Attorneys for Seattle's two daily newspapers sought yesterday to convince the state Supreme Court that each deserves to emerge the winner in their fight to survive.
Attorneys for Seattle’s two daily newspapers, taking another swing in their long-running legal struggle, sought yesterday to convince the state Supreme Court that each deserves to emerge the winner in their fight to survive.
The nine Supreme Court justices, sitting mostly in silence, listened as lawyers for both The Hearst Corp., owner of the Seattle Post-Intelligencer, and The Seattle Times Co. argued over whether their joint-operating agreement (JOA) should be the medium to preserve both papers or possibly end one of them.
“The Post-Intelligencer’s future is at stake here today,” Hearst attorney Kelly Corr told the justices.
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Corr said the intent of the 1983 agreement was to do everything possible to keep both papers operating and not to provide The Times with what he called “a free get-out-of-jail card.”
Times attorney Stephen Rummage argued that a strict interpretation of the contract governing the JOA gives The Times the right to demand negotiations that could end the agreement, shut the P-I or both.
Rummage said that while The Times did not set out to close down its crosstown rival — Hearst has said the P-I cannot survive outside the agreement — under certain circumstances the JOA could lead to that result. Those circumstances, he said, were hammered out during six years of negotiations before the JOA was signed more than two decades ago.
“At the end of the day, you have to pay attention to what they agreed upon,” said Rummage. “These were sophisticated parties agreeing to a sophisticated deal.”
A third party, the Committee for a Two-Newspaper Town, also argued before the court yesterday. The ad hoc citizens group, which contends the public interest would not be served if the JOA ends, was granted intervenor status in the case.
All the parties now await the court’s ruling, which is not expected for several months.
At the core of the argument between the papers is a basic contract dispute over whether the language of any legal agreement should be interpreted — as Hearst maintains — with an eye toward outside evidence of what the signers intended.
Times attorneys argue that an agreement’s written contents alone are the final evidence of its intent.
Times officials seek negotiations that could possibly shut down the JOA or the P-I. They cite the agreement’s “stop-loss” provision, which allows either party to force such negotiations after three consecutive years of losses.
In April 2003, Times Publisher Frank Blethen notified Hearst that The Times had lost money under a JOA formula from 2000 to 2002 and asked to begin shutdown talks. Blethen said the losses resulted from changing conditions in the newspaper industry that have made JOAs unworkable.
Hearst said, and The Times acknowledges, that the 2000 and 2001 losses stemmed mainly from a 49-day newspaper strike spanning both years. The intent of the JOA between the P-I and The Times, Hearst said, was to place such one-time events as the strike under the agreement’s “force majeure” provision. Force majeure is a standard contract provision that exempts the parties from liabilities resulting from events beyond their control.
Hearst contended that the intent of the JOA signers was to give the force majeure provision precedence over the stop-loss provision.
On the day before Blethen delivered his stop-loss notice, Hearst filed a pre-emptive lawsuit in King County Superior Court, seeking to block The Times from invoking the contract provision. Superior Court Judge Greg Canova ruled in Hearst’s favor, agreeing that the force majeure clause invalidated the 2000 and 2001 loss claims.
Last March, a three-judge state Court of Appeals panel reversed that decision and ruled in favor of The Times. Hearst then appealed to the high court.
During yesterday’s arguments, several of the justices seemed to be heeding The Times’ position. Justice Barbara Madsen, for example, sought clarification from Rummage over whether the Newspaper Preservation Act, the congressional act that provides JOAs with protection from federal antitrust rules, raised any prohibition to ending the agreements when market forces no longer favored them.
Rummage said the original act did not contain any such concerns and that 17 of the 29 JOAs that gained federal approval have since ended.
“They went away, just like this one would go away here,” Rummage said.
Both Hearst and The Times played down any effort to read the court’s reaction from the justices’ questions.
“I wouldn’t read too much into the justices’ questions,” Times spokeswoman Kerry Coughlin said after the hearing. Coughlin, who attended the session, said she thought that after the justices read all the case documents, they “will see that The Seattle Times’ survival is also at stake.”
Corr said Hearst’s attorneys were “guardedly optimistic over our arguments that the P-I should be saved.”
In any event, Corr said, Hearst plans to renew its court challenge over The Times’ 2002 loss claim. Litigating that part of the case, he said, could be “factually more intensive” than the contract argument because it focuses on whether Times spending levels created its 2002 loss.
Bill Richards is a freelance writer hired on a special contract by The Seattle Times to cover events involving the joint-operating agreement with the Seattle Post-Intelligencer. He can be reached at email@example.com.