is not yet established.

The Guardian sued the Weekly and Phoenix-based VVM, its 16-paper-chain parent, for predatory pricing. After a five-week trial, a San Francisco jury found that the Weekly and VVM intentionally sold ads below cost in an effort to drive the locally-owned competitor out of business.

The jury awarded the Guardian $6.39 million in damages. The law provides for treble damages after a jury verdict, but a recent court ruling interpreted that to mean that only a portion of the damages could be tripled. The ruling was not a big surprise: Miller had indicated at a May 9 hearing that she was prepared to issue an injunction and raise the damages to $15.6 million.

During the hearing, lawyers for the Weekly tried to argue that an injunction would violate their clients’ right to free speech. Forrest Hainline III of the Boston-based firm Goodwin Proctor, who was hired to handle the Weekly‘s appeal, insisted that the only way the Weekly could abide by an injunction would be to cut editorial costs – depriving the paper of its First Amendment rights.

That was a remarkable argument – in essence, the Weekly‘s lawyer was saying that the people could not possibly make a profit on its current product. But as Guardian lawyer Ralph Alldredge pointed out, there’s nothing unconstitutional about mandating that a newspaper obey basic business regulations.

The injunction states that the Weekly cannot sell display advertising space “at a price below the fully allocated cost of that space for the purpose of injuring plaintiff Bay Guardian Co, Inc., unless SF Weekly LP can establish by a preponderance of the evidence that an offer or sales alleged to fall within this injunction falls within an affirmative defense to the below cost sales prohibitions of the Unfair Practices Act.”

Miller’s ruling now sends the case to the next phase. Hainline indicated at the May 9 hearing that he will now ask Miller to reduce the damages or overturn the entire verdict. If she declines, the Weekly can take the case to the Court of Appeal, a move that could delay any final outcome for as long as two years.

However, the Weekly and VVM will now have to post an appeal bond of as much as $24 million to guarantee payment of the judgment and interest. The award will accrue interest at 10 percent – that’s about $4,300 a day – during the course of any appeal.

Most important, however, the court has issued an enforceable injunction mandating that the big chain do what the Guardian has been asking for all along: play fair.

The Weekly has been losing money every year since New Times – which changed its named to Village Voice Media after buying that company two years ago – purchased the newspaper in 1995. The chain has pumped some $25 million into San Francisco to keep the local operation afloat. That allowed the Weekly to cut the price of its ads so low that the Guardian had to struggle to cut its own costs to match the below-market rates.

At this point, the injunction should force the Weekly to compete on a level playing field – meaning that both papers will have a chance to survive in the market, offering readers and advertisers a choice. That’s what the First Amendment’s marketplace of ideas is all about.

Mike Lacey, VVM’s executive editor, and Jim Larkin, the company’s CEO, failed to return calls and e-mail seeking comment.

The Guardian‘s lawyers are Alldredge, Richard Hill, and E. Craig Moody.

For all the details and background on the case, go to www.sfbg.com/lawsuit.

The peakers vs. Mirant


EDITORIAL In the late 1960s, the Sacramento Municipal Utility District made a terrible decision and began building a nuclear power plant. Rancho Seco started generating power in 1977.

But over the next 10 years, environmental activists put pressure on the elected board that runs SMUD — and in 1989, the public power agency shut down the nuke with 11 years left on its operating license.

Pacific Gas and Electric Co. built Diablo Canyon nuclear plant about the same time — but despite massive public protests, it’s still running today. That’s a big difference between public power and private utilities — and its one the San Francisco Supervisors need to recognize as they debate power plants in the southeast part of town. Because right now, two big private power companies are setting the agenda for the city’s energy policy.

And if they’re in control, the environment will be the loser.

Over the past several weeks, Mayor Gavin Newsom has met with representatives of PG&E — which is desperately trying to keep the city out of the retail electric power business — and Mirant Corp., which seems quite happy to keep operating its power plant at the foot of Potrero Hill. And as a result, the mayor has changed his position, is backing away from a plan for three city-owned power plants, and is prepared to offer the worst possible alternative: he wants to retrofit the dirty Mirant plant and keep it running.

That’s unacceptable, and the supervisors need to reject it.

The background on this issue, for those who haven’t been paying attention, is fascinating and a bit complex.

For years, residents of the southeast neighborhoods have been trying to shut down the Mirant plant, which runs a natural gas-fired turbine and three diesel-powered auxillary generators. California Independent System Operator (Cal-ISO), which manages the state’s electricity grid, has balked at removing the only large-scale generating facility within city limits, saying San Francisco can’t bring all of its power in from outside.

Until recently, the San Francisco Public Utilities Commission — with Newsom’s blessing — has proposed that the city operate three natural gas turbines, known as peaker plants, that would run only when demand for power is high. Cal-ISO says the peakers would fulfill the in-city reliability requirement, and if they’re built, the Mirant Plant would be shuttered.

