Las Vegas Sun

May 25, 2024

Rulings back Sun in legal battle with R-J

Amended JOA is ruled valid; Sun’s antitrust claims cleared for trial

0403_sun_ReviewJournalExterior01

Steve Marcus

An exterior view of the Las Vegas Review-Journal newspaper at 1111 W. Bonanza Rd. Wednesday, April 3, 2024.

A federal judge weighing competing motions for summary judgment in the Las Vegas Sun’s antitrust lawsuit against the Las Vegas Review-Journal has issued a sweeping set of rulings that strongly supported the Sun’s position in the case and rejected the R-J’s antitrust counterclaims and arguments against the Sun.

In a ruling dated Sunday, Judge Anne Traum also wrote that the Review-Journal’s claim that a 2005 amendment to the 1989 Joint Operating Agreement (JOA) governing the combined editions of the daily newspapers didn’t have to be signed by the U.S. attorney general to be valid and enforceable and that the JOA was legal and binding on the Review-Journal.

The ruling was part of a 50-page opinion that refined the issues for a jury trial in a lawsuit brought by the Sun against the family of Sheldon Adelson, Adfam (Adelson’s family office), and the Review-Journal. The suit was brought by the Sun in September 2019 to prevent the Review-Journal’s efforts to end its publication of the Sun, following an arbitration finding that the R-J had engaged in improper accounting practices that denied the Sun its share of profit payments.

The JOA between the newspapers was created under the Newspaper Preservation Act to provide limited antitrust protection for the newspapers to combine business functions while remaining editorially and reportorially independent. The legislation in 1970 was approved by Congress, and the parties received attorney general consent for their original JOA in 1990 under this statutory scheme.

“The court ended the R-J’s attempt to invalidate the amended JOA today. The court concluded that the amended JOA is valid and enforceable,” said Leif Reid, an attorney with Lewis Roca, the firm representing the Sun. “The R-J’s efforts to end the JOA have always been a thinly veiled effort to eliminate the Sun. The R-J will be required to face the consequences of its anticompetitive efforts before a jury in Southern Nevada.”

The R-J had argued that the 2005 amendment to the agreement between the newspapers wasn’t valid because it lacked the signature of the U.S. attorney general, but the judge agreed with the Sun that the federal law creating joint operating agreements only required the attorney general’s signature on the parties’ original pact. The judge also cited multiple federal cases over decades that supported the Sun’s position and rejected the R-J’s attempt to invalidate an agreement that the R-J itself had bargained for and signed.

The agreement is scheduled to remain in effect until 2040.

Traum held that the RJ’s challenges to the amended JOA failed “because there is no signature requirement for amended JOAs and the 2005 JOA is clearly an amended JOA, not a new JOA. These conclusions are supported by the text and structure of NPA, case law, and the text and history of the 2005 JOA,” along with the fact that “(t)he R-J’s counsel Gordon Lang represented to the DOJ in the submission of the 2005 JOA that the parties ‘have amended the JOA, and filed the Amended Restated Agreement with the Assistant Attorney General for Administration.’ ” Traum concluded, “The fact that the 2005 JOA was not signed by the attorney general is not a defect, but rather consistent with its being an amended JOA.”

The Sun in its September 2019 filing alleged the R-J was attempting to stop the Sun from publishing to silence an alternative daily print newspaper voice in Las Vegas.

The Sun contends the R-J’s owners violated the JOA by eliminating profit sharing and omitting the Sun from advertising and promotional materials, among a variety of other antitrust violations. The Adelson family — prominent donors to Republican Party candidates and causes — intended to monopolize the local newspaper industry and squelch dissent to their right-leaning editorial views, the Sun argued.

Traum ruled that the Sun had sufficient cause to bring these matters to trial, writing, “Here, the R-J’s alleged anticompetitive conduct is itself potentially unlawful because it reduces editorial competition in the relevant market and harms consumers. … The Sun’s claimed injury, especially as it pertains to its reduced ability to compete, is exactly the type of injury the antitrust laws were intended to prevent.”

Kristen Martini, another one of the Sun’s lawyers, stated, “After considering all of the law and the facts, the court rightly rejected the Review-Journal’s antitrust claims against the Sun, and concluded that the Sun’s antitrust claims will proceed to a jury. The court’s robust and comprehensive order demonstrates how thorough and well-reasoned its decision on these antitrust issues is. This is a monumental victory for the Sun.”

The intent of the JOA structure was to preserve the publication of competing newspapers and continue to provide communities with diverse editorial voices. Prior ownership of the R-J participated in drafting the JOA in 1989 and its amendment in 2005, and defended it to the Department of Justice. But when Adelson purchased the R-J in 2015, he immediately started asking for ways to stop printing the Sun.

In meetings at that time, the Sun alleges, Adelson pondered ways to silence the competing publication by not printing it. “During one such meeting, Adelson asked what would happen to the Sun if, under the JOA, there was no profit, and in other meetings continued to hypothesize about what would happen to the Sun if the R-J squeezed the Sun out of the market by eliminating its profit payments,” according to the September 2019 complaint.

The court found the Sun had sufficient grounds to go to trial with its antitrust claims.

Meanwhile, Traum rejected all of the R-J’s antitrust counterclaims, and nearly all of the R-J’s cross-motion for summary judgment.

Only a portion of the R-J’s state law counterclaims survived to go to trial, which dealt with the R-J’s allegations, following the 2019 arbitration award in favor of the Sun, that the Sun breached the “quality” and “cooperation” provisions in the 2005 JOA amendment. Yet, Judge Traum further clarified her ruling in this regard, stating,“The court does find, however, that the Quality Provision cannot interfere with the Sun’s editorial independence in any way to be read consistently with the entirety of the 2005 JOA. This means the Quality Provision cannot apply to ‘the exercise of editorial control and judgment.’ ... The Quality Provision, then, if it does apply to the Sun’s content, must do so without regard for choices that fall within editorial control and judgment.”

A trial date will be later determined.

Brian Greenspun, the Sun’s owner and publisher, praised the rulings: “We have worked for many years to reach this moment, and we’re grateful the court has ruled so broadly to reject the R-J’s claims. We look forward to bringing the remaining issues of the R-J’s and the Adelson family’s conduct toward the Sun before a jury. As always, our commitment is to preserve the independent voice of the Sun and to encourage a robust exchange of ideas in the community.”

“We disagree that the Sun’s case has any merits,” said Ben Lipman, general counsel for the R-J. “We respect the judge’s decision and remain confident we will prevail when the case goes to trial.”