SF Weekly

Guardian lawyers win major award

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California’s chief justice presented the Guardian‘s lawyers with a major statewide award March 2, recognizing our predatory-pricing case against SF Weekly as one of the most important cases of 2008.

In a ceremony at the Carnelian Room atop the Bank of America Building, Chief Justice Ron George recognized Ralph Alldredge, Richard Hill, and E. Craig Moody as recipients of California Lawyer magazine’s California Lawyers of the Year Awards. The magazine chose 22 cases from the many thousands filed, litigated, and arbitrated every year in the state, saying the lawyers "made a profound impact."

Alldredge, Hill, and Moody handled the five-week trial that ended with the Guardian winning a $6.4 million judgment against the Weekly and its parent company, New Times (now owned by Village Voice Media). A jury found that the Weekly had sold ads below cost in an effort to drive the Guardian out of business.

Judge Marla Miller later raised the award to more than $18 million. The case is on appeal.

"In a David-and-Goliath face-off between San Francisco’s two man rival alternative weeklies, this legal team deftly made the unfair competition case for the San Francisco Bay Guardian," the award citation read.

Congratulations to Ralph, Rich, and Craig, who fought an uphill battle for years against a bigger and better-financed opponent.

Bay Guardian lawyers win major award

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The Dream Team: From left, paralegal Karen Douglas, Craig Moody, Guardian publishers Jean Dibble and Bruce Brugmann, Ralph Alldredge and Rich Hill.

By Tim Redmond

California Lawyer magazine has given the attorneys who represented the Bay Guardian in our predatory-pricing case against SF Weekly a CLAY award, citing the case as one of the most important legal battles of 2008.

The legal team of Ralph Alldredge, Rich Hill and Craig Moody – all solo practitioners – won the coveted award, which reflects the significance of a victory by a local business against a predatory chain.

In what the magazine called “a David and Goliath face-off,” the Guardian sued the Weekly and its chain parent, Village Voice Media, alleging that the big publishing outfit had for years sold ads below cost in an attempt to damage the locally owned competitor.

A jury found unanimously in favor of the Guardian, and awarded us $6.3 million. Judge Marla Miller later raised the damages to $15.6 million. With attorney’s fees and interest, VVM now owes us roughly $20 million. The case is on appeal.

Congrats to Ralph, Rich and Craig, who labored for years on this case, at every moment and every level fighting a bigger and better-financed opponent that went through a string of large and small law firms, seeking someone who could stand up to our team. In the end, the law, the facts and three tough, smart attorneys were on our side, and the SF Weekly just couldn’t compete.

The case is on appeal.

Yet another example of VVM ethics (or lack thereof)

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Did VVM hire these people to game Digg?

By Steven T. Jones

SF Weekly parent company Village Voice Media has been exposed for predatory financial practices, undermining good journalists and practicing unethical journalism, and secretly using a social networking tool in a sleazy way to promote its advertisers.
Now, a detailed investigation by thedeets.com shows how VVM has been gaming Digg.com (which is a tenant of ours in the Guardian Building) to inflate the number of page views on its websites, apparently hoping to fool advertisers and the public into thinking they have more readers than they really do.
VVM spokesperson Andy Van De Voorde refused to comment on the substance of the allegation, instead offering only taunts and insults and writing by e-mail, “Now here we go again with the obligatory request for comment, all under the guise of fair reporting.”
Digg spokesperson Beth Murphy told the Guardian, “We don’t really talk specifics with regards to individual Diggers, sites or media outlets in order to protect their privacy and ensure a level playing field. What I can tell you is that various sites can perform better on Digg based on social media tools and the breadth and diversity of their audience. For sites or individuals that attempt to game or spam Digg, as always, we’ve developed the back-end systems and algorithms to flag and detect gaming.”

The truth about Community Choice Aggregation

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By Amanda Witherell and Tim Redmond

It would be easy to just ignore last week’s SF Weekly story on
San Francisco’s energy policy.

The piece was exactly what we’ve come to expect from the Weekly – a direct attack on progressive San Francisco. It used all the buzzwords – “risky,” “radical,” “scheme.” It selectively chose facts and presented them without context.

But stuff like this sticks around, and people read it, so somebody has to set the record straight.

The running theme of the piece, by Peter Jamison, is that Community Choice Aggregation, an energy plan that would allow the city to be the wholesale buyer and provider of power to residents, comes with a high risk. In an effort to get greener power, the article charges, the city may wind up raising electric rates – “which could have a crippling impact on the city’s poorest residents.”

Of course, PG&E is going to raise electricity rates every year for the foreseeable future, and high PG&E rates are already having a crippling impact on poor people, small businesses and the local economy. But that’s not addressed in the story.

The truth is, CCA is only “risky” if you (a) assume that PG&E, which has been in and out of bankruptcy and continues to seek rate hikes, will somehow be a risk-free source of energy in the future and (b) assume that there’s no risk whatsoever to continuing to rely almost entirely on nuclear power and fossil fuels for our energy needs.

SF Weekly’s sleazy new deal

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By Tim Redmond

Village Voice Media, the owner of SF Weekly, has entered into a business deal with LikeMe.com, a weak competitor to Yelp. But already, the arrangement has generated controversy: The Seattle Altweekly The Stranger reports that many of the comments on this new site — comments promoted on the front page of the SF Weekly’s web site — are in fact promos for SF Weekly advertisers, written by SF Weekly ad staff. The Stranger notes:

The majority of Likeme’s reviews—which appear on 12 VVM websites, next to editorial content about the businesses—are written by ad representatives for VVM. The reviews, which are exclusively positive, focus on businesses that advertise in VVM papers.

For example, if you search for a review of Nick’s Crispy Tacos on the San Francisco Weekly’s site, a review from Likeme user LaraW is prominently displayed on the San Francisco Weekly’s page for the restaurant under the heading “The Inside Word on Nick’s Crispy Tacos.”

“If you’re looking for a great midweek activity that doesn’t cost a fortune, this is a great place to go,” LaraW gushes. “The crowd is always fun and the food is awesome.”

“Lara W” is actually Lara Weiss, the advertising coordinator for the San Francisco Weekly, where Nick’s Crispy Tacos advertises.

That’s pretty darn sleazy. Again, from the Stranger:

VVM isn’t the first company to engage in this practice, referred to by industry watchdogs as “astroturfing.” Companies such as Sony, Microsoft, and Philip Morris have all built fake grassroots campaigns to promote their own products or slam competitors.

“I think [VVM’s] first obligation is to be honest and transparent,” says Kelly McBride, ethics leader at the Poynter Institute for Media Studies. “You lose your marketability when you allow people with an agenda to post. And clearly the ad reps have an agenda: They want to make their clients happy.”

McBride adds, “When you create the false impression yourself… that’s really, really bad. It’s inherently dishonest, and I’d think it undermines your credibility.”

So what’s up here? Well, I emailed everyone I could think of at the Weekly and VVM, starting with the top editorial guy, executive editor Mike Lacey, who never returns my calls or emails anyway, but what the hell. I also emailed Executive Vice President Scott Spear, Executive Associate Editor Andy Van De Voorde, Weekly publisher Josh Fromson and Weekly editor Tom Walsh. Only my old pal Andy got back to me; he sent along this link. The argument:

As with any new web product you create or partner with, you give it to your friends and family to test drive

Still seems awfully misleading, especially for a media company that loves to criticize everyone else’s ethics.

Sensational trans-bashing at SF Weekly

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OPINION SF Weekly published an article Nov. 26 with the headline "Border Crossers." The subhead explained the thesis: "Long rap sheet? No problem. Transgender Latina hookers in SF are successfully fighting deportation by asking for asylum."

