Murdoch Ad Firm Dodges Old Rival's Fraud Claims
(CN) - A company that won a $29.5 million settlement from Rupert Murdoch's News America Marketing cannot pursue fraud claims now, a federal judge ruled.
New Jersey-based Floorgraphics had first brought News America Marketing In-Store Services LLC (NAM), a subsidiary of Murdoch's News Corp., to court in 2004.
The federal complaint alleged that News America was illegally accessing the password-protected website of Floorgraphics, which, as its name suggests, advertises on floor mats in grocery stores.
Before trial ended, the companies reached a March 2009 settlement in which News America agreed to pay $29.5 million for certain Floorgraphics assets.
Later that year, however, News America sued for breach of contract and fraud, alleging that much of the assets it paid Floorgraphics were invalid, unassignable or nonexistent.
Having allegedly discovered new evidence demonstrating that Gary Henderson, a former News America employee, committed perjury during before and at trial when he denied accessing the website or directing anybody else to do so, Floorgraphics moved to reopen the 2004 lawsuit.
U.S. District Judge Anne Thompson refused in 2010, and the 3rd Circuit affirmed about a year later.
On April 2, 2012, U.S. Magistrate Judge Mark Falk denied Floorgraphics' motion to add to the 2009 suit counterclaims for fraud, fraudulent inducement, and civil conspiracy.
That same day, News America asked the court to declare that Floorgraphics cannot pursue fraud claims, which are allegedly barred by the mutual release the parties signed on March 10, 2009, and to an award attorneys' fees incurred thereafter.
After the District Court refused to dismiss the action on Dec. 12, the maker of Dial Soap accused News Corp. of computer hacking to monopolize the market for promotions in 40,000 retail stores, and coupon inserts in "scores of newspapers nationwide."
Iron Workers Mid-South Pension Fund claimed this pastJune that Murdoch's shady tactics cost News Corp. shareholders $655 million in antitrust lawsuits.
U.S. District Judge William Martini partially granted News America's motion for summary judgment in the declaratory judgment action Tuesday, noting that Floorgraphics agreed in paragraph 2 of the mutual release to "release and forever discharge News America from all claims, demands, rights, liabilities and causes of action of every nature and description whatsoever ... whether known or unknown, concealed or not concealed."
"In spite of the seemingly unequivocal release language set forth in paragraph 2, FGI and NAM took an additional step of explicitly agreeing that they waived their right to assert claims based on unknown information that would have materially affected the terms of the settlement," Martini wrote.
Floorgraphics failed to convince the court that Henderson committed perjury, much less that but-for his perjury, the company would not have signed the mutual release.
"In short, based on the terms of the broadly-worded mutual release and the lack of any material fact suggesting that Gary Henderson committed perjury or that FGI was fraudulently induced into signing the mutual release as a result of that perjury, the court finds that FGI is barred from asserting fraud claims against NAM based on Gary Henderson's testimony prior to the consummation of the 2009 settlement," Martini wrote.
The parties' agreements do not entitle News America to attorney's fees, however, the ruling states.