Las Vegas newspapers’ antitrust battle reaches Ninth Circuit

(CN) — A Las Vegas tabloid faced off with the far more conservative broadsheet that handles its business operations in an antitrust battle at the Ninth Circuit over the validity of a joint operating agreement.

Attorneys for the Las Vegas Sun and the Las Vegas Review-Journal asked a three-member panel of the Ninth Circuit to look closely at the Newspaper Preservation Act, a 1970 statute intended to provide limited antitrust protection for combining newspapers, to bolster their cases at oral arguments Thursday.

The problem is that the papers have competing interpretations of the plain text of the statute, which U.S. Circuit Judge Daniel P. Collins noted is riddled with quirks.

“It’s a very sloppily drafted statute that even misspells ‘the United States,’ and has a note that it is misspelled,” the Donald Trump appointee said, eliciting a laugh from the courtroom.

In 1989, the two newspapers entered into a joint operating agreement under the Newspaper Preservation Act, allowing them to combine business operations with the approval of the U.S. attorney general. The agreement essentially combined all noneditorial components of the two papers with the intent to keep the Sun economically viable until at least 2040.

Then, in 2005, the papers altered the arrangement, this time without the attorney general’s approval. The new arrangement led to the Sun being distributed as an insert within the Review-Journal, which ended sales competition between the two papers.

In 2019, after an arbitration finding that the Review-Journal had been denying the Sun its share of profit payments, the Sun sued the Review-Journal, the family of the paper’s owner, Sheldon Adelson, and the family’s office, Adfam. The Sun accused its partner paper of trying to eliminate its only competitor. The Review-Journal filed an antitrust counterclaim, arguing that the 2005 agreement was illegal since the attorney general hadn’t approved it.

A federal judge agreed with the Sun and concluded the 2005 agreement was both lawful and enforceable because it was an amendment to the original agreement.

On appeal, the Review-Journal reignited its argument that the original agreement between the papers was terminated when the parties inked the 2005 agreement.

The Review-Journal’s attorney Ian Heath Gershengorn, with Jenner and Block in Washington, told the panel that the statute clearly makes exceptions for amendments, despite opposing counsel’s argument otherwise.

“The much more sensible understanding of the statute is to follow the plain text,” Gershengorn said.

By doing so, Gershengorn argued the court could determine that any change to the original agreement is subject to the attorney general’s approval. The 2005 agreement combined the papers’ subscriber bases and promotional activities, which he argued was a significant change to the original agreement.

“This is exactly the kind of thing the DOJ and AG should have looked at,” Gershengorn said.

The Sun argued the plain language omits the attorney general approval requirement for arrangements that have already been approved and immunized from antitrust claims, such as the 2005 amendment.

Collins pointed out the broadness of the statute and questioned the Sun’s attorney, E. Leif Reid with Reno-based Lewis Roca Rothberger Christie, why an amendment wouldn’t be considered a contract subject to the attorney general approval requirement.

He further noted that citing specific language used in the statute is challenging because it uses the phrase “joint newspaper operating arrangement” and drops the word “newspaper” several times at random.

“The only rational reading of it is that it is an accident and that it means the same thing in all of the places in which it’s used,” Collins said. “I can’t see that it means different things — it’s just a mistake.”

Reid said he agreed, but argued that the word “arrangement” broadly encompasses the business relationship between the papers and less the specific agreement.

“It defines the joint undertaking,” Reid said. “The act is an imperfect vehicle in some ways.”

He said that under the Review-Journal’s interpretation of the statute, gaining the attorney general’s approval for any agreement amendment would be impossible because the act was intended to assist “failing newspapers” — which the Sun no longer was in 2005, but only due to the terms of the arrangement.

“The truth is, the RJ’s reading would create an absurdity, meaning that no JOA could be amended,” Reid said.

The panel, which also included Trump appointee U.S. Circuit Judge Lawrence VanDyke and Joe Biden appointee U.S. Circuit Judge Salvador Mendoza Jr., did not indicate when it would rule.