The title successfully encapsulates the Jerry Springer-like journalism masquerading as a feature article in an alternative weekly in San Francisco. While I would normally just dismiss this as another example of how SF Weekly is turning into the National Enquirer, the article is important in that it reveals the intense discrimination transgender immigrant women who do sex work face in San Francisco — and unfortunately, quite possibly jeopardizes an incredibly essential legal protection.

The writer, Lauren Smiley, apparently believes she has unearthed a shocking secret: that transgender women may receive asylum in the United States based on intense discrimination in their home countries. So trans immigrants can avoid deportation even when they have been arrested for prostitution and have rap sheets.

As Smiley notes, immigration judges and asylum officers have the discretion to grant asylum when a transgender woman presents a showing of a well-founded fear of persecution based on gender identity. Even Smiley admits that transgender women face violence and intense discrimination in their home countries; however, what Smiley finds the most egregious is that some small subset of the asylum-seeking women have been prosecuted for sex work.

What Smiley single-mindedly ignores is the astonishing statistics that show an unemployment rate of more than 50 percent for transgender women of color, and perhaps even higher statistics for undocumented women in San Francisco. Instead of pointing to the well-documented obstacles transgender women face in employment, Smiley interviews one transgender woman who was able to get a job as evidence that transgender women really do not have to be "hookers" to survive. (Yes, she really did use the word "hookers".)

Without any context or analysis, Smiley quoted Dan Stein, president of the "Federation for American Immigration Reform" (FAIR) as a credible critic of the practice of granting asylum to immigrant transgender women. The Southern Poverty Law Center recently officially designated FAIR as a hate group, but nowhere in her article does Smiley mention that the organization is considered one of the least trustworthy, if not laughable, sources for information on immigration.

What concerns me most is not the cheapness of the shot, but rather that — like so much sensationalist journalism — a piece like this gives fuel to right-wing activists like FAIR. Even Smiley notes that the Republican Party has included in its platform an end to the practice that has literally saved many lives.

What is even more astounding is that last year, Smiley received an award from the Gay and Lesbian Alliance Against Defamation for an article about how doctors were using a new treatment for transgender children so that they wouldn’t develop into their biological sex until after puberty — which would give those kids the choice to transition later.

Yet in the Nov. 26 piece, when describing the landmark case of Geovanni Hernandez-Montiel, who was the first to get asylum based on gender identity, this award-winning writer frequently refers to Giovanni using the male pronoun "he." While I would not expect most journalists to give a nuanced perspective on Giovanni’s gender identity, I do expect a journalist who has received an award from an LGBT media watchdog group to allow for a more fluid understanding of Giovanni’s gender. I called Smiley and she acknowledged that she should have better described FAIR. When I asked her about the other problems, she simply said I should write a letter to SF Weekly.

In San Francisco, can’t we expect and demand better?

Robert Haaland is co-chair of SF Pride at Work, a LGBT labor organization. Alexandra Byerly is program coordinator, EL-LA Program Para Trans-Latinas. Nikki Calma is a member of the Commission of the Status of Women. Cecilia Chung is chair of the San Francisco Human Rights Commission

Matt Furie

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There is no emoticon that captures how it feels to look at Matt Furie’s art. But if anyone could create one, it would be Furie. Funny, frightening, disgusting, and endearing all at once, his drawings and paintings and comic books are both direct and unpredictable.

This past year brought a number of new shows by the self-described "Lord of Moldovia," who has brought space-hopping creativity to Bay Area art over the last five years. "Nature Freak" at Jack Fischer Gallery blasted the 49 Geary first-Thursday crowds with sexually graphic and seriously morbid imagery — but in a good-natured way. Vine-veined creatures cradled infant-size mates. A cadaverous Mother Nature and a two-legged beast with a beaked asshole for a head took a doggy-style page from The Joy of Sex. "I researched the Black Plague, and thought about the whole modern dilemma," Furie explains with typical low-key candor, as we sit outside a Russian Hill café and watch people yammer into cell phones on their way to the gym. ("This is an SF Weekly neighborhood, people here don’t read the Guardian," he jokes.)

No Bay Area art show this year matched the uncanny pleasure of Furie’s show "Heads," at Adobe Books Backroom Gallery. He crammed the small space with hundreds of drawn or painted heads, solo and in groups: a scrappy chick (as in female bird) with a sideways ponytail and a heart-shaped pendant; frogs and gators with mirrored shades; a triple-scoop ice cream cone sporting a bereft expression; a tough and pissed-off hot dog with an ear-piercing; hamburger-bun eyes. An installation that crammed stuffed animals beneath a giant fan evoked Mike Kelley, but Furie’s deeper passions run from Hieronymous Bosch and Pieter Bruegel ("He’s the master") to R. Crumb and Charles Schulz. Beneath the comic imagery — and within his talent for rendering personality — lurks truly imaginative social commentary. "There’s a balance between having fun and being conscious of the views I have," Furie says. "I’m concerned with ecology and animal welfare. It comes out, but I don’t want to do it with a heavy hand. I want it to sneak up on you."

Attention readers: Also in 2008, Buenaventura Press published boy’s club and boy’s club #2, where the artist (who appreciates the absurdity of the Geico gecko and of Mystery from VH1’s The Pick Up Artist) uses a Sesame Street palette to render the antics of a Furie-ous four: easygoing and smart-assed Andy, stylin’ and energetic Bret, prankish and party-ready Landwolf, and everyman-with-a-frog-face Pepe. Unlike the unnamed characters of “Heads” — an acid-spiked Kool Aid mass portrait of San Francisco hipsterdom with perhaps more breadth and wamth than the subject deserves — the comic-book bros of boy’s club are drawn from aspects of Furie’s personality. "I’m going back to a time in my life when I didn’t think about factory farming," he says. "Growing up in Ohio, I did a lot of goofing off indoors."

From the growing number of endangered species to the perils of a champagne-and-SpaghettiOs diet, you can count on Matt Furie to get it all down on paper. "It’s better than working in a slaughterhouse," he admits. "Or being a politician."

www.myspace.com/mattfurie

Backroom brokers

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› tredmond@sfbg.com

It’s not the invisible hand of Adam Smith tossing hate mail on your doorstep this fall like ugly confetti. It isn’t a distinct and independent group of candidates and civic organizations that just happen to be saying the same things, either. There is a carefully orchestrated campaign going on to undermine the progressive agenda, block affordable housing and clean energy, and give Mayor Gavin Newsom a majority on the Board of Supervisors.

It’s well funded; it’s serious; it’s based on lies — and it’s a threat to rent control, sustainable environmental policies, universal health care, the city’s living wage law, and the rest of the accomplishments and goals of the progressive majority on the board.

If that sounds overblown, listen to what the organizers of this campaign are saying themselves.

On Aug. 15, after progressives took control of the Democratic County Central Committee and installed Sup. Aaron Peskin as chair, John Keogan, the head of a year-old organization called the San Francisco Coalition for Responsible Growth, a pro-downtown group founded to counter the progressive movement, announced his intentions in a letter to allies.

"CRG are [sic] preparing for an all-out attack with other like-minded groups and now is our time to stand-up [sic] and be counted," Keogan wrote. He asked members to support "taking SF on a sharp turn to the right."

Those "other like-minded groups," according to campaign finance reports, are a Who’s Who list of downtown-based organizations that have consistently fought to roll back tenant protections and slash government spending on social services: the Building Owners and Managers Association, the Committee on Jobs, Pacific Gas and Electric Co., the Association of Realtors, the Chamber of Commerce, Plan C, and the Police Officers Association.

By law, political candidates can only raise and spend limited amounts of money. But organizations like BOMA, the Realtors, and Plan C can put as much cash as they want into supporting and opposing candidates — as long as the efforts are "independent."

But the orchestration of the attacks on supervisorial candidates Eric Mar, John Avalos, and David Chiu, and the support for their conservative rivals, Sue Lee, Ahsha Safai, and Joe Alioto, is so sophisticated it’s impossible to believe that these groups and candidates aren’t working together.

