Thursday, April 16, 2009
Court of Appeal Rejects Daily Journal Suit Against MNC, County
By a MetNews Staff Writer
The Court of Appeal for this district yesterday rejected a suit challenging an advertising contract between the Metropolitan News Company and Los Angeles County, saying the issue was moot.
Div. Eight, in an opinion by Acting Presiding Justice Laurence Rubin, also held that the Daily Journal Corporation, which challenged the contract, cannot maintain a taxpayer action seeking to recover alleged overpayments by the county to its rival.
The contract at issue was a legal advertising contract entered into in October 2004. MNC, the parent company of this newspaper, was chosen over DJC in a competitive bidding process and given a three-year agreement, extendable by up to two years, to place advertising in MNC and other newspapers.
In February 2007, 27 months after the contract took effect, DJC brought a petition for writ of mandate, seeking to force the county to cancel the contract and pursue alleged overcharges from MNC.
MNC was made a real party in interest to the proceeding after DJC demurred. In an amended petition, DJC asserted a taxpayer claim for waste, alleging that the county was legally obligated to collect alleged overpayments.
The applicable statute, Government Code Sec. 25502, requires that county advertising contracts be competitively bid. DJC argued that the MNC contract violated the statute because the bid invitation expressly solicited quotes for newspapers with circulations up to 125,000; DJC was told by the county that it could not separately include rate quotes on larger newspapers in its bid; and MNC was, after the contract was awarded, allowed to place ads in larger newspapers at rates negotiated by MNC with those publications.
DJC also alleged that MNC understated the true ad rates from several publications in which it intended to place county ads. The county refused to cancel the contract and said it believed MNC was adhering to the contract rates.
Los Angeles Superior Court Judge Dzintra Janavs, now retired, sustained demurrers and dismissed the petition. She concluded that the bidding process did not violate Sec. 25502, and that the bid invitation should be read as a request to bid in newspapers of any size, provided that specific rate information be provided for newspapers of less than 125,000 circulations.
Janavs further ruled that the decision on whether to pursue alleged overcharges was discretionary on the part of the county and could thus not be challenged in an action for waste.
Rubin, writing for the Court of Appeal, said the appeal was moot to the extent that it challenged a contract that has already expired. He rejected DJC’s urging to decide the case as representing an issue that is likely to recur.
“Given the vagaries of future contracts for publication of legal notices – affected surely by economic factors and new technologies – we cannot say that the present controversy is likely to recur,” the jurist wrote.
He also agreed with Janavs with respect to the waste issue. “It has long been held that a government entity’s decision whether to pursue a legal claim involves the sort of discretion that falls outside the parameters of waste under section 526a and cannot be enjoined by mandate,” he wrote.
MNC attorney Roger M. Grace—who is also editor and co-publisher of the MetNews—said there was no way “the court could have decided it otherwise.” DJC’s action, he said “was brought purely for harassment,” as indicated by the length of time the company waited to sue.
Daily Journal publisher Gerald Saltzman “just got out bed one morning and decided to be nasty,” Grace added.
He further commented that, while the action was decided on the pleadings, DJC had no case on the facts.
An internal audit, he explained, showed that the county was overbilled by $8,000 due to a computer glitch. But other invoices, Grace said, showed an underbilling of $12,000.
“No, we’re not going to sue the county for $4,000,” he quipped.
DJC’s attorney, Neil Papiano of Iverson, Yoakum, Papiano & Hatch, said he had not yet seen the opinion and could not say whether he would recommend his client seek Supreme Court review.
Deputy County Counsel Brandi M. Moore, who represented the county on appeal, was not available for comment.
The case is Daily Journal Corporation v. County of Los Angeles (Metropolitan News Company), B204630.
Copyright 2009, Metropolitan News Company