Tuesday, November 16, 1999

Yes...we are OPEN
This sign went up on the front door soon after the announcement
of the court's decision was made in the newsroom.

Star-Bulletin will
publish—for now

One expert calls ruling 'extraordinary'
Gannett to continue appeal process

Bullet In San Francisco: The appellate court's ruling gives fresh impetus to San Francisco's efforts to save its afternoon newspaper.

Bullet The events: There were 69 gut-wrenching days for the Star-Bulletin and its supporters. A look at the events that led to yesterday's decision.

Bullet Who are they? The panel that upheld Judge Alan Kay's decision.

By Debra Barayuga,
Crystal Kua, and Christine Donnelly


Gannett Co. plans to ask a full panel of the 9th U.S. Circuit Court of Appeals to review a decision by a three-judge panel that in effect keeps the Honolulu Star-Bulletin alive.

Michael Fisch, publisher of Gannett's Honolulu Advertiser, today said Gannett will file a petition in a few days asking that the case be reviewed en banc, or by a full panel.

"We continue to believe that the original decision of the District Court was incorrect on the law and we are hopeful that an appeals court panel will look at the details and consider the case on the merits," Fisch said in a statement.

By Blaine Fergerstrom, Webmaster
The sign on the front door this morning left no doubt
as to the current staus of the Star-Bulletin.

The federal appellate court said yesterday that U.S. District Judge Alan Kay did not abuse his discretion in granting a preliminary injunction barring the shutdown of the Honolulu Star-Bulletin.

A succinct ruling handed down by the three-member panel upheld Kay's Oct. 13 decision until the lower court can decide on the merits of the state's antitrust suit and whether to grant a permanent injunction.

The action means that the Star-Bulletin will remain open, likely until at least September 2000, when the state's suit will be heard.

Lawyers for the newspaper owners have 14 days to file a petition asking the appeals panel to hear the appeal again or ask for a bigger panel to review it, said Molly Dwyer, chief deputy clerk of the 9th Circuit.

'It's unquestionably better
for our community to live with
more than one daily print media
perspective, and this day brings
us one step closer to
ensuring we do.'

Benjamin Cayetano


To hear a case en banc, all judges in the 9th Circuit must vote in favor of rehearing the case. If a majority of the 21 active judges agrees, then a panel that includes Chief Judge Procter Hug and 10 other judges will be chosen from a pool of active judges.

However, the likelihood of the case being heard en banc is not high, Dwyer said. Appeals are heard en banc only if the matter is of national importance or contradicts existing 9th Circuit decisions.

The Appeals Court receives about 9,000 appeals a year and only about 6,000 are heard. Of those, only about 20 or 30 are heard en banc, Dwyer said.

California law professor Stephen Barnett said the effects of the 9th Circuit ruling keeping the Star-Bulletin open will be felt across the country.

By George F. Lee, Star-Bulletin
KGMB TV cameraman Tom Garbisch and reporter Jerry Drelling
prepare for a live broadcast in front of the Hawaii Newspaper Agency
building yesterday about the 9th Circuit Court's decision to uphold
the injunction keeping the Honolulu Star-Bulletin printing.

Barnett said that although yesterday's ruling can't be used as precedent, it could be used to stop the proposed break-up of the joint operating agreement between the San Francisco Examiner and Chronicle.

Kay's decision ordered Liberty Newspapers Limited Partnership, owners of the Star-Bulletin, and Gannett to suspend their plan to end their joint operating agreement, resulting in the closure of the 117-year-old afternoon paper.

Kay also barred the newspaper owners from taking any steps that went against their joint operating agreement or would harm Star-Bulletin subscribers, advertisers and the paper's standing in the community.

"Our review of the granting of preliminary injunctive relief is limited to whether the district court abused its discretion," wrote 9th Circuit Judges J. Clifford Wallace, Jerome Farris and Thomas G. Nelson in their unanimous decision.