Between Sept. 9 and Oct. 20, public records show, the groups spent a combined $363,754 ($178,177 in District 1, $104,308 in D3, and $81,269 in D11) on independent expenditures attacking Avalos, Mar, and Chiu and supporting their opponents. They also spent $20,000 supporting Eva Royale in her long shot race for the solidly progressive District 9 seat.

The landlords and downtown aren’t the only ones organizing. All that spending, and the threat of even more to come considering the hundreds of thousands of dollars these downtown groups still have in the bank, has served to unite tenant and labor groups in ways unseen in previous San Francisco elections.

"There’s an unprecedented coalition between tenants and labor," labor activist Robert Haaland told us. "We’re working together to defeat the landlord candidates, who are also anti-labor."

"We have a tremendous fear that the spending and progress on health care and social services will be rolled back," Tim Paulson, president of the San Francisco Labor Council, told us. "Anything less than our candidates [being elected in each of the three swing districts] will pose a real danger to the movement."

NEWSOM’S SLATE


One of the central players in this attempt to take the city away from the progressives and hand it over to downtown is Mayor Gavin Newsom, who is actively supporting Alioto, Lee, and Safai.

Eric Jaye, the mayor’s chief political advisor, has no formal role in the three district campaigns, but Newsom rarely makes a move in local politics without consulting Jaye. In fact, when reporters call the mayor’s press office to ask for comments on local candidates and initiatives, they are typically referred to the private consultant.

Jaye told us he’s talked to all of Newsom’s candidates. "I told them to run on district issues," he said.

The mayor and the latest member of the Alioto clan to seek office (Joe’s sister, Michela, is already on the board) have walked precincts together. And Newsom is so involved with the downtown effort he’s skipping a major Democratic Party gala (where he was slated to get an award) to spend time instead with the Republican-led Coalition for Responsible Growth (CRG).

Jaye’s main job this fall is running the PG&E campaign against the Clean Energy Act, Proposition H. So far PG&E has spent more than $10 million on the effort, and that number will grow in the final week before the election. Part of that same campaign has been propping up Newsom ally Carmen Chu, who has benefited from thousands of dollars of PG&E spending on her race. Chu’s face is all over PG&E’s No on H fliers.

Another central operator is Alex Tourk, the former Newsom aide who resigned after learning that the mayor had been sexually involved with Tourk’s wife. Tourk is now running the CRG operation.

"They brought me on board to do a volunteer campaign that, yes, they funded, but which seeks to inform voters in a non-partisan fashion where the candidates in D1, 3, and 11 stand on key issues," he said.

That campaign’s goal was to get 10,000 people to mobilize — he called them, using a term popularized by Richard Nixon, the "silent majority."

Tourk maintains that door-hangers the group has been distributing don’t endorse any candidates or push any initiatives. But the messages fit exactly with the overall downtown strategy — they seek to discredit the progressives by linking them with controversial ballot measures such as Proposition V, which would urge the School Board to save the military recruitment program, JROTC.

The supervisors have nothing to do with JROTC, but downtown and the Republican Party are using it as a wedge issue.

CRG is facing some political heat of its own: SF Weekly reported in its Oct. 22 issue that CRG’s recently elected president, engineer Rodrigo Santos, accepted money for professional work from someone who had business before the Building Inspection Commission while he served as commission president. Santos is a Republican, like several key Newsom appointees.

Making matters worse are revelations that Mel Murphy, vice president of the inspection commission and a CRG member, distributed invites in City Hall to an Oct. 17 CRG fundraiser for Safai and Alioto. City officials aren’t supposed to do political work at City Hall.

Alioto’s filings show that on Oct. 17, he received $500 from the firm of Santos and Urrutia’s structural engineer Kelton Finney and $250 from S&U engineer Calvin Hom.

PG&E’S FAKE DEMOCRATIC CLUBS


Political consultants Tom Hsieh Jr. and Jim Ross are involved in the District 1 race (Hsieh also responded to the Guardian on Safai’s behalf) — and are using PG&E and downtown money to support Sue Lee.

Beyond Chron reported Oct. 27 that Hsieh has been sending robocalls in Cantonese to voters saying that Lee is endorsed by the "San Francisco Democratic Party Club." Actually, the Democratic Party endorsed Mar.

What is this new "party club" anyway? Well, the Web site reported, the club started raising money just two weeks ago, and already has collected $30,000 from PG&E, $2,000 from the Chamber of Commerce, $5,000 from GGRA (Golden Gate Restaurant Association), and $70,000 from the Committee on Jobs. Another new club, called the Richmond Reform Democratic Club, is opposing Mar — and has $18,000 from the Committee on Jobs, $5,000 from PG&E, and $2,000 from BOMA.

In television ads paid for by the Realtors, a voiceover tries to link Mar, Avalos, and Chiu to Sup. Chris Daly, whose popularity outside his district is low — although neither Mar nor Chiu has much of a discernable connection to Daly. Avalos was a Daly City Hall aide.

One of the Realtors ads was so utterly inaccurate and deceptive — it claimed Chiu and Avalos support decriminalizing prostitution, when both have publicly opposed the decriminalization ballot measure — that Comcast pulled the ad off the air when Chiu filed a complaint.

Fog City Journal uncovered what appears to be illegal collusion between the police union and Safai. Although candidates are barred from coordinating with groups making independent expenditures on their behalf, POA president Gary Delagnes told FCJ editor Luke Thomas that Safai had given the group a photo of him to use on a mailer, a copyrighted image that Thomas took. Safai denied wrongdoing, but refused to answer further inquiries about the matter.

It’s a pitched battle — labor, the tenants, and the Democratic Party against the landlords, PG&E, downtown interests, and the Republicans. It’s pretty clear which side you want to be on.

Steven T. Jones, Sarah Phelan, and Amanda Witherell contributed to this report.

The SF Weekly’s big lie

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By Tim Redmond

Will Harper, who insists he’s not opposed to public power, lashed out today at the Yes on H campaign. His claim: Supporters of the Clean Energy Act — including me — aren’t being straight with the voters about what the measure means.

Yes, Will: Much of what is in the charter amendment could be done without going to the ballot — if the mayor of San Francisco were willing. But with a mayor whose chief political advisor, Eric Jaye, is on Pacific Gas and Electric Company’s payroll, it’s a little hard to get any progressive energy policy done. Even if eight supervisors vote for, say, a study to consider public power, the mayor can do what he’s done with affordable housing: Refuse to spend the money.

And yes, it seemed to make sense to put together an overall ballot measure that included several things — aggressive clean-energy goals, an energy optioins study AND enabling legislation to allow the supervisors to issue revenue bonds for utility projects.

Harper insists that Prop. H is somehow misleading:

With the earlier power measures, their intent was always clear: Municipalize PG&E. Prop. H, however, conceals its true objective.

Um, I think if you read the Guardian, Will, you’ll see that we’ve been rather clear that this is a BOTH a clean-energy proposal and a public-power measure, and that we think that’s a good idea. The evidence is pretty clear that public power is the best (perhaps the only) way to meet strong clean-energy goals; PG&E clearly isn’t going to get there.

It’s true that the measure calls for a study on power options. If it hadn’t, then PG&E and its allies would be blasting the measure for mandating public power without a study. You can’t win with these guys.

As for his personal attack on me:

In various editorials, the Prop. H supporters at the Bay Guardian have made this seem like no big deal. The most blatant distortion appeared in its recent endorsement issue in which executive editor Tim Redmond proclaimed, “Nobody ever votes on revenue bonds. In California, we vote on general obligation bonds, which are backed by taxpayers. Revenue bonds are backed by a defined revenue stream…”

Actually, people do vote on revenue bonds. Seven years ago, San Francisco voters approved Prop. A, which authorized the city to sell $1.63 billion worth of revenue bonds to upgrade the Hetch Hetchy Reservoir. The defined revenue stream: San Francisco water users, who saw their rates go up.

