A claim by the Las Vegas Review-Journal that the Las Vegas Sun has breached a decades-old Joint Operating Agreement can move forward in Clark County District Court, a judge ruled Wednesday.
But the prospects of the claim may depend significantly on another legal matter — a lawsuit filed this week in federal court by the Sun against the R-J.
Clark County District Judge Timothy Williams heard arguments from the legal teams for both newspapers before ruling that the R-J could proceed with its claim that the Sun — which is delivered inside the R-J — is an inferior product and that the JOA, which is set to expire in 2040, should be terminated.
Wednesday’s hearing, which lasted for about an hour at the Regional Justice Center, came a day after the Sun filed a lawsuit in federal court alleging any attempt by the R-J to end the JOA prematurely would be a violation of antitrust laws.
Much of Sun attorney James Pisanelli’s argument before Williams centered on what he said was the need for the matter to be heard in federal court as opposed to state court.
“The Review-Journal’s attempt to terminate this JOA must be scrutinized by the only court that has jurisdiction to do antitrust scrutiny, which is the federal court,” Pisanelli said. “Federal court has exclusive jurisdiction over antitrust laws.”
In federal court, the Sun seeks an injunction to force the R-J to cease its “abusive, unlawful and anti-competitive practices” and a judgment ordering the R-J’s owners to either divest themselves of the newspaper or turn over its noneditorial business operations to an independent agency or trustee.
Pisanelli said after the hearing that he wasn’t surprised by the judge’s decision because the bar is low to move such a complaint forward.
Indeed, Williams said granting a motion to amend a pleading, as discussed Wednesday, represented a “low hurdle” to overcome.
Williams also warned that federal proceedings in the battle between Las Vegas’ two major newspapers could affect the case.
“What happens in federal court could have a significant impact in this case, and my mind is open in that regard,” Williams said. “Whether or not the federal court has exclusive jurisdiction over antitrust cases, we can deal with that down the road. As far as the Newspaper Preservation Act, if that has some sort of impact on this case, I will consider that.”
The Newspaper Preservation Act — approved by Congress in the 1970s and the foundation for the Sun/R-J operating agreement — provides limited antitrust protection for newspapers to combine business functions while remaining editorially independent. It was created to benefit communities by maintaining competing newspapers and diverse editorial voices.
Pisanelli said communities are generally better off when they have newspapers that feature different points of view editorially. That was one of the main points of the JOA, he said.
“In some cases, like what we have here, there’s a dominant player that could drive the other voice out of the marketplace,” Pisanelli said. “The JOA is a good solution to what otherwise could be a monopoly.”
Pisanelli called the R-J’s attempt to terminate the JOA “predatory” and “anti-competitive.” The R-J made its claim after losing an arbitration issue.
He said the Sun, through further court proceedings, plans to “shine a light” on the R-J’s attempts to put it out of business.
“We’re not going to pull any punches,” Pisanelli said. “We’re going to prove (in federal court) that there was charging of improper expenses in order to financially starve the Sun, there’s been the concealing of the Sun’s mandated space, and we’re going to see that the Review-Journal has been blocking the Sun’s auditing (functions).”
Review-Journal attorney Randall Jones said the R-J simply wants to hold the Sun accountable to its JOA promise to adhere to “high standards of newspaper quality.”
He said that since winning a Pulitzer Prize for public service journalism in 2009, the Sun’s newspaper operation has fallen off and now fails to meet the standards expected by the R-J.
“In 2009, the Sun was a different paper, and that’s the problem,” Jones said. “The content of the Sun has continued to deteriorate.”
Pisanelli argued, however, that one of the main goals of the R-J is to eliminate the Sun from the Las Vegas news landscape.
“This is a monopolistic scheme,” Pisanelli said, adding that R-J owner Sheldon Adelson wants “one voice in this community.”
The two sides are scheduled to next appear in Clark County District Court on Oct. 16.