Sunday, February 07, 2010

The Full Story on Jerry Roberts Victory Over Wendy McCaw

So how was it that former Santa Barbara News-Press editor Jerry Roberts was able to get an arbitrator to award him over $900,000 in attorney fees and costs from Wendy McCaw's Ampersand Publications?

The foundation for the award was laid back in December of 2008 when it was revealed that the arbitrator found that Ampersand and McCaw failed to establish any of their breach of contract or other claims against Roberts and that McCaw and Ampersand were entitled to none of the $25 million in damages that they had sued him for. Therefore, Roberts was determined to be the "prevailing party" in the arbitration. The arbitrator ruled that Ampersand would have to pay Robert's attorney's fees in an amount to be determined. That was over a year ago. Arbitrator Deborah Rothman finally ruled on the attorneys fee and costs issue on October 27, 2009, but the nature of arbitration, which is what the parties agreed to in order to resolve their dispute, is that the findings and rulings of the arbitrator remain confidential until someone goes to court to either confirm or vacate the arbitrator's award. That happened last Friday, when Ampersand filed it's paperwork in Superior Court to have the arbitrator's award set aside.

The arbitration process in the matter of Ampersand vs. Roberts has been a long waiting game. And if your recollection of the tortious history of this dispute needs refreshing, I refer you to my previous account of it.

In the meantime, here's the short version: Shortly after Roberts resigned his position with the paper in July of 2006 in a dispute over journalistic ethics, Ampersand sued him. According to the arbitrator's capsulation of the allegations:
If compelled to determine who launched the first missile that signaled the start of the News-Press/McCaw/Roberts war, I would have to conclude that it was Ampersand, which thereafter published an article charging Roberts with orchestrating media coverage favorable to his 'position.' . . . Mrs. McCaw believed Roberts had been the source of the detailed information concerning the inner workings of the paper, including the editor's complaints that culminated in their resignations. Mrs. McCaw felt strongly that information of this nature should not be aired, and that by airing it, Roberts had breached his contractual confidentiality obligations as well as his duty of loyalty.

There were other allegations as well, but the issues of breach of confidentiality and the alleged abrogation of Robert's duty of loyalty to his employer formed the crux of the suit.

Roberts answered the complaint and denied the allegations. He also counter-sued Ampersand with a few claims of his own, most notably that he had been defamed by a blog post that appeared on the "Nippers" website site run by McCaw's boyfriend and News-Press co-publisher, Arthur von Wiesenberger.

Arbitrator Deborah Rothman, who heard the case, ultimately ruled that Ampersand failed to establish any of the 15 allegations that it had made against Roberts and that Ampersand would take nothing on its claim of $25 million in damages. More particularly the arbitrator found that Roberts did not breach his obligations under the confidentiality provisions of the employment agreement, did not defame Ampersand and did not breach his fiduciary duty of loyalty to Ampersand.

Rothman in her written 67 page ruling concluded that Ampersand "fought each and every issue with equal ferocity, frequently proceeding in a scorched-earth, take-no-prisoners, go-for-broke, leave-no-stone unturned campaign to punish Roberts."
I infer from the evidence before me that Mrs. McCaw is capable of great vindictiveness and appears to relish the opportunity to wield her considerable wealth and power in furtherance of what she believes to be righteous causes.

The observation that McCaw, "wasn't shy about wielding her considerable wealth" was bolstered by the fact that McCaw expended approximately $2.4 million in attorney's fees in her suit against Roberts. Her side had as many as eight individual lawyers on its team, which was led by Barry Cappello, while Roberts never had more than three on his legal team which was headed by Andrine Smith of San Francisco. Of course with Ampersand suing Roberts for $25 million he was forced to expend over $629,000 in attorney's fees to defend himself and to assert several counterclaims against Ampersand. When you combine that $2.4 million with the nearly million in attorney's fees and costs that Roberts incurred you can say that the case of Ampersand vs. Roberts is a $3.5 million industry, for the attorneys that is.

One of the reasons that Ampersand was not able to succeed in making a case against Roberts for defamation was the fact that his comments about the circumstances surrounding his departure had become a matter of "public interest." The arbitrator noted that Ampersand had made the direction of the paper a matter of public interest when Mrs. McCaw published an open letter in the News-Press in 2000, shortly after purchasing the paper, in which she stated her intention to leave news functions "to the professionals." The arbitrator would write, "Having thrown down the gauntlet, i.e., voluntarily used the offices of the News-Press to commit to letting professional journalists manage and direct the paper in an independent matter consistent with journalistic integrity, Ampersand opened the door for Roberts to comment on her fulfillment of that public commitment."

As for the substance of what Roberts had said to the media about McCaw, the arbitrator found each and every one of the statements that were alleged to be defamatory to either be true, which is an absolute defense to a charge of libel, or that they were purely statements of opinion, and therefore not libelous.