Will, do your homework. In 2002, voters approved two things: A revenue bond measure for water and sewer projects and another measure that allows the SF PUC to issue revenue bonds without a vote of the people..

So we don’t vote on water and sewer revenue bonds. We don’t vote on airport revenue bonds, either. The airport is in the process right now of selling revenue bonds for the Terminal 2 rebuild; nothing on the ballot about that. In fact, the mayor wants to speed up the process. The voters have decided that it’s okay to issue revenue bonds for improving the airport and the Hetch Hetchy water system; all Prop. H does is ask for the same authority for clean energy and power projects.

There’s nothing secret about this (except maybe the SF Weekly’s position on the issue). Harper writes:

I’m not opposed to the idea of public power, but I don’t like being bullshitted.

Okay, WIll, now that I’ve cleared it all up for you, are you voting Yes on H?

Lotsa press on Prop. H

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The SF Weekly is usually against anything we’re supporting (they love to bash the left over there, and particularly like to bash us), but to my astonishment, along with his typical snide comments, Benjamin Wachs actually has some intelligent comments on the Clean Energy Act:

The city has the right -even the duty- to plan responsibly for its future, and then follow-up. Prop H shouldn’t even need to be on the ballot, it should be standard practice. Yes, let us evaluate our options and pick the best one. I wish the city would run its economy, law enforcement, and housing offices the same way. To be clear: anyone who is against Prop H isn’t against public ownership of utilities – they’re against planning.

Randy Shaw’s on the case, too. He’s a little dubious about the political hopes for Prop. H, since it doesn’t fit his own rule of “Keep it Simple,” and he suggests that the measure may get buried in the PG&E propaganda and the flood of other stuff on the ballot. The problem is, you can’t make a serious clean-energy initiative simple; there’s just too much policy involved. And if it were simpler, PG&E would call it “a simplistic solution.”

We all knew from day one that PG&E had endless money and would spend whatever it thinks is necessary to defeat Prop. H. But Shaw acknowledges that

With Mark Leno, Susan Leal, and Bevan Dufty taking high-profile roles in backing Prop H, the initiative has a broader and more diverse base than its similar predecessors.

And the Yes on H campaign is only really starting.

If this wasn’t going to be close, PG&E wouldn’t already be pulling out all the stops.

The Weekly’s publisher knows nothing

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Fromson tries the Sgt. Schultz defense

By Tim Redmond

The publisher of the SF Weekly, who harshly criticized the professional qualifications of his Bay Guardian counterpart during our predatory-pricing trial, said yesterday under oath that he knows almost nothing about his business.

Josh Fromson testified in a sworn deposition as part of the Guardian’s efforts to collect on the $17 million that the Weekly and its parent company, Village Voice Media, owe us after a jury verdict in a five-week trial.

Guardian attorney Robert Pollak was attempting to find out where the company’s resources are. The so-called debtor’s exam is a common procedure in civil cases, and the company that owes the money is supposed to provide honest information about its finances.

Fromson provided almost nothing. In fact, if the Weekly’s top local executive, who claims to run everything except the editorial department at the paper, was telling the truth, he is astonishingly lax in his understanding of his job.

Fromson testified that he was responsible for all of the business activities of the Weekly, that he oversaw everything except editorial. That’s typical for a newspaper publisher.

But from then on, his answers were – to be kind – a bit hard to believe.

Fromson started off by saying that he didn’t know who his boss worked for.

He said his immediate supervisor was Jim Larkin, who is listed on the Weekly’s masthead as the chief executive officer of Village Voice Media. Nowhere in any of the thousands of pages of lawsuit documents was there any suggestion that Larkin was anything but a VVM employee, and to my knowledge nobody at VVM has ever suggested that either.

When Fromson was asked, almost as a matter of course and for the record, who Larkin’s employer was, he said:

“I don’t know.”

That became a refrain in a deposition that Fromson clearly didn’t take seriously. He spent much of it leaning back in his chair and chewing gum.

And by the end, it became clear that Fromson – again, if he’s telling the truth – doesn’t know whether his company owns or leases its office equipmemt, doesn’t know what bank his company uses for its accounts (although he signs the checks), doesn’t know what his weekly expenses are, doesn’t know whether there’s enough money in the bank to cover the checks he signs, doesn’t know who the paper owes money to, doesn’t know who deposits the checks the Weekly gets from its advertisers, doesn’t know whether any records of those deposits exist or where they are … in short, he doesn’t know any of the basic financial information that the publisher of any newspaper I’ve ever heard of is responsible for knowing.

Some examples of Fromson’s purported ignorance:

Pollak asked him if he knew what type of corporate form the SF Weekly took.

“I don’t know,” he said. (That’s pretty lame, considering that the Weekly’s corporate structure was laid out in detail in the lawsuit.)

Pollak asked whether the Weekly owned the desks, chairs, computers and other equipment in the office.

“I don’t know,” Fromson said.

“Who would know that?” Pollak asked. “I don’t know right off hand,” Fromson said.

Pollak asked what happens to the money that the Weekly collects from its advertisers (does it get deposited in a bank account, for example?).

Fromson: “I don’t know.”

What bank does the SF Weekly use for its accounts?

“I don’t know.”

When you sign the rent check each month, what bank is it drawn on?

“I don’t pay attention.”

What are your average expenses each week?

“I don’t know.”

What bank account are the operating expenses paid through?

“I don’t know.”

Who decides which bills get paid and when?

“I don’t know.”

Pollak asked for documents showing deposits in bank accounts. Fromson said they don’t exist. He asked if Fromson ever checked the balance in the company’s account; Fromson said he didn’t. “When you write a check,” Pollak asked, “how do you know there’s money in the account?”

Fromson: “I don’t.”

When clients send checks to the SF Weekly, Pollak asked, who takes the deposit to the bank?

“I don’t know.”

When that person gets a receipt for the deposit, where is that filed?

“I don’t know.”

You get the picture.

During the trial, Fromson took the stand and launched a harsh attack on Guardian co-publisher Jean Dibble, who oversees the paper’s finances, saying she didn’t go out on sales calls (which he was proud to say he does).

But after today, I have to wonder:

Can a sophisticated operation like VVM really have a publisher who doesn’t know which bank he uses, who doesn’t know if there’s money to cover the checks he signs, who doesn’t keep track of the deposit receipts, who seems to have no knowledge of the most important aspects of his job?

Is Josh Fromson really that dumb and incompetent?

Or was his sworn testimony, perhaps, a bit short of the truth, the whole truth and nothing but the truth?

The verdict stands

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› tredmond@sfbg.com

Judge Marla Miller on July 18 rejected attempts by the SF Weekly and its chain owner to overturn the Guardian‘s victory and $16 million jury award in a predatory pricing case.

The ruling marked the end of the first full round of this legal fight and sets the stage for a shift to the California Court of Appeal.

SF Weekly and Village Voice Media had asked Miller to overturn the jury verdict or order a new trial, and the company lawyers spent hours July 8 arguing that the evidence presented in a five-week trial didn’t justify the jury’s decision. They also claimed that Miller had issued improper jury instructions.

Attorneys James Wagstaffe and H. Sinclair Kerr also tried to get the judge to sever the 16-paper chain from the damages part of the case. That would have left the Weekly as the only guilty party. And VVM had admitted that the Weekly has no assets and would be unable to pay the Guardian anywhere near $16 million.

Miller, with little comment, denied both requests.

The defendants have consistently said they plan to appeal.

The case centered around the Guardian‘s charge that the Weekly had for years sold ads below the cost of producing the newspaper for the purpose of injuring the locally owned, independent competitor.

