Judge orders oral arguments before ruling on Times and P-I's request for arbitration

A bid by The Seattle Times and The Hearst Corp., owner of the Seattle Post-Intelligencer, to settle their long-running legal dispute through closed-door binding arbitration suffered at least a temporary setback Friday.

King County Superior Court Judge Greg Canova decided to hear oral arguments from lawyers April 27 before ruling on the newspapers' motion to freeze all court proceedings until the arbitration is completed. The companies had hoped Canova would act on their request Friday, paving the way for arbitration to start.

The Committee for a Two-Newspaper Town, a citizens group that is an intervener in the lawsuit, has asked Canova to deny the two newspapers' motion, contending the public interest could be irreparably harmed. The committee also had requested oral arguments.

Canova's decision means, at the least, a delay in the start of arbitration. But Hearst and Times representatives said they don't anticipate it will affect the schedule spelled out in the arbitration agreement the companies announced last week.

Other than that, they declined to comment.

The arbitration agreement calls for what would in effect be a private trial before former King County Superior Court Judge Larry Jordan, who would rule by May 31, 2007. There would be no appeal.

Canova's ruling also leaves open the possibility arbitration may not happen at all. The Times-Hearst agreement allows either company to pull out unless all court proceedings are suspended.

While the Committee for a Two-Newspaper Town has urged Canova to keep legal proceedings alive, it has said its real goal is participation in the arbitration — something both companies oppose. Canova's decision gives the newspapers a chance to reconsider that, committee attorney Dmitri Iglitzin said Friday: "There's certainly time now, which there wasn't before."

The P-I and Times have been linked since 1983 by a federally sanctioned joint operating agreement (JOA) under which they maintain separate news operations while The Times handles the business and production side for both. They have been fighting in court since April 2003, when The Times moved to trigger an escape clause in the JOA contract to terminate the agreement, close the P-I, or both.

The Times contends it has lost nearly $25 million under the JOA over the past six years and that publishing the smaller P-I has become a financial burden that threatens The Times' future. Hearst, which says the P-I couldn't survive outside the JOA , maintains the losses The Times has claimed aren't valid under the contract.

The Committee for a Two-Newspaper Town, a coalition of labor, civic and political leaders, has challenged the constitutionality of one provision in the JOA that it says provides an incentive for Hearst to stop publishing the P-I. The Times and Hearst told Canova that claim still could be decided in court after the arbitration concludes, but the committee argued the arbitration could transform the legal landscape and make further court action moot.

Iglitzin called Canova's decision a good sign. "It shows Judge Canova is taking seriously the committee's point that this is not a no-brainer that two parties involved in litigation get to stay all proceedings while they arbitrate," he said.

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