The peakers (which the city already owns, thanks to a lawsuit settlement) are fossil fuel plants and release air pollution — not as much, the city says, as the Mirant plant, but not zero. So environmental justice activists want to stop the new plants, saying the city can make do with conservation, new renewable energy facilities, and a new power line across the Bay. So far, Cal-ISO disagrees, but the activists are pushing the city to try harder to make the state accept a greener option.

So PG&E and the environmentalists are both trying to stop the supervisors from approving the peakers. PG&E sees them as public power, and is funding a sophisticated lobbying and direct-mail campaign against the city peakers.

That effort has turned Newsom around: as Amanda Witherell reports on page 15, the mayor is apparently prepared to offer a new plan that would scrap the city-owned peakers in favor of retrofitting the diesel units at the Mirant plant. PG&E would bring more cables into the city and would work on conservation efforts.

Conservation is fine, and PG&E ought to be pushing those efforts anyway. But the proposal makes no sense.

For starters, all evidence suggests that even after a retrofit, the Mirant plant would still generate fossil fuel pollution, quite possibly more than the city peakers. So the southeast would continue to get dumped on, with no significant relief. And the plan would leave PG&E and Mirant in control of generating and distributing power in the city.

We’re sympathetic to the environmental justice arguments, and we’ve been consistent in our position that the city shouldn’t build or operate new fossil fuel plants unless the scientific evidence shows they’ll be cleaner than any reasonable alternative. We would much prefer that San Francisco refrain from any new fossil fuel sources and rely instead on a completely renewable portfolio. But for all the problems we have with the peakers, they would, at least, be owned by the city.

That’s a crucial issue: if San Francisco controls the plants, San Francisco can turn them off any time, the moment the city’s renewable efforts convince Cal-ISO that the peakers aren’t needed (or even before that, if we want to risk a legal fight with the state). If a private company owns the generators, the plant will continue to run as long as it makes money.

If there’s a credible way to avoid any fossil fuel generation, we’re all in favor. But if the choice is between the peakers and retrofitting Mirant, it’s a no-brainer. And the real lesson here is that the supervisors should be moving forward with Sups. Mirkarimi and Peskin’s charter amendment to create a full public power agency at City Hall. *

Editor’s Notes


› tredmond@sfbg.com

When the ruling on same-sex marriage came down, I was in upstate New York, hanging out with my brother, who runs a small construction outfit in a working-class town. His employees are the people Democratic leaders worry about; a generation ago they were called "Reagan Democrats." They make extremely un-PC jokes and insult each other with terms that would make most San Franciscans cringe.

And you know what? They couldn’t possibly care less about same-sex marriage.

"The people in my crew have families to feed and payments to make on their houses," my brother told me. "They don’t care who marries who. It’s the most ridiculous issue in the world." (My brother, who got married on his lunch hour wearing overalls covered with concrete dust, also told me years ago that "marriage is like a horse with a broken leg; you can shoot it, but that doesn’t fix the leg." You get the picture).

Yes, there are gay couples living in his little community. The framers and roofers treat them like everyone else. The construction workers are not remotely disturbed about queers being threats to their traditional values or marriages. And they’re all voting for Obama because they’re sick of the war, sick of the recession, sick of the cost of health insurance, sick of the politics in Washington DC, and ready for something totally different.

I thought about all of that when I came back and read the San Francisco Chronicle stories repeating the old argument that same-sex marriage could be the bane of the Democrats in November. It’s the same thing Rep. Nancy Pelosi says about all kinds of social and economic issues: we can’t go too fast. We might piss off some swing voters.

Sure, you might do that. And I’m not a pollster, and my focus group, as it were, is fairly narrow here. But I don’t think I’m wrong when I say that among rapidly growing numbers of Americans, gay marriage is becoming pretty insignificant as a wedge issue. I used to say that in 20 years, people would look back at this era and wonder what the foes of marriage equality were thinking. Now I suspect we’ll only have to wait 10 years, maybe less, before this is totally accepted in the mainstream of American society.

When somebody like Mayor Gavin Newsom takes the lead on a civil rights issue like this, I think it’s pretty crass to question his motives. But you can’t dispute the outcome: Newsom may have been acting out of pure principle or out of political calculation. But in the end, his career is now tightly tied to an issue that is part of the future. He will never have to say he was sorry about this, and all of the weak and trembling little Democrats who are wringing their hands will all look like idiots one day. One day very soon.

