April 12, 2007

Round one

by HANK SIMS

People call it a newspaper war, but what kind of newspaper war is it when the newspapers in question do battle in court and neither newspaper reports the fact? Yes, that's right -- it was the Eureka Reporter versus the Times-Standard in Humboldt County Superior Court last week, and as of this date (Tuesday) neither paper had printed a story.

Why not? The case was a humble one, but it just might presage future legal actions between the two billionaires currently squaring off in our small corner of the country: Reporter owner Rob Arkley, the hometown contestant, and Dean Singleton of the Denver-based MediaNews Group. It's not as if this scrap hasn't generated ink before. Generally, people seem quite curious about the matter. Some sweaty readers are less interested in the news itself than in the comparative deconstruction of the rival papers' texts. It's an unofficial county pastime. So why no stories? Why, colleagues?

Whatever the case, we're here to report that the Reporter pulled off an upset victory. Against the Times-Standard's objections, Judge J. Michael Brown ruled Monday that the insurgent Eureka daily had what it took to be declared an officially adjudicated newspaper in the state of California.

This is significant because the law states that only "adjudicated" newspapers may contract to run legal notices -- those small ads in the back of the paper that various individuals, organizations and government entities are required to publicize, for various reasons. (If you want the flavor, flip to page 34 of this week's Journal.) Legal notices can be a significant source of revenue, especially when a paper lands a regular contract with a city or a county. In order to compete for such business, in January the Reporter applied to be adjudicated; the Times-Standard objected; the case went to trial last Thursday.

It was a fascinating little case, and it was a bit surprising to everyone that the Reporter eked out a victory. The Times-Standard's attorney put together a clever objection -- namely, that the law which set up the system of newspaper adjudication requires, among other things, that an applicant paper have a "bona fide list of paying subscribers." The Reporter, it was argued, had no such thing -- it is a free paper with free delivery. It invites people to pay if they wish, but does not require them to do so.

Arguing for the Reporter Thursday morning was local attorney Russell Gans of the Eureka firm of Mitchell, Brisso, Delaney & Vrieze. Gans ably made the case that adjudication of the Reporter was surely in the public interest -- the paper was widely and freely available, he said, meaning it was well within the reach of people from every income level. He admitted that payment to the paper was voluntary, but he presented a list of 810 persons from across the county who had sent in a check nevertheless. The purpose of the century-old adjudication statute, he argued, was to insure that legal notices reach the public sphere. Surely the Reporter, despite its new-fangled business model, reached the public sphere.

"I believe it is highly unlikely that the legislature considered the prospect of a voluntary paid subscription in 1905," Gans said.

Appearing by telephone for the Times-Standard was Rachel Matteo-Boehm, an attorney attached to the San Francisco branch of a high-powered Denver firm -- Holme Roberts & Owen -- that does a lot of work for MediaNews. In contrast to Gans' argument, which relied mostly on horse sense, Matteo-Boehm hewed very closely to the law. She cited a California Supreme Court case from 1920 -- In re Herman -- which further defined the meaning of "bona fide list of paying subscribers."

"It seems to us that the term as used in this connection means a real, actual, genuine subscription list which shall contain only the names of those who are in good faith paying regularly for their subscriptions," the court wrote.

Well, the Reporter had nothing of the sort, Matteo-Boehm argued. "The Eureka Reporter position is that sporadic donation constitutes subscribers," she said. Sporadic, voluntary donation is clearly not the same thing as a purchase of goods. In all likelihood, none of the 810 people on the Reporter's list "subscribe" to the paper; they started receiving it on their lawns and decided afterward to send in a check. There is no connection between the check and the delivery. Hence it is not a subscription.

But Judge Brown disagreed. In his Monday ruling, he did not bother to address Matteo-Boehm's precedent case directly -- he stated, simply, that the Reporter's list was "sufficient to meet the statutory requirement of 'paying subscribers.'"

Reached at her office in San Francisco, Matteo-Boehm said it was too early to know whether her clients would appeal the decision. But she did say that she disagreed with the ruling, and she furthermore disagreed with Brown's decision to allow the Reporter to submit its subscriber list under seal.

Meanwhile, over at the Reporter Tuesday, Publisher Judi Pollace was stoked. "It's the last component in our growth," she said. "We're just picking one thing at a time, trying to perfect it in our own style and moving on to the next thing." Pollace said that a marketing campaign for the new Reporter legals was already in place, and that the paper expected to be "very competitive" in that market.

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You've already heard the big news from the Pacific Lumber bankruptcy trial; on Friday, Judge Richard S. Schmidt, of the federal bankruptcy court in Corpus Christi, denied the motion brought by a consortium of Wall Street firms that would have accelerated their ability to foreclose upon 200,000 acres of Humboldt County timberlands. The Wall Street firms, who own $720 million of Pacific Lumber's debt, have appealed the decision.

No word yet on whether or not Schmidt will order the case moved to California. The court is currently taking up a number of other, smaller matters -- how the company may spend its cash-on-hand, who it may hire to assist it with the various aspects of managing a bankrupt company.

Last week's real Pacific Lumber news came out of the Security and Exchange Commission, where Maxxam, Palco's corporate parent, filed its annual report and a few other documents. Two items of note:

1.of December 31, 2006, Pacific Lumber's pension plan was underfunded to the tune of $23 million.

2.CEO Charles Hurwitz and General Counsel J. Kent Friedman will each receive bonuses in excess of a million dollars this year, thanks to the company's "improved consolidated financial results."

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Last week in this space, we told you about an upcoming opening at the Westhaven Center for the Arts -- namely, the Humboldt debut of that internationally acclaimed modern artiste that answers to the name of Beloved Adi Da Samraj. Well, scratch that. Turns out that the Da or his people have scrapped the show. No news as to why -- perhaps he's got better things to do than waste his creative talents on peasants such as yourselves.

You can still view the Da's work on his website: daplastique.com. Or you can go see his other big opening this year. I don't know, maybe you've heard of it ... it's only a little thing called the Venice Biennale.

Chew on that, Alan Sanborn!

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