Both McCaw and Roberts testified at the arbitration hearing. Evidently, McCaw failed to make a good impression with the arbitrator. "Mrs. McCaw," she wrote, "was a flawed witness."
Although she is a complex woman, which makes her credibility determinations more difficult, certain of her statements clearly defy credulity. Notwithstanding the publication in the News-Press of an article about the pornographic images of children purportedly found on the Ampersand laptop Roberts had used, Mrs. McCaw subsequently answered "Never" to her attorney's question, "Have you ever used your paper to punish your personal or political enemies?

The arbitrator went on to observe that, "She adamantly refused to draw conclusions too obvious to deny." The arbitrator went on to say that, "Her responses could be evidence of a profound lack of self-awareness, or a propensity to shade the truth for the purpose of garnering a large arbitration award. Either way, they do not make Mrs. McCaw a first-rate witness."

Most telling is this observation by the arbitrator.
(McCaw) testified about the difficulty she has had in hiring a new publisher for the paper: "My personal opinion is that they look at me as the problem," negating with her tone of voice the real possibility that such a perception could be true.

While McCaw did not fare well in the credibility department with the arbitrator, Roberts did. She wrote, "A conscientious and honorable journalist, Roberts had the support and admiration of both his newsroom and the Santa Barbara community."

As for Ampersand's allegations of disloyalty on the part of Roberts, the arbitrator concluded,
Roberts did not act out of venality - he had nothing to gain financially by speaking out against Ampersand - but out of deeply-held principles, beliefs and values on the respective roles of editors, publishers, advertisers and celebrities in journalistic excellence.

The arbitrator's written decision provides insight into what were and are the real priorities of the News-Press under McCaw's ownership. For example, in a May, 2006 e-mail, von Wiesenberger criticized Roberts for a News-Press article about the bad housing market that
. . . still has realtors from Carpinteria to the Santa Ynez Valley angry at the News-Press and already taking action by staging an advertising brown-out. I spoke with a Sotheby's agent two days ago and she informed me that they are still extremely unhappy and are planning yet another brown out. . . While I expect you will characterize this criticism as us cowering to commercial interests and bring out your book of Journalistic ethics, it has nothing to do with ethics.

Although Roberts clearly had the better part of the ethics argument, it ultimately was of no help to him in pressing his counter claims against Ampersand. The arbitrator concluded that notwithstanding ethics, the publisher of a relatively small-town newspaper, like the News-Press, "has the right to control the look, feel and yes, slant of the paper." That meant that, "Roberts refusal to give his unqualified support to Mrs. McCaw's management decisions could legitimately have led to his termination for cause, and thus without severance pay. Because Roberts was constructively discharged under circumstances in which Ampersand could have terminated his employment for cause, he is not entitled to recover severance benefits under the terms of the parties' agreement."

As for the infamous "hamburger stand" allegory, that appeared on von Wiesenberger's blog, which Roberts claimed was defamatory, the arbitrator determined that Roberts failed to prove that the post was authorized or ratified by Ampersand, after all, it was "Nipper's" blog, not one run by the News-Press.

So although Ampersand failed win on any of the claims it brought against Roberts, Roberts failed to succeed on any of the claims he in turn had brought against Ampersand. Nevertheless, the arbitrator determined that as between Roberts and Ampersand, Roberts was the party who had achieved his basic litigation goal, which was to successfully defend himself against Ampersand's claims, while Ampersand had failed to achieve its goal, which was to pin the blame on Robert's statements to the media for its lost prestige and credibility in the Santa Barbara community.

Since Roberts was the party who "prevailed," he was entitled to recover, pursuant to his contract of employment with Ampersand, his attorney's fees and costs. In particular, $748,022 in attorney's fees and $167,516 in costs.

So while Roberts has won a significant victory against McCaw's Ampersand, it still figures to be awhile before he sees any money as a result of the ruling. Both sides go to court at the end of this month. Ampersand will seek to vacate the arbitrator's award while Roberts will seek to confirm it.

Assuming Ampersand loses its motion to set the award aside, they will undoubtedly appeal. Given that arbitrator's awards cannot be set aside for mere mistakes in applying the facts to the law, but rather can only be set aside if an arbitrator has committed gross misconduct or has acted in excess of their authority, reversing the award is a low percentage proposition.

But McCaw has been down this road before when she was able to set aside an arbitration award that had gone in favor of her former lover and legal counsel, Greg Parker. So having hit the jackpot once, there's no reason to think that she won't buy another lottery ticket and take her case to the California Court of Appeal.

One avenue that wont' be open to McCaw is to take this case to the Federal Courts that have proved to be hospitable to her. In spite of the fact that $3.5 million have been expended in attorney's fees, it's simply not a federal case.
© 2010 by Craig Smith and