Citizens' committee wants to keep Times — P-I proceedings in court

A citizens' committee on Wednesday struck back against a move by Seattle's two daily newspapers to settle their long-running legal fight behind closed doors, arguing the public interest could be irreparably harmed.

The Committee for a Two-Newspaper Town asked King County Superior Court Judge Greg Canova to reject a joint bid by The Seattle Times and The Hearst Corp., owner of the Post-Intelligencer, to put all court proceedings on hold so the companies can submit their dispute to binding arbitration.

The committee had said earlier that, rather than seeking to scuttle arbitration, it would ask Canova to let it participate in the private proceedings — something both newspapers oppose. Dmitri Iglitzin, the committee's lawyer, said in an interview that participation remains the group's goal.

Getting Canova to deny the newspapers' request is the first step, he said. If that happens, "They're [Hearst and The Times] going to have to come to us" to craft a mutually acceptable deal, he added.

The 12-page brief the committee submitted to Canova on Wednesday raises another possibility: parallel tracks. The judge could allow Hearst and The Times to settle their charges against each other through arbitration while hearing the committee's claims against both companies in open court at the same time.

That isn't the process the citizens' group prefers, Iglitzin said, but it's better than what the newspapers have proposed.

Canova is scheduled to consider the matter Friday.

Hearst and The Times are scheduled to respond today in writing to the committee's arguments. A Hearst spokesman declined comment Wednesday. Times spokeswoman Jill Mackie repeated the company's contention that it's unprecedented to let a third party participate in arbitration of a contract dispute between two other parties.

The Committee for a Two-Newspaper Town is an intervenor in the legal war that has pitted Seattle's two newspapers against each other for three years. At stake: the future of the joint operating agreement (JOA) that has bound them for 23 years, and the continued existence of the P-I.

Under the JOA, The Times handles the business and production side for both newspapers while each maintains separate news and editorial operations. The Times gets 60 percent, Hearst 40 percent of what's left after combined non-news expenses are subtracted.

The Times, which maintains the smaller P-I has become an economic burden that threatens The Times' future, notified Hearst in April 2003 that it had lost money in each of the previous three years under a formula prescribed by the JOA. Under the contract, that triggered an escape clause that calls for closure of the P-I, termination of the JOA or both.

Hearst, which has said the P-I can't survive outside the JOA, filed a lawsuit challenging the validity of The Times' losses.

Canova allowed the Committee for a Two-Newspaper Town to intervene in the case three months after it was filed. The group, a coalition of labor, political and civic groups whose name is synonymous with its goal, has sided with Hearst in court in the contract dispute.

But it also has filed claims against both companies. It contends a 1999 amendment to the JOA that allows Hearst to receive 32 percent of The Times' net profit through 2083 if it voluntarily closes the P-I is a disincentive to continue publishing, and an unconstitutional restraint of trade.

The Times and Hearst announced a week ago that they had agreed to submit their dispute to binding arbitration and not appeal the arbitrator's ruling. Under the agreement, arbitrator Larry Jordan, a former King County Superior Court judge, should rule within 14 months.

The agreement also contains language allowing either company to pull out within 30 days if Canova rejects their motion to put all legal proceedings on hold, or requires Committee for a Two-Newspaper Town involvement in the arbitration. The Times has said it would withdraw if committee participation is required.

In the brief it filed Wednesday, the committee says it would be appropriate for Canova to put a hold on legal proceedings involving only the two companies — but not those involving the committee.

Hearst and The Times have said the committee still could argue its claims in court after the arbitration is concluded if it doesn't like the outcome. That's not acceptable, the committee contends: "CTNT [the committee] is not obligated, and should not be ordered, to wait in line for Hearst and The Seattle Times to resolve their own internecine conflict ... "

Decisions the two newspapers make as a result of the arbitration could be difficult to undo later in court, the committee adds. The "anti-competitive" provisions of the JOA already have influenced negotiations between the two companies that led to the agreement to arbitrate, it says.

"The bell, once being rung, cannot be unrung," Iglitzin said Wednesday.

He said the committee still hasn't decided exactly what role it wants to play in the arbitration proceedings. "We want there to be some transparency in the arbitration process," he said, but "the committee has no interest in poring over thousands of pages of Seattle Times financial records."

The Times and Hearst have cited a reluctance to publicly reveal "confidential and sensitive business and financial information" as a benefit of arbitration.

The committee's co-chair is Seattle attorney Anne Bremner. She said last week that other members of its executive board include former Seattle Mayor Wes Uhlman; University of Washington law professor William Andersen; retired P-I reporter Hilda Bryant; Brian Earl, president of the union that represents Times and P-I press operators; and Liz Brown, administrative officer of the union that represents Times and P-I news, advertising and circulation employees.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com