Politics Blog

Questions were raised in court yesterday about the ability of SF Weekly and their parent company, Village Voice Media, to pay the $15.6 million judgment that the Bay Guardian won in its predatory pricing lawsuit against the chain – or even to secure the bond needed to move forward with appeals.
Weekly attorney Rod Kerr argued the defendant’s motion for a stay of the judgment until 10 days after Judge Marla Miller rules on post-trial motions. Those motions are scheduled to be heard on July 8 and the judge has 10 days to rule, meaning the enforcement of the judgment could have been delayed until July 28.
Kerr argued that turmoil in the financial markets and the need for VVM to get approval from its lenders is making it difficult to secure the bond. “Without the post trial decisions, they’re not willing to release the collateral,” he said in court. “I think it’s a very reasonable request under the circumstances.”
Kerr said he believed there was a likelihood that the judgment amount would be substantially lowered during post-trial rulings, something that the company has also represented to its lenders. The difficulty in obtaining a bond for the full amount was also emphasized in a written declaration by SF Weekly’s chief financial officer, Jed Brunst.
Guardian attorney Ralph Alldredge, speaking to the court via telephone while his co-counsels Richard Hill and Craig Moody were present, reiterated a previous offer to stay enforcement until June 18, which is 30 days after the judgment was entered following the March jury verdict.
But Alldredge said the statements and briefs by the defendants raise serious concerns about whether they’re prepared to cover the full judgment, so the Guardian needs to be able to take steps to ensure that assets are being identified and secured to satisfy the judgment.
“They anticipate post trial motions will result in a reduction of the verdict, so apparently their lenders have been told that,” Alldredge said, adding, “The lenders need to be told the judgment is likely to be the final amount.”
The combination of problems securing a bond in the full amount and the defendant’s optimistic belief that they won’t have to pay the full $15.6 million raise concerns about whether the Guardian is going to get paid, he said.
“That’s a very shaky situation and it implies some risk that the bond may never be issued,” Alldredge said.
Hill also told the court that given the fact that Village Voice Media assets are spread across a number of states, it will be a long and difficult process for the Guardian to recover its judgment if VVM isn’t able to secure a bond and a long delay now would make that even more difficult.
Judge Miller agreed with the Guardian position, granting the stay only until June 18 but allowing the defendants to return to court to ask for more time if they can provide evidence showing how it will result in a bond being issued.
“I am concerned there is a risk that the bond may never be issued, based on the declaration of Mr. Brunst,” Miller said.
The judgment was based on the verdict that SF Weekly has been engaged in illegal predatory pricing going back to the mid 1990s when it was purchased by VVM, selling advertising below the costs needed to support the paper in an effort to drive the Guardian out of business. That’s illegal under California law.
VVM is appealing the verdict, but to do so must guarantee its ability to pay the verdict plus interest that began accruing when the judgment was entered last month. Kerr’s motion also sought to delay enforcement of an injunction Miller issued that bars further below cost pricing by SF Weekly, but that portion of the motion was denied.
Both sides are due in court July 8 at 9 a.m. to argue post trials motions, including one by the defendants to throw out the verdict and order a new trial.