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October 24, 2014

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R-J owner says Sun erred in listing of defendants in antitrust suit

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Steve Marcus

Brian Greenspun, editor and publisher of the Las Vegas Sun, is pictured in this Tuesday, Nov. 22, 2011, file photo.

The parent company of the Las Vegas Review-Journal filed a motion today to dismiss four of eight defendants listed in an antitrust lawsuit filed by Las Vegas Sun Editor and Publisher Brian Greenspun.

The motion argues Michael Ferguson, CEO of Stephens Media LLC; Warren Stephens, CEO of Stephens Holding Co.; SF Holding; and Stephens Holding Co. have nothing to do with the company’s effort to terminate a long-standing joint operating agreement at the center of Greenspun’s lawsuit.

The motion contends Greenspun added the four defendants to the lawsuit “for no reason other than their status as managing members” under the Stephens Media umbrella.

Under the Federal Rules of Civil Procedure, the filing says, Greenspun's complaint "is devoid of any allegations specifying how each (of the defendants) purportedly violated the antitrust laws.”

But Joseph Alioto, Greenspun’s attorney, says it seems clear the executives were deeply entrenched in the company’s efforts to dissolve the 24-year-old JOA. Alioto and Greenspun claim Stephens' intent is to kill the Sun to create a media monopoly in Southern Nevada.

“We believe the allegations of the complaint and the law support the fact that Ferguson and Stephens were involved,” Alioto said. “And if they weren’t, how would they otherwise do it? How else would corporations operate? With ghosts?”

Stephens attorneys say Greenspun failed in his lawsuit to name specific facts that would tie each of the eight defendants listed in his suit to an antitrust violation. They lastly point to the executives’ standing as members of a limited liability company.

“Besides the lack of specific allegations identifying how these defendants actively participated in a scheme designed to achieve anti-competitive ends, they should be dismissed from the action on the additional group that members of a Nevada limited liability company, even where they are the company’s managing members, are not liable for the debts or liabilities of the company,” the filing says.

A federal judge last week denied Greenspun’s second attempt to prevent what the Sun publisher argues is an effort by the R-J to gain a media monopoly.

U.S. District Judge James Mahan rejected Greenspun’s request for a temporary restraining order to block the termination of a joint operating agreement in which Stephens prints and delivers the Sun.

Mahan ruled the matter was “still not ripe for review” by the court because there had been “no definitive contract or legal agreement providing for termination of the JOA,” according to court documents.

Alioto later said the case is headed for the 9th U.S. Circuit Court of Appeals in San Francisco.

Mahan’s decision mimics a decision he made Sept. 6, when he called Greenspun’s Aug. 21 lawsuit “premature” because no letter of intent or contract regarding the JOA had been signed.

Greenspun and Alioto then asked for a restraining order less than a week after Mahan’s decision when Greenspun’s three siblings signed a letter of intent to terminate the JOA. The four Greenspun siblings control both the Las Vegas Sun and the Greenspun Corporation.

In their suit, Alioto and Brian Greenspun say dissolving the 24-year-old JOA would force the Sun to cease operations, running counter to the Newspaper Preservation Act, the federal law that originally led to the creation of the JOA.

Stephens Media hopes to terminate the JOA by Dec. 31, as stated in the letter of intent. The agreement does not include the URL lasvegassun.com and doesn’t restrict how Greenspun Media Group uses the website.

Brian Greenspun first sued Stephens Media in August, when Stephens offered to transfer the URL lasvegas.com to the Greenspun family in exchange for the dissolution of the JOA, which the Arkansas-based company has found burdensome. The Greenspun Corporation leases lasvegas.com from Stephens Media for as much as $2.5 million a year.

Brian Greenspun said he was unaware of the agreement between Stephens Media and his siblings — until just before the family put the deal to a vote on Aug. 7. The Sun’s publisher cast the lone dissenting vote and has since said he is willing to buy the newspaper from siblings Danny Greenspun, Susan Greenspun Fine and Janie Greenspun Gale. Their late father, Hank Greenspun, started the Sun in 1950.

The JOA was created to ensure Las Vegas would have two independent newspapers with differing editorial voices. The U.S. Justice Department green-lighted the pact in 1989, requiring the R-J to print and distribute the Sun and share advertising revenue, which most recently amounted to about $1.3 million a year.

Amended in 2005 to allow the Sun to be distributed inside the R-J, the JOA is set to expire in 2040 and renew itself in 10-year increments.

The deal Stephens Media struck with the three Greenspun siblings would end the annual profits payment Greenspun Media Group receives, pay each of the Greenspun siblings $70,000 in severance and grant the family full ownership of the lasvegas.com URL.

Stephens Media has argued Brian Greenspun has no legal standing because other print and online news sources could substitute for the Sun. As examples of adequate substitutes for the Sun, Stephens’ lawyers listed Auto Trader, Bridal Spectacular, Las Vegas Pet Scene, Construction Notebook, several apartment guides and other niche publications.

But Brian Greenspun’s lawyers say local television, local radio, the Internet, nonprofit and community media are not apt to fill the reporting and editing gap left behind when a newspaper fails. They anchor their argument to the Newspaper Preservation Act, created by Congress to maintain the publication of newspapers in any community where publishers have drafted a joint operating agreement because one of the newspapers struggled financially.

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