Evidence presented at trial showed that the Weekly had consistently lost money, as much as $2 million a year, since New Times — now known as VVM — bought the paper in 1995.

The evidence also showed that VVM’s executive editor, Michael Lacey, had vowed to put the Guardian out of business, and that Weekly advertising and business staff were instructed to try to take business away from the Guardian, whatever the cost.

And while the VVM lawyers mounted a convoluted legal argument to claim that the parent company wasn’t legally liable for any damages, the trial showed that the senior executives at the Phoenix-based chain were not only aware of the predatory strategy but were active participants in it.

In fact, two senior officers, CFO Jed Brunst and group publisher Scott Tobias, admitted that the SF Weekly would have gone out of business years ago if the chain hadn’t subsidized its operations.

For more details and key documents, go to sfbg.com/lawsuit

Weekly comments too good to pass up: “butt-to-nut”

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Damn, we just can’t pass this one up. A commenter over at the SF Weekly‘s blog posted a message agreeing with Benjamin Wachs that there are some fine folks in the Midwest contrary to what so many San Franciscans seem to believe. I won’t speak for rest of the newsroom here, but I agree with Wachs, too. I grew up in Tulsa and resent any implication that Oklahomans are somehow dysfunctional because popular pundits have encouraged the country to divide each state into two colors and thus make broad assumptions about millions of people. But there’s a problem. Read the comment closely:

Posted at: July 17, 2008 10:54 AM

Dan says:
When San Francisco got too expensive in the late 90s, the ex and I took our freelancing selves to a small town in the Midwest. The generalizations made by the coasters were always amusing to read; our small town of about six thousand was populated by other refugees from big towns, artists and radicals and iconoclasts made it something of a weekend destination and arts center. These people had real cultural connections and credentials but very little of the pretension you’d find at, say, the Lexington (which, more than likely, is jammed butt to nut with a bunch of people who are actually from the Midwest and would be mortified if you found out). I found that we did travel more than when we lived in California. But that was mostly because we were still making San Francisco wages but paying small town Midwestern rent.

Wait. Huh? Wha? Are you talking about the Lexington in the Mission? You’ve been there before, right? Are you sure your parenthetical description of it is, uh, accurate? You’re right about one thing, however. The Lexington, like so many other places in town, contains a lot of refugees from elsewhere who may actually be proud of where they came from but couldn’t stand being treated like second-class citizens there anymore.

Judge denies SF Weekly motion for new trial

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Judge Marla Miller July 18th rejected attempts by the SF Weekly and its chain owner to overturn the Bay Guardian’s victory and $16 million jury award in a predatory pricing case.

The ruling on the defendants’ post-trial motions marked the end of the first full round of this legal fight and sets the stage for a shift to the California Court of Appeal. All that remains to be decided by Judge Miller is the Guardian’s upcoming motion for attorneys’ fees, which are expressly allowed to a prevailing party under the California Unfair Practices Act.

SF Weekly and Village Voice Media had asked Miller to overturn the jury verdict or order a new trial, and the company lawyers spent hours July 8th arguing that the evidence presented in a five-week trial didn’t justify the jury’s decision. And they claimed, in a laundry list of challenges, that Miller had issued improper jury instructions and erred in admitting evidence at trial.

Defense attorneys James Wagstaffe and H. Sinclair Kerr also tried to get the judge to overturn the 16-paper chain’s liabilty for any damages awarded by the jury. That would have left the Weekly as the only guilty party. VVM had admitted in earlier post-trial proceedings that the Weekly has a negative net worth and alone would be unable to pay the Guardian anywhere near $16 million.

Miller, with little comment, denied those requests.

In her “order denying defendants’ motion for new trial” Miller stated:

“To the extent that the motion for New Trial is based upon the grounds of insufficiency of the evidence to justify the verdict (Civil Procedure Code #657(6) and excessive damages (Civil Procedure Code #657(5) the court has weighed the evidence and is not convinced from the entire record, including reasonable inferences therefrom, that the jury clearly should have reached a different verdict. To the extent that the motion for New Trial is based upon errors at law which Defendants contend occurred at the trial and were excepted to by them (Civil Procedure #657(7), the Court finds these contentions lack merit.”

The defendants have said they plan to appeal.

The case centered around the Guardian’s charge that the Weekly had for years violated California’s Unfair practices Act by selling advertising space below the cost of producing it for the purpose of injuring the locally owned, independent competitor.

Evidence presented at trial showed that the Weekly had consistently lost money, as much as $2 million a year, since New Times, now known as VVM, bought the paper in 1995.

The chain later bought the East Bay Express, and transformed it from a profitable paper to one that consistently lost money. Between the Weekly and the Express, VVM has lost some $25 million in San Francisco.

The evidence also showed that VVM’s executive editor, Michael Lacey, had vowed to put the Guardian out of business, and that Weekly advertising and business staff were instructed to try to take business away from the Guardian by below cost pricing, whatever the sacrifice in revenue and profits.

And while the VVM lawyers mounted a convoluted legal argument to claim that the parent company wasn’t legally liable for any damages, the trial showed that the senior executives at the Phoenix-based chain were not only aware of the predatory strategy but were active participants in enabling the Weekly to carry out its pervasive program of below-cost sales..

In fact, two senior officers, CFO Jed Brunst and Controller Jeff Mars, testified on the stand or in pretrial depositions that the SF Weekly would have gone out of business years ago if the chain hadn’t made a policy of shipping large sums of money from headquarters into the San Francisco operation to subsidize below-cost sales.

After the trial, jurors said they were convinced that VVM sought to destroy local competition. Juror Kerstin Sjoquist, a local business owner and graduate student, said in an interview that “it felt overly predatory on the part of the Weekly” and that “the predatory intent trickled down from the top.”

Although the VVM lawyers have 60 days to file their notice of appeal, there’s already some indication of what the chain will try to argue to the higher court. Even before the trial started, Andy Van De Voorde, VVM executive associate editor, who flew in from Denver to cover the trial for the Weekly, argued in his blogs that the California Unfair Practices Act was out of date and irrelevant. Referring to the act as a “depression era law,” (actually, the act dates back to 1913, California’s Progressive Era), Van De Voorde suggested that modern competitive markets made such a law pointless.

The law bars any business from selling a product or service below cost with the intent to harm a competitor or destroy competition. That prohibition has been upheld by many appellate court decisions, some as recent as the 21st century. The state Legislature has reviewed and even amended that part of the state code many times in recent decades, but has declined to make any fundamental changes in the protections afforded by the Unfair Practices Act.

And the trend toward chain ownership and consolidation of businesses in everything from coffee shops to bookstores and hair salons would seem to suggest that the need for a law protecting independent local merchants from predatory chains is greater than ever today.

That’s certainly true for the news media: One company new owns almost every daily newspaper in the Bay Area.

Both before and after the trial, the VVM lawyers also argued that a ban on predatory pricing would violate the Weekly’s First Amendment rights. If the paper was forced to live within its means – that is, to raise ad rates and stop relying on big subsidies from the chain – Weekly managers might have to cut the size of the staff, thus reducing editorial coverage, the lawyers argued.

Two judges – first Richard Kramer, who handled pre-trial rulings, and later Miller – rejected that argument wholesale.

As the Guardian’s lawyers argued, newspapers have always had to follow basic business regulations – even when they might cost money that could have gone to editorial staffing. No newspaper has ever seriously tried to claim that labor laws, or environmental laws, or workplace-safety laws, or tax laws were a First Amendment violation.

Still, those claims may appear again in the appellate briefs.