If Newsom wants to be governor, this can only help him — but it won’t be enough. My brother’s point is that the country is in a deep recession, the economy is a disaster, economic inequality is ruining the American Dream, and social issues aren’t going to carry the day. A politician who won’t tax the rich to improve the lot of the poor and the middle class, who won’t offer comprehensive economic solutions, who has nothing to say to people who make their living building houses when the housing market is in free fall … that politician’s going nowhere. *

Go directly to court


› news@sfbg.com

After nearly four hours of debate punctuated by boos and cheers from an impassioned audience, the San Francisco Board of Supervisors’ Budget and Finance Committee decided May 14 not to release $500,000 in reserve funds for Mayor Gavin Newsom’s proposed Community Justice Center.

The project, modeled after courts in Manhattan and Brooklyn and touted by Newsom for years, would be a tribunal for bringing in quality-of-life crime violators — usually the homeless or other street denizens — immediately after they’re cited and, in theory, getting them right into social services or community service work.

But the 3-2 committee vote against the project was based on this year’s big budget shortfall, Newsom’s opposition to other expenditures outside the normal budget process, lack of demonstrable savings or benefits from the program, and the fact that the social services it claims to offer are being cut.

"Let’s be clear here. We’re having this discussion while we’re contemputf8g some of the most draconian service reductions, at least that I’ve seen here, in seven-and-a-half years," Sup. Chris Daly said at the hearing.

He cited $3.3 million in cuts to senior services, $17 million in cuts to the Department of Health, closure of the homeless service center Buster’s Place, and a reduction in mental health services as examples.

In early May, Newsom vetoed an initiative sponsored by Sup. Ross Mirkarimi that would allocate $76,000 to record and post the proceedings of various municipal boards and commissions on the city’s Web site. The board voted 8-3 to successfully override that veto on May 13.

At the CJC hearing, Daly read a letter from Newsom dated April 30 saying he wanted to hold out on new spending initiatives like the Mirkarimi measure until new programs could be considered in the larger context of the 2008-09 fiscal year budget deliberations that begin in June.

"This is his veto message based on the dire budget situation," Daly said. "These words are directly applicable to the item in front of us."

Sup. Bevan Dufty and other Newsom allies on the board are expected to try to overcome the committee votes by introducing the proposal to the full board. Dufty told us, "I recognize there are members of the committee who aren’t comfortable with it, but I asked that the full board weigh in because I felt like everybody on the board ought to have a decision whether this moves forward or not."

Newsom Press Secretary Nathan Ballard blasted the committee vote, telling the Guardian, "It was cowardly for Chris Daly and his colleagues to vote against the Community Justice Center. They lack the courage to support this program that will help get low-level offenders back on the right track. Why? Their fear outweighs their capacity to care: they fear the idea of agreeing with Gavin Newsom more than they care about people in the Tenderloin who are suffering and need help. They ought to be ashamed of themselves."

But critics say the proposal is rife with problems. Peter Masiak, lead tenant organizer for the Central City SRO Collaborative, said the CJC plans did not call for enough staff members to handle all the cases on its own. The staff would therefore have to refer people to service providers like his group, whose budgets are on the chopping block.

"It does nothing if you’re creating an expensive mechanism for referring people to services you’re cutting," he said at the hearing. "I’m concerned I’m going to have to tell my clients the only way they can get services is to stand on the street and smoke crack."

Deborah Newman of the City Budget Analyst’s Office said the CJC would cost approximately $2.9 million annually to operate. The $500,000 discussed May 14 originally was set aside for two holding cells — one for men and one for women — subleasing the court space, tenant improvements to the space, and social services.

Newman said that after tenant improvements, social services salaries, new cells, and subleases, new expenses would cost the city $2.4 million, even with a $1 million federal earmark supplied by Speaker Nancy Pelosi. CJC supporters said savings produced by the court would justify these costs.

San Francisco Superior Court Commissioner Ron Albers said San Francisco has used problem-solving and collaborative courts for more than a decade, citing the award-winning behavioral health court for mentally ill offenders as one example of how these courts can stop the courts’ current revolving-door system.

"This is a difficult budget time, but we can target high-end users of expensive programs and save money," he said.

Albers added that under the current system, people charged with misdemeanors must wait two days for an arraignment, while those charged with felonies wait three days. At $152 per day per bed, taxpayers spend thousands of dollars a year on people whose charges are ultimately dropped.

A representative of the mayor’s budget office told the hearing that the CJC could also save money by eliminating the need to build more jail pods, thus lowering the sheriff’s budget. But Harvey Rose of the Budget Analysts’ office said the CJC has failed to document any actual savings.

"Savings means that a budget is going to be cut, and we have seen no cuts in any budget," Rose said.

Some Tenderloin residents said that because crime is so rampant in their neighborhood, it would unacceptable for the city not to take action in some way, and they urged approval of the CJC. Yet others object to the double standard of creating what they dub the "poverty court." *

Summer Fairs and Festivals 2008