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Star Tribune fires back against 'Stop the Petters Scam' group's lawsuit 'abuse'

Pioneer Press reporter John Welbes had an interesting note at the end of his Sunday story on disgruntled Tom Petters investor Thane Ritchie. Ritchie, Braublog readers may remember, is suing the Star Tribune for not running all his “Stop the Petters Scam Foundation” ads.

I’ve termed that suit “dangerous” — a rich guy’s attempt to bleed a publication through a bogus case. More on that in a bit. As part of Ritchie’s fishing mission, his suit names 30 “John Does” who may have pressured the Strib to pull the 15-part series after nine ads ran. Welbes suggests who some of the Does may be:

Subpoenas have gone out to U.S. federal district Court Judge Ann Montgomery, who's handling the Tom Petters civil case; former U.S. Sen. Norm Coleman; U.S. Sen. Amy Klobuchar; Doug Kelley; and Deanna Coleman, a Petters executive who led federal investigators to the Ponzi scheme, pleaded guilty to fraud and testified against Petters at his trial.

People close to the case said several of the subjects of the subpoenas would contest being forced to give depositions.

As well they should. The ad series stated that those parties screwed over Ritchie; while it might be fun to see what the judges, politicians and lawyers say, our legal system requires you have to have a case first. According to a recent legal response, the Strib is asking Hennepin County Judge Tanya Bransford for a “judgment on the pleadings,” which means Ritchie’s legal theory is so inane that it should be thrown out before any additional evidence is gathered.

According to the brief, “The utter lack of merit in the Plaintiff’s lawsuit suggests it is using the legal system simply to draw public attention to itself. The Court should not allow the Plaintiff to abuse the judicial system in this way.”

Before I dive in to the details, I should note that the Strib’s brief does not say who specifically canceled the ads, or why. In a statement last month, Strib spokesman Ben Taylor has insisted there was no third-party interference; even Ritchie’s ad man, Bill Hillsman, says only that Strib officials told him management was “squeamish” about the ads.

The Strib’s brief makes it clear the Foundation claims fail even before any third-party deposition. It defines three issues: Whether the newspaper had a contractual duty to run all the ads, whether the Foundation was damaged, and whether Ritchie can recover damages from the paper.

Fundamentally, the Strib says there was never a contract. Although the paper cashed the foundation’s checks totaling $62,464.90, it sent along a Standard Advertising Policies form that explicitly stating the Strib could cancel ads at any time “for any reason.” Though Hillsman’s Northwoods Advertising didn’t sign the form, the Strib’s brief says sending it meant it was part of any deal presumed to have existed.

Forms are sent because they’re meant to be signed, so the Strib was sloppy in not getting a signature first. But the newspaper’s response is that *they* never signed a contract explicitly stating they would run all the ads, and their ability to cancel is a “long-established” policy made clear when they sent Northwoods the SAP.

As for actual damages, the Strib notes they refunded all of the Foundation’s 62 grand — even for the nine ads that ran. “Far from losing money,” the Strib notes, the Foundation “has received ... a significant benefit in the form of nine free advertisements.”

As for the Foundation’s claimed “reputational damage” to its “goodwill, reputation and credibility,” the Strib responds that a) libel trials are the typical route for this claim, b) libel requires defamation, and c) “Plaintiff has not alleged that the Star Tribune published any defamatory statement about it, much less a false one.”

In fact, Strib management no doubt hoped the ad spiking would disappear quietly; you can see what the paper reported here. To me, it was the Foundation itself that turned the cancellation into a cause célèbre, cleverly adding free media to its paid dissemination of grievances.

The Foundation contends that the Strib’s spiking somehow made it harder to buy time for a two-hour documentary on local TV stations. While First Amendment lawyers I spoke with after the suit was filed regarded this claim as laughable, the Strib’s barristers restrain themselves, noting “Plaintiffs vague claims of harm to its reputation are speculative and not within the contemplation of the parties,” and adding that they are “not properly awardable in a breach of contract suit.”

As for the most sensational allegation — that the Strib and John (and Jane) Does engaged in negligent or intentional interference with a business relationship — the newspaper says Minnesota courts don’t recognize negligence claims and the Foundation’s inability to document actual economic damages dooms the intentional claim.

A hearing on the case is scheduled for later this month. We’ll see if Judge Bransford lets it get that far.

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