Meanwhile, the costs to VVM and the Weekly will continue to rise: If the verdict is upheld on appeal, the chain will have to pay interest on the jury award, which is now accruing at about $4,300 a day. And at this point the Guardian has an additional statutory right to recover reasonable attorney’s fees, which could add a substantial amount to the current judgment of more than $16 million

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

You can read the Guardian’s key legal brief on the post-trial motions here. For a detailed history of the case, click here

SF Weekly bashes the left — and misses the point

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I’m not surprised that Matt Smith is once again looking for ways to bash the left, and that the SF Weekly is once again looking for ways to attack public power. But Smith’s latest piece is really screwy.

His thesis seems to be that the public-power movement is supporting the move to build city-owned power plants at the foot of Potrero Hill. Actually, that’s completely wrong.

There’s a measure headed for the fall ballot called the Clean Energy Act that would, among other things, move the city toward public power. But it has very little to do with the battle over the power plants.

The two cosponsors of the Clean Energy Act, Ross Mirkarimi and Aaron Peskin, are on opposite sides of the power-plant issue. And even a cursory read of the Guardian blogs demonstrates that the activists are by no means of one mind on this.

The whole idea that the peakers were a public-power plot is pretty laughable, since NONE of the leading public-power activists had anything to do with the idea in the first place. (And later, when it came out of the SFPUC — which again, has NEVER been a bastion of public-power activism) some of us liked the idea and some of us didn’t.

And the Peskin measure that Smith talks about has nothing to do with public power either.

Nuclear fallout

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› sarah@sfbg.com

As the US Navy prepares to deal with its radioactive past at the Hunters Point Shipyard (HPS) — inviting folks to submit comments by July 28 on its proposed cleanup plan for Parcel B — community members are struggling to understand the threat and its implications.

Bayview–Hunters Point residents and environmental and public health advocates gathered July 8 at City College’s Southeast Community Facility to hear from and question Navy officials, but few came away satisfied. Most expressed doubts about the Navy’s credibility, or confusion about the exact risks to human health and the environment from the plan to clean up radiological, soil, and water contamination.

For the past 25 years, this 59-acre property has housed a colony of artists in the site’s Building 103, in studios rented through the San Francisco Redevelopment Agency. In September the artists will be ejected, either to portables and buildings on the shipyard or to an offsite location, so the Navy can excavate the building’s storm drains and sewers where low levels of radiological contamination have been found.

HPS Base Realignment and Conversion Environmental Coordinator Keith Forman explained at the meeting that when the Navy first presented a cleanup plan for Parcel B in 1997, it had not surveyed for radionuclides, remnants of the shipyard’s military past.

That 2001 survey revealed that there are 14 sites on Parcel B that may have been exposed to radiation, including Building 103. The Navy’s 2004 Historical Radiological Assessment reveals that while Building 103 began as a non-nuclear submarine barracks, Operation Crossroad personnel subsequently used it as a decontamination center after an atomic test went awry in July 1946 in the South Pacific.

In that test, the Navy detonated two bombs the size used on Nagasaki in the lagoon of Bikini Atoll. One bomb, the HRA notes, was an underwater burst called Shot Baker, which "caused a tremendous bubble of water and steam that broke the ocean’s surface."

"Then a huge wave, over 90 feet high … rolled over target and support vessels as well as the islands of the atoll," the HRA records. "Vast quantities of radioactive debris rained down on the target and support ships, islands and lagoon."

Seventy-nine ships were sent to the Navy’s radiological center at Hunters Point Shipyard for decontamination, a site chosen in part because University of California, Berkeley and Stanford University were nearby to support the radiation studies.

The following year, from April through August 1947, the Navy burned 610,000 gallons of radioactively contaminated ship fuel at HPS. Also, workers sandblasting contamination at the shipyard’s dry docks showered in Parcel B’s Building 103, raising the current concern that cesium-137, cobalt-60, plutonium-239, radium-226 (from radioactive decay of uranium-238) and strontium-90 could be present in underground drains and sewers.

The 2004 HRA also identified two plots on Parcel B, IR07 and IR18, as having been used as dumps for radioluminescent devices and possibly more sandblast debris. It also listed a discharge channel between a pump house and Drydock 3 as radiologically impacted.

Currently the Navy is proposing to excavate soil from IR-07 and IR-18, including known mercury and methane spots, and ship it to dumps in Idaho and Utah; fill and seal the suspect discharge channel; cover potentially radiologically impacted soil; and stipulate that these two areas be used as open space in future plans for the base.

The cost of the Navy’s proposed radiological cleanup is $29.6 million. The Navy also proposes spending $13 million on amended soil and sediment cleanup, and $2.7 million on amended groundwater remediation.

Forman told the crowd that the Navy’s old soil remedy was a "bad fit." Excavations were larger than expected, Forman said, and showed no pattern of release. "There was no end in sight for the Navy," Forman said. "It didn’t look as if we were doing what we were meant to do: namely, find Navy-caused spills."

Forman also criticized the Navy’s old groundwater remedy as being "very passive." He proposed a remedy that includes more monitoring along the shoreline and using contaminant-eating bacteria to cleanup groundwater contaminants.

"The old remedy did not consider risks to wildlife and aquatic organisms at the shoreline, whereas the amended remedy will," Forman noted. "It was silent on this issue, yet we know the area has a shoreline."

Ultimately, amending the Navy’s cleanup plan is "about protecting human health and the environment," Forman said.

Green Action’s Marie Harrison was critical of the Navy’s failure to explain the risks in simple terms. "You talked about risk assessment, but you never told us what the risks were," Harrison said. "What is the risk to human life? How is capping going to stop it going into the bay? I’m not a scientist. I don’t have a PhD. I was hoping you were going to give me some kind of knowledge."

Harrison also worried that the Navy was not factoring in the cumulative risks for people living and working in the surrounding community who visit the shoreline to relax. Told that manganese, nickel, and arsenic are present in risky quantities, Harrison was referred to online information at www.bracpmo.navy.mil and to documents housed at the San Francisco’s Main and Third Street libraries.

Other community members criticized the Navy for not doing enough outreach to the Samoans, Latinos, and Asians in the community, and for having taken too long to acknowledge radiological impacts.

"Do you really want us to believe that no one was aware of nuclear waste and spills, given this was a Superfund site?" said Espanola Jackson, a BVHP resident since 1948.

"What I expect you to believe," Forman replied, "is that until 2002, no one who had technical and scientific expertise had looked at the evidence, sifted through history, and done an analysis to put together a radiological assessment."

Jackson also accused the Navy of "fast-tracking the cleanup in order for Lennar to build houses," referring to the efforts of Mayor Gavin Newsom, Speaker of the House Nancy Pelosi, and others to hasten the shipyard’s cleanup and early turnover to the city so the area can be turned into a massive development project pursuant to the voter-approved Prop. G.

"We are not going to accept anything less than total cleanup," Jackson said. "If you have to move that dirty dirt, do it. We need $10 billion. You said $60 million. You can’t even scrape the surface with that amount."

Melanie Kito, the Navy’s lead remedial project manager, replied that the Navy is "chartered to clean up releases of spills from Navy activities. Whatever remedy we put forth, we have to demonstrate that we are protecting human health and the environment."

Kristine Enea, a member of the community-based Restoration Advisory Board, told the Guardian that she felt that the Navy did not do a great job of explaining the risks of contaminants in, say, a major earthquake.

"If there’s an earthquake, would the risk be like getting 10 x-rays at once, or having a three-headed baby?" Enea said.

Pamela Calvert, deputy director of Literacy for Environmental Justice, told the Guardian she’s worried about shipping the contamination elsewhere.

"I’m really concerned that we don’t solve problems in Bayview by creating ones for another community," Calvert said. "It’s best to deal with it here. There is no such thing as ‘away.’ It’s someone else’s backyard."

Saul Bloom, executive director of Arc Ecology, which does contract work for the Redevelopment Agency, said that Calvert’s concerns strengthen the argument for simply capping Parcel B so that the contamination can’t escape rather than removing the material.