"Under this standard, reversal is appropriate only if the district court based its decision on erroneous legal principles or on clearly erroneous findings of fact. It did not."

The appeals court appears to be sending a message that antitrust laws do limit the way newspaper joint operating agreements are terminated, Barnett, of Boalt Law School, said.

Barnett noted that the appeals court didn't tinker in any way with Kay's order, not even opting to go along with a suggestion by the Justice Department to cut back on part of the injunction in an attempt to satisfy First Amendment concerns.

"I think it's striking that although Kay's opinion is worded very broadly, the court (yesterday) didn't say anything to cast doubt on any of those statements," Barnett said. "I think it's significant."

The state's case

State Deputy Attorney General Rodney Kimura said he was "very pleased" with the appeals court's decision but it means there's still a lot of work to be done.

The state intends to proceed with preparations for trial Sept. 19. Also pending is a Dec. 13 hearing in District Court on the newspaper owners' motion to dismiss the state's lawsuit.

The state, which sued Gannett Co. and Liberty Newspapers Limited Partnership contends that their plan to end their joint operating agreement and cease publication of the afternoon daily for a payment violated state and federal antitrust laws and amounted to a conspiracy to monopolize general circulation newspapers on Oahu.

The newspaper owners appealed Kay's decision to the 9th Circuit, saying it violated their constitutional rights by forcing the Star-Bulletin to publish when its owner doesn't want to.

The state maintained that Kay's ruling was proper and did not violate the newspapers' First Amendment rights.

By Blaine Fergerstrom, Webmaster
Assistant managing editor Michael Rovner
prepares to celebrate this afternoon.

While the appellate judges did not explain their reasoning or discuss the legal issues raised by the newspaper owners, their decision should not guide the district court's review of the merits of the state's suit, the judges said.

Gannett and Liberty contend they are simply amending their joint publishing agreement as allowed under the Newspaper Preservation Act and have complied with requirements that they notify the U.S. Department of Justice and that the amendment does not add another paper to the agreement.

The $26.5 million termination payment to Liberty is far less than what Gannett would have had to pay it for remaining in the mutual publishing agreement until 2012 and the millions of dollars in annual losses Gannett would have to absorb, they argued.


A ruling from the 9th U.S. Circuit Court of Appeals means the Star-Bulletin will remain open, likely until at least September 2000, when the state's case seeking permanent injunctive relief will be heard. Here are some key steps in the process.

Bullet Lawyers for the newspaper owners have 14 days to petition the 9th U.S. Circuit Court of Appeals panel to hear the appeal again or ask for a bigger panel to review it. The owners could also appeal to the U.S. Supreme Court.

Bullet Dec. 13: The newspaper owners' motion to dismiss the state's lawsuit will be heard in District Court.

Bullet Dec. 23: The termination agreement between Gannett Co. and Liberty Newspapers will expire unless both agree to extend it.

Bullet Sept. 19, 2000: The state's lawsuit is scheduled to begin.

Rupert Phillips, principal investor in Liberty Newspapers, said in an affidavit that he did not offer the Star-Bulletin for sale and no one has approached him with an offer since the announcement of the pending closure.

For the state's lawsuit to go to trial, Liberty and Gannett will have to agree to extend the Dec. 23 "drop dead date" cited in the termination agreement, according to Phillips. If the agreement is allowed to lapse, the lawsuit against the newspapers is essentially moot.

JOA parties to 'think twice'

Ben Bagdikian, an expert on media monopolies and former dean of the graduate school of journalism at University of California at Berkeley, called the appeals courts' finding "extraordinary."

The courts and the U.S. Department of Justice antitrust division have until this year permitted the partners in joint operating agreements to dissolve and allow one of its papers to die, Bagdikian said.

"I think it means from now on, partners in competing papers in a joint operating agreement will think twice before cutting it short and paying the other paper to commit suicide."

The newspaper industry in 1970 asked Congress to pass the Newspaper Preservation Act to permit joint operating agreements for the purpose of preserving a second voice.

