ORLANDO (CN) – Two former newspaper executives who saw their golden parachutes go up in smoke are now on the hook for attorneys’ fees, a federal judge ruled.
The golden parachute agreements came to light after Cox Media filed suit in 2004 against the company in which it was a minority shareholder, News-Journal Corp., which used to own the Daytona Beach News-Journal. Cox had claimed that the parent company misused corporate funds in offering $13 million to name the new performing arts center that would be home to a theater company founded by Herbert M. “Tippen” Davidson, the then-CEO of the News-Journal who died in 2007.
Davidson had presented the golden parachute agreements to the publishing News-Journal CFO David Kendall and publisher Georgia Kaney six months after Cox filed suit.
Under these agreements, Kendall and Kaney were given “lifetime employment at the highest level of the company at levels of compensation exceeding $200,000 per year,” according to the suit.
Against the opposition of both executives and the News-Journal, the Middle District of Florida labeled the deals as corporate waste and set them aside.
A magistrate judge found, however, that Cox and the News-Journal’s receiver should not collect attorneys’ fees and other expenses connected to this dispute from Kendall and Kaney. The law firm of Cobb Cole, which represented the News-Journal in its defense of the golden parachutes, also did not have to disgorge the fees it collected in connection to that work, the judge ruled.
Cox caught a break, however, in objecting to those findings.
Kendall and Kaney must cover the fees Cox owes to its attorneys for challenging the golden parachutes, but they are not liable for other costs such as expert witness fees, U.S. District Judge John Antoon II ruled Monday.
It is the apparent “bad faith” actions of Kendall and Kaney that make them liable, according to the court.
“Throughout this litigation, Kendall and Kaney have shown a disregard for the procedures of this court by directing NJC to willfully defy court orders,” Antoon wrote.
“Thus, Kendall and Kaney will only be required to reimburse Cox for its attorneys’ fees as a sanction for their actions,” he added.
Since the News-Journal’s board supported the company’s opposition, however, Kendall and Kaney did rely on that position in bad faith and thus do not owe attorneys’ fees in that regard, the court found.
Antoon also denied claims as to Cobb Cole disgorgement after finding that the parties resolved that issue independently.
Cox must file a motion by July 27 detailing the amount of fees it seeks to recoup from Kendall and Kaney.
The former executives then have seven days to respond.
In 2006, Antoon set the value of Cox’s shares in the News-Journal at $129.2 million. He valued the newspaper at $300 million, but advertising dropped 50 percent in the intervening years.
By the time that the court-appointed receiver arranged the sale of the News-Journal’s publishing assets in 2010, Halifax Media Acquisition entered the highest offer at just $20 million.