Bloom said he blames the Navy’s "incompetence" for the city losing the opportunity to transfer Parcel B early and speed development. "If we’d got rid of Parcel B in 2004, we would have been part of the housing boom, not the housing bust," Bloom said.

He believes the Navy’s proposed plan is acceptable, feasible, and protective, but that "whether it’s the best use given the needs of the BVHP is another debate."

While some residents are arguing for a total excavation of the site down to the sea floor, Bloom disagrees: "I think the covering strategy is a protective solution." He criticized the Navy for only having scheduled 11 days between its July 28 public comment deadline and its final draft, due out August 8.

"I’m concerned about the length of time they’ve allotted for the question that comes up and that no one has the answer to," Bloom said. "I don’t think it is adequate or seemly from a ‘we take your comment seriously’ point of view."

Shipyard artist Rebecca Haseltine, who has rented at Building 103 for 18 years, says that she has consistently trusted Arc Ecology’s advice on the shipyard cleanup. "But I also feel that we still don’t know the half of what happened on the shipyard. The Navy denied that any radioactive material had been used at the base, until a reporter with the SF Weekly published a story about it in 2001."

Weekly tries to overturn verdict

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Lawyers for the SF Weekly and its parent company tried July 8 to overturn the Bay Guardian’s $16 million predatory pricing verdict, rehashing several old arguments and trotting out a few new ones.

Judge Marla Miller took the case under submission and is expected to rule within ten days.

The Weekly and Village Voice Media asked the judge to throw out the jury verdict or order a new trial. The gist of their arguments: The evidence presented in court didn’t support the decision that a San Francisco jury reached after a five-week trial.

The arguments were at times highly technical, and hinged on the finer points of the definitions of words. In the same way the Bill Clinton once asked what the meaning of “is” is, James Wagstaffe, one of the VVM lawyers, tried to insist that the judge and jury had misinterpreted the term “agent” – and thus improperly concluded that the Phoenix-based chain was equally responsible for paying the damages.

The argument was aimed at severing VVM – a company with $190 million in sales and $11 million in profits – from the verdict. That way the only guilty party would be the Weekly – which VVM admits has no assets and would be unable to pay the Guardian anywhere near $16 million.

Evidence presented at the trial had shown that VVM executives were well aware of, and directly involved in, the SF Weekly’s long pattern of selling ads below cost in an effort to harm a locally owned competitor. In fact, two senior officers, CFO Jed Brunst and group publisher Scott Tobias, admitted on the stand that the SF Weekly would have gone out of business years ago if the chain hadn’t made a policy of shipping large sums of money from headquarters into the San Francisco operation to subsidize below-cost sales.

And yet, Wagstaffe claimed, the law required that VVM be acting as an “agent” for SF Weekly in order to be equally liable. “You have to act on behalf of someone else to be an agent,” he argued. “It is not enough to aid or assist.”
Since VVM was the parent company, Wagstaffe told Miller, nobody at that entity was taking orders from the local subsidiary. So VVM and its officers couldn’t have been SF Weekly’s “agents.”

He also said that Miller had screwed up and given the jury the wrong instructions about the presumption of intent. He said the instructions improperly allowed the jury to assume that VVM and the Weekly intended to harm the Guardian.

At the time those instructions were hammered out, later in the trial, “it was nine o’clock at night and we were all running around,” he told her with typical animation. “I was there with my usual energy but everyone else was tired.”
Guardian lawyer, Ralph Alldredge calmly asked Miller to look directly at the statute involved in the case. “The language is remarkable in its breadth,” he said, explaining that the state Legislature had clearly written the Unfair Practices Act to prevent big companies from hiding their assets by blaming subsidiaries for illegal acts. The law, he said, “refers to aiding and assisting, directly or indirectly, and says that the people who do that are equally responsible.”

He added: “What more aid and assistance could you possibly provide in a predatory pricing case than to fund it?”
As for the jury instructions, Alldredge pointed out that the issue of presumption is hardly new. “That court has already looked long and hard at this,” he said. “There were long discussions about jury instructions.”
Alldredge agued that the state law applied directly to the facts at trial, and that the jury properly applied that law. “This is exactly the sort of scenario that the law was written to cover,” he said. “A big company with operations in many markets was going after a smaller entity in one market.

“That statute,” he concluded, “was set up to presume that if you can prove below-cost sales and damages, intent shouldn’t be the sticking point.”

H. Sinclair Kerr, Wagstaffe’s partner and the lead Weekly lawyer during the trial, then rehashed the VVM argument from the trial that the Guardian profits over the seven year period of the complaint were not sufficient to justify the $6.3 million in damages that the jury awarded. (Miller later ruled that much of the damages should be trebled).
Alldredge countered that the Guardian financial expert, Clifford Kupperberg, had calculated the profit the Guardian could have made during that period without the Weekly’s below-cost pricing and the losses the Guardian experienced. The combination of the two would be around a million dollars a year, he said.

Although Kerr claimed the damages were “excessive,” Alldredge argued the Guardian had to shrink its business to survive the predatory onslaught and would have to make major investments to build the paper back up. “The Guardian must get back the profits and invest to rebuild the business,” he said. There was “nothing excessive about what the jury found,” he said.

At one point, as Kerr tried to bring back the VVM argument about the extent of the competition for the two alternatives Judge Miller interrupted and said, “Do you mean the poetry journal and the paper in Livermore?”

She was referring to the VVM argument during trial in which it cited a huge list of papers, from the Gilroy Dispatch to the Bodega Bay Navigator to a paper in Livermore, as competition. Alldredge made fun of the reference during trial. Miller’s remark stopped Kerr from continuing this line of reasoning.

The hearing lasted four and a half hours, and Miller allowed both sides considerable latitude in speaking and addressing the arguments. Both of the top executives of VVM, Mike Lacey and Jim Larkin, were on hand, as was Brunst and Andy Van De Voorde, who has been covering the trial for VVM.

Van De Voorde, whose reports have been long on rhetoric and personal attacks, posted an atypically short and non-bombastic story on the hearing.

The Guardian is represented by Alldredge, Hill and E. Craig Moody. The Weekly has brought Forrest Hainline onto its legal team after the trial, but he is no longer involved, so the case is in the hands of Kerr and Wagstaffe.

Click here to see the Guardian arguments as laid out in our opposition brief.

Weekly paper dies in Cleveland

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Curious deal creates alternative weekly monopoly

By Tim Redmond
I’m a little late on this, but it’s taken me a while to figure out the back story.

The parent company of the SF Weekly, which a few months ago sold off the East Bay Express, is shedding another money-losing paper — in the process, ending alternative weekly competition in Cleveland.

Village Voice Media will sell the Cleveland Scene to Times Shamrock, a chain that owns five other alternative weeklies. Times Shamrock is also buying the Cleveland Free Times, and will merge the two papers under the Scene name.

“It’s a sad day,” David Eden, former Free Times editor, told me. “This is a strong voice that being silenced.”
It’s also a curious new chapter in a six-year-old saga involving the nation’s largest alternative weekly chain, the U.S. Department of Justice and a scheme to wipe out competition in two markets.

The Scene was losing gobs of money, more than $1 million last year alone, according to documents filed in court as part of the Guardian’s lawsuit against VVM. The Free Times, owned by The Times-News of Erie Pennsylvania, was also struggling, publisher Matt Fabyan told me, “although we were much closer to stable.”

Still, there’s been talk of shutting the Free Times for months now: Back in December, 2007, Justice Department lawyers contacted Eden and asked him if he thought the Cleveland market was big enough for two competing alternative papers. “I told them it was,” Eden said.

Among the proposals on the table: VVM was interested in buying the paper and merging it with the Scene. But federal regulators wouldn’t allow it.

