Judge to mull whether Sun can depose R-J’s Adelson

By Bryan Horwath

Tuesday, Feb. 4, 2020 | 7:30 p.m.

U.S. District Magistrate Judge Brenda Weksler will decide in the coming months whether Las Vegas Sun lawyers can depose Review-Journal owner Sheldon Adelson as part of a federal lawsuit alleging Adelson is trying to silence the Sun, which presents an alternative voice to the R-J’s conservative editorial views.

Lawyers for the R-J have requested a delay in the presentation of documents and witness testimony because they want the court to rule on their October motion to dismiss the lawsuit. But the Sun doesn’t want to wait to depose the 86-year-old Adelson, a casino magnate and Republican Party contributor who has had recent health scares.

“We would focus on the (R-J’s) predatory behavior,” Sun lawyer Leif Reid said Tuesday during a hearing that lasted nearly three hours. “There was a sea change that occurred when Mr. Adelson purchased the paper (in 2015). He’s likely the first person we’d want to depose.”

As part of an ongoing legal dispute between the two Las Vegas newspapers, the Sun filed a federal lawsuit against Adelson and the R-J’s ownership in September. The antitrust action alleges Adelson is attempting to stop the Sun from publishing and silence its countering editorial voice in Southern Nevada. Putting the Sun out of business — which is exactly what Sun attorneys say the R-J is attempting to do — would create a monopoly for the Review-Journal.

“What is the nature of Mr. Adelson’s ownership of the newspaper?” Reid asked at one point while answering one of Weksler’s questions. “Counsel has, in other situations, denied Mr. Adelson’s ownership. The organization, the business structure, those are all relative things that we would conduct discovery around.”

Along with Adelson, Reid said it was likely that Keith Moyer, publisher and editor of the R-J, and other members of the paper’s leadership team would be deposed.

The papers are fighting each other not only in federal court but in Clark County District Court, where the R-J announced plans last year to file a counterclaim attempting to dissolve the joint operating agreement under which the R-J and the Sun have operated since 1989. The JOA was amended in 2005.

The R-J’s counterclaim was in reaction to a Sun suit accusing the R-J of changing its front page and diminishing the Sun’s presence on it in a manner not allowed under the JOA.

When the R-J announced its plans, the Sun went to federal court and filed suit saying this effort and other R-J actions constituted an attempt to create an illegal monopoly in Clark County.

In November, Clark County District Judge Timothy Williams issued a partial pause for a similar case in state court. Williams said he wanted to see how the federal case would unfold.

Part of the argument made by the R-J’s team of lawyers on Tuesday centered on the idea that an antitrust suit must be in relation to economic hardship.

Sun lawyers argue that the dispute around the JOA — a structure created under the federal Newspaper Preservation Act, which was approved by Congress and signed into law in the 1970s — includes matters of the public good. The act provides limited antitrust protections for newspapers to combine business functions while remaining editorially independent.

Having two Las Vegas newspapers with differing editorial viewpoints, they say, is a positive for the community.

“In any antitrust claim — in every single antitrust claim — you must have what’s called antitrust injury,” said Richard Stone, an attorney for the R-J. “There’s a commerce clause requirement for the antitrust statute. The law is very clear, it must be economic competition. There must be harm to competition in a relevant market. There can’t be any economic competition between the Sun and the Review-Journal for the sale of newspapers because they’re sold in a package.”

In 2005 after the two sides agreed to a revised JOA, the Sun’s print edition began being distributed inside the R-J’s daily newspaper package.

In another legal matter last year, an arbitrator ruled mostly in favor of the Sun, saying the R-J engaged in improper accounting practices that deprived the Sun of JOA-required profit payments. Sun lawyers maintain that through the years the R-J had withheld funds owed to the Sun under terms of the JOA using various accounting irregularities, but since Adelson purchased the paper those irregularities have intensified.

“Going back to 1989, the Sun has relied on monthly payments coming from the JOA to fund its editorial operations,” Reid said. “Shortly after Mr. Adelson purchased the newspaper, those payments stopped. This is a multiyear litigation. Every motion, every procedural move that happens, is intended to cause delay. The status quo benefits the Review-Journal very much because they are not making payments. We are prejudiced by any delay in discovery. We do want to get started.”

Sun lawyers previously asked Williams to affirm most of what the arbitrator ruled in 2019. R-J attorneys have argued to keep the arbitrator’s findings out of public view.

While Reid expressed concern about Adelson’s advanced age and 2019 cancer diagnosis, Stone said Adelson had since “successfully completed” cancer treatments.

“(Adelson) traveled to China this fall and attended the signing of the phase one trade agreement with China in Washington, D.C., in December,” Stone said.

Patrick Dumont, Adelson’s son-in-law and chief financial officer for Las Vegas Sands Corp., is also named in the federal lawsuit.