Congress after twice refusing, granted JOAs extraordinary exemption from antitrust laws, and they have profited from this exemption all these years, Bagdikian said.

"It strikes me as a contradiction when newspapers want to kill a second voice after taking advantage of (antitrust) exemptions," he said.

The newspapers have a "moral obligation" to complete the terms of their joint operating agreement and continue publishing both papers, he said.

Justice Dept. investigating

The U.S. Department of Justice is looking into whether the agreement to close violates federal antitrust laws. It filed a "friend of the court brief" urging the appeals court to uphold Kay's injunction until serious antitrust questions are resolved.

Numerous media companies, including the Newspaper Association of America and the Associated Press supported the owners of the Star-Bulletin and Advertiser by filing their own brief asking the injunction be lifted.

Attorneys for the state and the newspapers received the appeals court's decision yesterday afternoon, just five days after Gannett and Liberty submitted reply briefs rebutting the state's arguments.

'It's a very awkward time'

Fisch said HNA has abided by all requirements of the preliminary injunction and has vigorously promoted and marketed the Star-Bulletin, including replacing some Star-Bulletin newspaper boxes that had been repainted for Advertiser use.

"I wish there was some clarification for everybody who is caught in this kind of legal limbo. I think we're all in that," Fisch said. "All of us would like to operate in an environment where we can plan and manage and serve our customers well. It's a very awkward time for everybody."

When it was announced in September that the Star-Bulletin would close Oct. 30, the competing Advertiser announced it would expand its newsroom. Job offers were extended to about 20 Star-Bulletin staffers, but were contingent on the paper closing.

Otherwise, "those jobs don't exist and I think that's been pretty clear from the beginning," Fisch said.


By Blaine Fergerstrom, Webmaster

'Looking forward, we just
redouble our efforts to do the job
that our readers, who so strongly
rallied to our support,
expect of us.'

David Shapiro


John Flanagan, publisher of the Star-Bulletin, hailed yesterday's ruling. "It's fantastic -- it looks like we'll be in business until next September."

While the Star-Bulletin has lost or will lose at least three staffers, including two editors on the city desk, since Liberty announced it would close, the staff now has incentive to stay on the job and continue producing, he said.

The last two months have been incredibly stressful for the Star-Bulletin staff, said Managing Editor David Shapiro. With yesterday's ruling, the staff has a better sense of what the short-term future looks like.

"Looking forward, we just redouble our efforts to do the job that our readers who so strongly rallied to our support expect of us," Shapiro said. "I think we've done a very good job at this point of maintaining the quality of this newspaper during extremely trying circumstances. I expect us to continue to do so."

Decision described as 'win'

Wayne Cahill, administrative director of the Hawaii Newspaper Guild whose union members include Star-Bulletin and Hawaii Newspaper Agency staff, said the decision is a "win" not only for the 100 to 150 employees who will continue to have a job, "but for all of Honolulu and the state of Hawaii who will continue to have two major daily newspapers."

Star-Bulletin supporters appreciate the concern shown by Gov. Ben Cayetano upon learning that the paper wasn't put up for sale and asking the state attorney general to look into it, Cahill said.

Cayetano, in a written statement, lauded the appeals courts for affirming Kay's decision, calling it a "good day for freedom of the press."

"It was wrong for Gannett to take advantage of the Newspaper Preservation Act, then dispose of it when it no longer suited their purposes," Cayetano said. "It's unquestionably better for our community to live with more than one daily print media perspective, and this day brings us one step closer to ensuring we do."

By Kathryn Bender, Star-Bulletin
Managing Editor David Shapiro, Lucy Young-Oda, Richard Borreca
and Paul Arnett talk after hearing the verdict of the 9th Circuit Court
upholding Judge Alan Kay's decision.

Richard Port, spokesman of the citizens group Save Our Star-Bulletin and a plaintiff in a separate lawsuit filed against the newspaper owners, likened the Star-Bulletin's latest victory to the Rainbows' win on Saturday clinching the WAC championship and earning them a berth at the Oahu Bowl.

