Thursday, March 19, 2009

More About News America Settlement and Litigation

Several articles have been published recently regarding the Floorgraphics settlement and acquisition:

Fortune covered the settlement in this article on March 13. It reported that:

While Emmel was taking a break from testifying [during the trial], [News America President Chris] Mixson allegedly followed him into the restroom. Says [Emmel's attorney, Phil] Hilder: "It's my understanding that Mixson said 'Nice job telling lies on the stand,' in a very menacing way.

News America accused Emmel of making up the incident, and also pointed out that Floorgraphics has paid $375,000 for its share of Emmel's legal fees (which apparently exceed $750,000 total, with Insignia paying for the other half). The article also reported that Emmel is likely to testify at the upcoming Insignia trial.

The New York Times wrote about the settlement and acquisition in this March 12 article.

BNET reported today that the stock of both Insignia and Valassis jumped after the Floorgraphics settlement was announced, because:

The settlement and acquisition of FGI [Floorgraphics, Inc.] by News America raises the probability that Valassis may succeed in its trial (paving the way for a jackpot jury verdict in favor of Valassis) or that News America may offer to buy Insignia in a similar settlement to FGI's.

BNET also wrote on March 16 about the Summary Judgment ruling against Robert Emmel, observing that: "The ruling is chilling for employees of ad agencies and marketing firms who discover that their company is engaged in potentially illegal acts."

Finally, a recent filing in the Insignia case provided some additional details regarding the alleged conduct by News America that Insignia is challenging, including alleged false statements made by News America. Specifically, Insignia stated in interrogatory responses that:

News America made false and misleading statements regarding Insignia's compliance rate; News America made false and misleading statements regarding its own compliance rate; News America made false and misleading statements regarding Insignia's financial condition; News America made false and misleading statements regarding Insignia's history of payments to retailers; News America made false and misleading statements regarding the exclusivity provisions of certain News America contracts; News America made false statements about the exclusive nature of its relationship with certain retailers; and News America made false statements about Insignia's performance of its contractual obligations with CPGs and retailers. Insignia further identifies the following entities to which false and misleading statements were made, including but not necessarily limited to: Georgia Pacific; White Wave; Ocean Spray; McCain; Solo Cup; Hormel; Kraft; Ryan Multifoods / Ryan Partnership; Pfizer, Dreyer's; Kellogg's; Dial; Chef America / Nestle; Nabisco; Campbell's; Sorrento; B & G Foods; Colgate; Church & Dwight; Pinnacle Foods; Procter & Gamble; SC Johnson; Tyson's; General Mills; Pillsbury; and Safeway.

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