Saturday, January 30, 2010

Valassis Accepts $500 Million Settlement from News America

A few days before Valassis' federal trial against News America Marketing was scheduled to begin, Valassis announced that it has accepted a $500 million settlement to resolve not only the federal case, but also the pending California state court case, and the Michigan case where a $300 million jury verdict is on appeal.

In addition to the monetary payment, the settlement provides that the judge will issue a permanent injunction preventing News America from engaging in certain of the business practices at issue, and News America will also enter into a 10-year shared mail distribution agreement with Valassis Direct Mail.

While $500 million is a large sum of money, Valassis had alleged that News America's anti-competitive conduct, including alleged violations of the antitrust laws, had caused $1.5 billion in damages to Valassis, and Valassis was seeking treble damages.

Valassis CEO Alan F. Schultz stated, "I am pleased that we were able to reach a mutually agreeable settlement and avoid protracted future litigation."

In a press release issued by News Corporation today, News stated:

"It has become evident to our legal advisors from pre-trial proceedings over the past couple of weeks that significant risks were developing in presenting this case to a jury. That, coupled with concerns over the venue, led us to believe it was in the best interests of the Company and its stockholders to agree to a settlement."
News America was concerned that the Detroit, Michigan venue would favor Valassis, which is based in Livonia, Michigan. News America had requested that they be allowed to submit a questionnaire to jurors about possible bias, and to move to transfer venue if the responses suggested such a bias. Judge Tarnow denied the request for a written questionnaire on January 22, 2010, though News America still had an opportunity to question potential jurors about possible bias during voir dire.

Given the outcome of the Michigan state court trial, and the damaging evidence that Valassis introduced in that case, News America had reason to be concerned about the risk of trial. News America had filed motions with the Court seeking to exclude certain evidence, including, for example, references to the state court verdict against News America, an internal Valassis memo – dubbed the "Valassis Dolphin Project Memo" – analyzing the reasons for News America's aggressive tactics, and a statement made a representative of Sara Lee who stated that it "[f]eels like they [News America] are raping us and they enjoy it."

With the settlement of all three Valassis cases against News, and the prior settlement with Floorgraphics, the only major lawsuit News America still faces is the Insignia v. News America case currently pending in federal court in Minnesota.


The Law Firm of Kotchen & Low LLP - Civil Litigation, Counseling, and Representation Before Government Agencies

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