Committee wants look at JOA arbitration

The committee that says it speaks for the public in Seattle's long-running newspaper war plans to go to court to try to find out what's happening behind closed doors in binding arbitration proceedings between the owners of The Seattle Times and Seattle Post-Intelligencer.

Seattle attorney Anne Bremner and former state Supreme Court Justice Phil Talmadge said the Committee for a Two-Newspaper Town, which they lead, will seek transcripts of depositions and other documents.

The newspapers shouldn't get "private justice in a very public matter," said Talmadge, a committee board member.

But Bremner, the committee's co-chairwoman, said the bid hinges on raising $25,000 quickly as a show of good faith to the group's new lawyers.

After three years of battling in court over the future of their joint operating agreement (JOA), The Seattle Times Co. and The Hearst Corp., owner of the P-I, agreed this spring to let arbitrator Larry Jordan hear the complex dispute in private. There would be no appeal of his decision, which would be made public.

The ruling could alter the futures of both newspapers. If Jordan decides for The Times, the P-I could close.

The companies have refused to let the Committee for a Two-Newspaper Town participate in the arbitration. But the committee is an intervenor in the underlying lawsuit — which remains alive — and has filed claims against both newspapers.

Bremner and Talmadge argued that gives the group a legal right to records the companies have produced in preparation for a climactic hearing before Jordan next April. He is expected to rule by May 31.

"It's difficult to accept that two parties in a public proceeding can say, 'We're going to go behind closed doors — you other parties, so long,' " Talmadge said.

Times spokeswoman Jill Mackie said the company "entered into arbitration on the premise it would be confidential. That continues to be our preference."

She said it's premature to comment on the committee's legal reasoning, since it hasn't filed anything with the court yet.

A Hearst spokesman declined to comment.

So far The Times and Hearst have been engaging in what lawyers call "discovery" — interrogating potential witnesses under oath, requesting documents and ferreting out other information as they prepare their cases.

Talmadge and Bremner said the committee's bid for access to discovery documents is the first step in a new strategy to pursue its legal claims and ensure Seattle continues to be served by two daily newspapers.

The group decided to proceed only after making an unsuccessful pitch in recent months to get the state Attorney General's Office to intervene on antitrust grounds, Talmadge said. It's unfortunate that the committee must represent the public because public agencies won't, he added.

Kristin Alexander, a spokeswoman for the Attorney General's Office, confirmed its staff had met with the committee. But she said it reached the same conclusion it had arrived at several years ago: The state doesn't have a role.

"At this point, it's a contract dispute between the [newspapers]," she said.

Under the 23-year-old JOA, The Times and P-I retain separate news and editorial operations while The Times handles the business side for both. In return, it gets the lion's share of what's left after paying the non-news expenses of producing both papers.

But The Times maintains it has lost money for the past six years under the arrangement, and that the smaller P-I, whose circulation has dropped by one-third since 1999, has become a financial burden. In 2003 it moved to trigger an escape clause in the JOA that could lead to termination of the contract, closure of the P-I, or both.

Hearst, which maintains the P-I wouldn't be financially viable outside the JOA, immediately filed suit. Months later King County Superior Court Judge Greg Canova allowed the Committee for a Two-Newspaper Town to intervene, writing that it appeared to represent the public interest.

Among its claims, the committee contends a JOA clause that would allow Hearst to voluntarily close the P-I and collect 32 percent of The Times' profits until 2083 is a disincentive to continue publishing and an unconstitutional restraint of trade.

This spring Canova agreed to put the two newspapers' claims against each other on hold while binding arbitration proceeds. But he refused to freeze the committee's claims, saying the delay could harm its interests irreparably.

Bremner and Talmadge said those interests also could be harmed if the committee doesn't get access to documents produced during discovery.

Bremner said many records probably address the financial viability of the JOA, information the committee needs. Talmadge said the newspapers may be discussing a settlement that would result in one closing.

"The fear really is, we get frozen out," Talmadge said.

Hearst and The Times said they sought arbitration in part to avoid public disclosure of sensitive business information. But Bremner said a judge could easily handle that with judicial orders limiting disclosure.

The two-newspaper committee has spent the past six months rebuilding after the newspaper workers union that created and bankrolled it severed ties in May. The committee has retained a fundraiser and a new team of four lawyers, and added new board members.

But the committee still lacks money to pay legal bills. Bremner said it plans to contact well-heeled Seattleites after the election to ask for large contributions.

Keeping two newspapers in Seattle is a civic crusade "kind of like saving the [Pike Place] Market," Bremner said.

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