The reason: Back in 2003, the Justice Department and the attorneys general of California and Ohio filed suit against New Times, then the owner of the Scene, and VVM, which owned the Free Times. The two chains, which have since merged, had entered into a shady – and, it turns out, illegal – arrangement to create alt-weekly monopolies in Cleveland and Los Angeles. VVM agreed to shut its paper in Cleveland, and in exchange, New Times shut a paper in Los Angeles that was competing with the VVM-owned LA Weekly.

Justice forced the chains to sell the Free Times to a group of investors who vowed to keep it open and continue competition. The consent decree the chains signed bared them from taking any further anticompetitive actions in Cleveland or L.A.

But although VVM couldn’t create a monopoly, another newspaper outfit apparently can.

Fabyan said he had been in contact with the Times Shamrock people for some time, and that “I told them you really want to buy both papers. I don’t think this is a market big enough for two alternative weeklies.”

Eden was willing to try to save the Free Times: He said that he’d raised enough money to make a “substantial offer” for the paper: “I’m told that VVM had offered $450,000 for the Free Times,” he said. “We were close to that figure.” But his bid was turned down.

Don Farley, who runs the alt-weekly group at Times Shamrock, said he couldn’t comment on the details of the negotiations except to say that “we’ve been back and forth looking at the Free Times, and Scene became available as well.”

That was clearly part of the appeal: Running a paper that has no competition is typically more lucrative. “We can serve the community better this way,” said Fayan, who will be publisher of the Scene.

Andy Van De Voorde, executive associate editor at VVM, told me that his company didn’t see this as a three-way deal. “We sold our paper to Times Shamrock, and that’s our only role,” he said.

But he also confirmed that VVM had wanted to buy the Free Times and merge the two papers, but had run afoul of the Justice Department. “I’ll leave it to you to speculate on why we couldn’t do this deal, but Times Shamrock could,” he said.

Well, for one thing, Times Shamrock isn’t a previous offender, under a consent decree to stop trying to monopolize markets. But I’m also curious why Justice is allowing this to happen.

I’ve been trying to get a comment out of the Justice Department since Friday. The PR people keep telling me they’ll get back to me. I’ll let you know if I hear anything.

SF Weekly seeks to delay payment

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The chain that owns SF Weekly, which last year had revenue of at least $159 million and more than $11 million in profit, argued in court June 5 that it’s having trouble raising money for an appeal bond to cover the $15.6 million judgment the Guardian won in its predatory pricing lawsuit.

SF Weekly attorney Rod Kerr asked Judge Marla Miller June 5 to stay the judgment until 10 days after she rules on post-trial motions. That could have delayed the judgment until July 28.

Village Voice Media, which owns the Weekly, needs to post a bond for the full amount of the verdict plus interest — now accruing at more than $4,000 a day — if the chain wants to avoid paying the Guardian during the appeals process.

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.

Kerr said he believes there is a likelihood the judgment amount will be substantially lowered during post-trial rulings, something the company has represented to its lenders.

Guardian attorney Ralph Alldredge, speaking to the court by 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."

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," Miller said.

A San Francisco jury found that SF Weekly has been engaged in illegal predatory pricing going back to the mid-1990s, selling advertising below the costs needed to support the paper in an effort to drive the Guardian out of business.

Kerr 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-trial motions, including one by the defendants to throw out the verdict and order a new trial. (Steven T. Jones)

For more details and key documents, go to sfbg.com/lawsuit

SF Weekly and VVM having problems paying up

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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.

SF Weekly sneers at sex work

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Sex writer Violet Blue is one of the best things at the Hearst-run SFGate website, an authentic local voice singing the praises of sex-positive San Francisco. So of course, the soulless and snarky hacks over at the SF Weekly felt compelled to try to knock her down a few notches, sneering at the notion that many of us are accepting of sex workers. And for that, they have been rhetorically bent over and pegged by the lovely Mistress Blue in a blog post earlier today.
You’ve really got to read this thing, which is more investigative in nature than your average flame. She brings up the Weekly’s weird history of fake journalism on another sex story, and digs up some good dirt on the latest perpetrator, freelance writer Benjamin Wachs. Now, we couldn’t verify the rumors about Wachs’ efforts to start a right-wing news site in San Francisco (hey, Ben, good luck with that one). But our research does show the guy moved here a year ago from Rochester, NY, which might come as a surprise to the Brighton-Pittsford Post in New York, where he’s supposedly a local columnist.
Messages to Wachs and the Weekly went unanswered — no surprise — but I’ll update if I hear anything new. Or if you see Ben around town…
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…maybe you can ask him why he wanted to live in San Francisco if he has such a problem with our values.

Matt Smith loves prop. 98

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I almost don’t know what to say about Matt Smith’s SF Weekly piece in favor of Prop. 98. I know Smith gets a little unhinged when it comes to housing issues, but his faith in the free market to lower the price of housing in San Francisco – against all odds and all evidence – is just looney.

He starts off with the typical landlord/libertarian argument against rent control, which is that it screws up the marketplace:

Tens of thousands of other apartments are kept off the market through “hoarding,” as individual tenants remain in cheap and cavernous three-bedrooms, hang on to their old $200-a-month apartments long after they’ve moved in with a spouse, or are otherwise motivated to cling to their leases.

Except that Prop. 98 would allow existing tenants to stay in existing rent-controlled apartments, which lose rent control forever when they’re vacated. So the rent-controlled units would be even more valuable, and the incentive to “hoard” even greater. As would be the incentive for landlords to evict long-term tenants.

But wait, there’s more:

Studies also show that rent control discourages construction of new rental apartments New housing construction fell by one third in the seven years after San Francisco’s rent control law passed in 1979. During the 1990s, meanwhile, the number of rental units actually decreased by 7,500.

Ah, but all newly constructed units are exempt from rent control anyway. So something else must be going on here. Perhaps the number of rental units decreased because developers, who care nothing for the city’s housing needs, realized there’s more money to be made selling condos. It’s the same reasons Lennar Corp. broke its promise to build rental housing in Hunters Point: There’s more money in selling units right now than in renting them.

And, of course, we’re losing rental housing – not to rent control but to condo conversions, another way property owners can make money.

Smith seems to think that without rent control

“it’s reasonable to surmise … that downtown apartment construction would accelerate. Rents would stabilize or decline. …. Businesses would flock to San Francisco, which would have ample new office space and more, cheaper homes for their employees.”

Sounds idyllic, if you want to live in Manhattan, which I don’t.

In fact, Matt Smith’s vision of a “great city” is by nature one that’s constantly growing and ever-more dense. He berates the urban environmentalists:

San Franciscans replaced what had been a metropolitan vision of the future with one best described as suburban. Rather than being a great city, it would instead be a tranquil place to live.

Matt, you have no sense of history. After World War II, the captains of industry who had completely taken over planning and development policy, in the military model of command and control, to make the West Coast war machine work, decided they liked that way of doing business. So a handful of them sat down and planned the future of the Bay Area. Low-cost South of Market housing would be demolished to make way for hotels and a convention center. Following the suburban model, BART would connect outlying bedroom communities with a dense downtown office core. High-rise buildings would hold the economic center of the Pacific Rim. A network of freeways would cross the city in a Los Angeles-style grid.

That’s what the master planners who Smith lauds had in mind. And the people who lived here decided that it wasn’t fair that nobody asked them about it. So they fought back, cutting off the freeways, down-zoning neighborhoods, fighting over-development (which, by the way, hurts city coffers more than it helps) and trying to keep this a decent place to live.

Rapid growth is not always good, not always desirable. Cities are places where people live, and keeping them livable is a noble pursuit.

And when it comes to housing in a city like San Francisco, the market will never, ever solve the problem. I’ve written about this over and over, but here’s the latest.

Regulation – treating housing not just like a fungible commodity but like a necessity of life that the market can’t fairly provide – is the only way to keep San Francisco affordable.

Judge hits SF Weekly with injunction

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› 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.