Ad-War Case Against News Corp. Pushes Forward

MANHATTAN (CN) - An antitrust action accusing News Corp of using Al Capone's tactics and computer hacking to monopolize the market for promotions in 40,000 retail stores can proceed as a class action, a federal judge ruled.

Dial Corp. led the charge against Rupert Murdoch's news empire and its subsidiaries; its 2012 case was joined by eight other manufacturers of packaged consumer goods who filed in the Eastern District of Michigan.

They accused News Corp. of a 20-year scheme to suppress the promotion of "a massive number of consumer goods in forty thousand retail stores, and scores of newspapers nationwide, to acquire and maintain two unlawful monopolies and earn large monopoly profits at the expense of its purchasers."

One former top News Corp. executive boasted about its anticompetitive tactics with a video clip from the Capone-inspired film, "The Untouchables," according to the lawsuit.

The scene depicts Capone serving "as a sales role model as he cudgels a competitive enemy to death with a baseball bat," and Dial said News Corp. Chief Operating Officer Paul Carlucci had "been equally blunt with the press as to News' exclusionary purposes, vowing to 'destroy' his competitors as a 'man who has to have it all.'"

The complaint also accused News Corp. of elbowing out the now-defunct Floorgraphics in its effort to control the market for in-store-promotion services.

"Floorgraphics has alleged that News hacked into its password protected accounts at least eleven times in 2003 and 2004 to obtain its customer lists (and other marketing materials)," the lawsuit said.

New Jersey-based Floorgraphics had reached a $29.5 million settlement with News Corp., however, that prevented it from later advancing federal fraud claims.

The suit by Dial and the others was transferred to the Southern District of New York, where U.S. District Judge William Pauley granted class certification Thursday.

"Although prices may differ on an individual level in both the actual and but-for worlds, plaintiffs' evidence suggests that prices are systematic and, thus antitrust injury is measurable with common proof," he wrote.

The certification hinged on a battle of the experts.

While Dial had Jeffrey MacKie-Mason, the dean of the University of Michigan's School of Information, News Corp. hired Jerry Hausman, a professor of economics at the Massachusetts Institute of Technology.

Judge Pauley saw no trace of the problems that led the U.S. Supreme Court to disband the class in Comcast v. Behrend.

"Plaintiffs' damages model is sufficient to show that damages are measurable through use of a common methodology," his opinion states.

The class approved by Pauley includes "non-retailer consumer packaged goods ?rms residing in the United States which have directly purchased in-store promotions from News Corp at any time on or after April 5, 2008, and were not subject to mandatory arbitration clauses."

Dial's attorney declined to comment.

News America spokeswoman Laura Adams said, "We are reviewing the judge's decision."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit