Magazine article Editor & Publisher

Weekly Chain Files Chapter 11; Bankruptcy Petition Filed to Protect Itself against Federal Lawsuit over a Classified Ad

Magazine article Editor & Publisher

Weekly Chain Files Chapter 11; Bankruptcy Petition Filed to Protect Itself against Federal Lawsuit over a Classified Ad

Article excerpt

Southern California Community Newspapers, owner of 31 weeklies and semiweeklies in Los Angeles County, has filed a Chapter 11 bankruptcy petition to protect itself against a federal lawsuit over a classified ad.

SCCN president and publisher Ric Trent said the alternative was ruinous litigation, and warned that "anyone can be trapped into this."

According to Trent, the suit by the Fair Housing Council (FHC) and a prospective tenant stems from an "unsubstantiated claim" that the group engaged in discriminatory advertising practices when one of its papers, the Montebello News, ran an "Adult Pref." (adults preferred) apartment rental ad two years ago.

The council asserts that the ad is in violation of the federal Fair Housing Act as amended in 1988.

Trent said he had offered the FHC $50,000 in free advertising to settle the suit and was turned down.

"They wouldn't even speak to us," the publisher added.

However, in a court appearance last month, the plaintiffs told the judge they would settle for $400,000 plus punitive damages and their attorneys' fees over the past year-and-a-half, Trent said.

"My lawyers," he continued, "said to me, 'This is a perfect First Amendment case and we'd love to take it over, but you can't afford it.'"

Trent said they told him that even if a jury awards $1 to the plaintiffs, he would have to pay the other side's attorneys' fees, which at that time were up to about $250,000.

Trent described the federal action as a "nuisance lawsuit," adding: "They could have chosen anybody but they probably would not have picked a major metropolitan daily because they have in-house lawyers, or a mom-and-pop operation because they have no money. They chose me because we're big and have insurance."

However, SCCN's insurance firms "looked the other way," Trent said, telling him that he had violated a federal statute.

Trent said his attorneys advised him to seek bankruptcy protection.

"After a two-week trial, I was faced with the prospect of having to come up with a half-million dollars," he ex plained.

"The lawyers told me this is a no win situation. There is nothing more important I could do for the newspaper industry than to take this case to the appellate court and the Supreme Court, but I can't afford it."

Trent said he already has spent $100,000 in legal fees in connection with the suit. He opined that a test case would have to be taken on by a larger organization than his.

"The real threat here is that many newspapers could be put out of business by this law," Trent observed. …

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