"The community can anticipate they will have two newspapers provided they continue to support having two statewide newspapers -- and I certainly expect them to," Port said.

More than half the neighborhood boards on Oahu so far have gone on record supporting efforts to save the Star-Bulletin.

And Saturday, Save Our Star-Bulletin collected close to 4,000 signatures from fans attending Saturday's football game against Fresno State.

"If the 'Bows can win the WAC, anything is possible," said Star-Bulletin sportswriter Paul Arnett. "Now I know what a man on death row feels like when the governor calls."

Star-Bulletin writer Rick Daysog contributed to this report.



Here are the series of events that led to yesterday's court ruling:

Bullet Sept. 7: The Honolulu Advertiser's owner, Gannett Co., and the Honolulu Star-Bulletin's owner, Liberty Newspapers Limited Partnership, sign a deal that would end their joint operating agreement and give Liberty a $26.5 million payment from Gannett. The termination agreement would result in the shutdown of the Star-Bulletin.

Bullet Sept. 16: Liberty and Gannett officially announce that the Star-Bulletin will close permanently Oct. 30.

Bullet Oct. 6: The state attorney general and a community group calling itself Save Our Star-Bulletin file separate lawsuits in federal court seeking to stop the Star-Bulletin from closing, arguing that the termination agreement between Gannett and Liberty violates state and antitrust laws.

Bullet Oct. 8: The state attorney general's office files a motion for a court order to preserve the status quo and stop further harm to the Star-Bulletin until the court can fully consider the merits of the case.

Bullet Oct. 13: U.S. District Judge Alan Kay issues a preliminary injunction which prevents the Star-Bulletin from closing until the case goes to trial. He says the agreement to shut down the Star-Bulletin goes against the Newspaper Preservation Act.

Bullet Oct. 15: Kay denies a request by the newspaper owners for a reconsideration of his ruling. Gannett files a notice of appeal of Kay's Oct. 13 ruling.

Bullet Oct. 20: The 9th U.S. Circuit Court of Appeals rejects the newspaper owners' request for an emergency appeal. The court sets a schedule for when briefs are due, resulting in the Star-Bulletin remaining open past Oct. 30.

Bullet Oct. 27: Gannett and Liberty file their briefs with the appeals court, arguing that Kay erred when he prohibited them from amending their joint operating agreement. Several media organizations join the newspaper owners in a request to lift the injunction, which they said violated the First Amendment.

Bullet Nov. 3: The Justice Department urges the appeals court to uphold the injunction.

Bullet Nov. 5: A Sept. 19, 2000, trial date is set in the case.

Bullet Nov. 10: The newspaper owners file their final briefs with the court, saying there was no conspiracy to shut down the Star-Bulletin without putting its assets up for sale.

Bullet Nov. 15: A three-judge panel of the 9th U.S. Circuit Court of Appeals upholds Kay's decision.




The full text of the court's ruling, can be found here.


Here are the three judges on the U.S. 9th Circuit Court of Appeals who issued the ruling upholding U.S. District Judge Alan Kay's preliminary injunction against the shutdown of the Star-Bulletin:

Jerome Farris

Bullet Born: 1930.
Bullet Title: Senior U.S. Circuit Court of Appeals judge.
Bullet Home: Seattle.
Bullet College: Morehouse College.
Bullet Law school: University of Washington.

Thomas G. Nelson

Bullet Born: 1936.
Bullet Title: U.S. Circuit Court of Appeals judge.
Bullet Home: Boise, Idaho.
Bullet College: University of Idaho.
Bullet Law school: University of Idaho.

J. Clifford Wallace

Bullet Born: 1928
Bullet Title: Senior U.S. Circuit Court of Appeals judge.
Bullet Home: San Diego.
Bullet College: San Diego State University.
Bullet Law school: Boalt Hall School of Law, University of California at Berkeley.

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