Salt Lake Tribune Pub. Co., LLC v. At & T Corp., 2:00-CV-00936ST.
| Decision Date | 27 January 2005 |
| Docket Number | No. 2:00-CV-00936ST.,No. 2:03-CV-00176ST.,No. 2:03-CV-00565ST.,2:00-CV-00936ST.,2:03-CV-00176ST.,2:03-CV-00565ST. |
| Parties | SALT LAKE TRIBUNE PUBLISHING COMPANY, LLC, Plaintiff, v. AT & T CORPORATION and Kearns-Tribune, LLC, et al., Defendants. MediaNews Group, Inc., and Kearns-Tribune, LLC, et al., Plaintiffs/Counterclaim Defendants, v. Philip G. McCarthey, et al., Defendants/Third-Party Plaintiffs, v. Deseret News Publishing Company, et al., Third-Party Defendants. Salt Lake Tribune Publishing Company, LLC, Plaintiff, v. Management Planning, Inc., et al., Defendants. |
| Court | U.S. District Court — District of Utah |
United States District Judge Ted Stewart has been presiding over three related cases dealing with, as the Tenth Circuit has called it, "a continuing fight over the ownership and control of The Salt Lake Tribune."1 For nearly three years, the Salt Lake Tribune Publishing Company has attempted to have Judge Stewart removed from the case. The McCarthey Family has joined in that attempt for the last year. Judge Stewart has rejected three motions for recusal, and the Tenth Circuit has stated that no reasonable person, knowing the facts before the court, would "harbor doubts about [Judge Stewart's] impartiality."2 Nevertheless, the McCarthey Family, joined by the Salt Lake Tribune Publishing Company ("SLTPC"), have again filed a motion for the recusal of Judge Stewart. The motion has been assigned to the undersigned judge for resolution. This motion raises mainly the same arguments that have been raised before. This court finds that the motion is untimely in part, and fully without merit. The motion is therefore DENIED.
A brief background of the three cases pending before Judge Stewart is necessary to resolve this motion. The McCarthey Family members are former shareholders in the Kearns-Tribune Corporation (now Kearns-Tribune LLC). Kearns-Tribune is the owner of The Salt Lake Tribune. The McCarthey Family's interest in The Tribune dates back to 1901.
In 1997, the McCarthey Family conveyed its shares of Kearns-Tribune to Tele-Communications, Inc ("TCI"). In return, the McCarthey Family received shares of TCI stock. The McCarthey Family clearly wanted to retain control of The Tribune, however. So as part of the transaction, the McCarthey Family and other former shareholders of Kearns-Tribune formed the SLTPC. SLTPC entered into a Management Agreement with TCI which gave SLTPC the right to manage The Tribune through July, 2002. Under a separate Option Agreement, SLTPC also retained the right to reacquire The Tribune. After purchasing Kearns-Tribune, Mr. Leo Hindery became the President and CEO of TCI. Under the direction of Mr. Hindery, TCI began attempting to sell The Tribune. In October, 1997, Mr. Hindery began negotiations with Dean Singleton, the President and CEO of MediaNews Group. In October, 1997, Mr. Hindery also began negotiations with Deseret News Publishing Company ("DNPC"). SLTPC was initially unaware of these negotiations.
In March, 1999, TCI merged with AT & T. As a result, AT & T became the owner of Kearns-Tribune and thereby The Tribune. AT & T, however, had no interest in owning a newspaper. So the negotiations for a sale of The Tribune to DNPC continued. Meanwhile, AT & T sent a letter to SLTPC suggesting interest in accelerating exercise of the Option Agreement. The letter noted, however, a possible conflict between the Option Agreement and the Joint Operating Agreement ("JOA") between The Tribune and the Deseret News, and stated that if the conflict could not be worked out AT & T would consider selling The Tribune to a third party approved by DNPC.
Although nearly consummated, the sale of The Tribune to DNPC could not be worked out. So in June, 2000, negotiations were reopened with MediaNews Group, and in September, 2000, DNPC consented to the sale of The Tribune to MediaNews. MediaNews agreed to pay $200,000,000 for The Tribune. MediaNews also agreed to work with DNPC to make certain changes to the JOA.
But there was still the problem of the Option Agreement. AT & T contacted representatives from SLTPC and, without informing them of the offer made by MediaNews, began negotiating with SLTPC for its potential reacquisition of The Tribune under the Option Agreement. On November 27, 2000, SLTPC made on offer of $180,000,000 to reacquire The Tribune as part of a proposed Acquisition Agreement. AT & T and SLTPC, however, could not reach an agreement. And on November 29, 2000, AT & T's Board of Directors approved a 200 million dollar sale of Kearns-Tribune to MediaNews. Because of the fear that the Option Agreement would still be enforceable, as part of the sale of The Tribune to MediaNews, AT & T agreed that if the price eventually paid under the Option Agreement was less than the $200 million MediaNews paid, AT & T would reimburse MediaNews up to $26 million. MediaNews also agreed that it was bound by the terms of the Management Agreement and the Option Agreement.
In December, 2000, SLTPC filed the first of these related cases in an attempt to enforce the Option Agreement.3 The suit by SLTPC sought (1) a preliminary injunction against AT & T, MediaNews, and Kearns-Tribune to prevent the sale of The Tribune, (2) a declaratory judgment that SLTPC had an enforceable option to reacquire The Tribune, and (3) specific performance of the Option Agreement. The case was originally assigned to Judge Tena Campbell, but she recused. After Judge Campbell's recusal (as well as subsequent recusals by Judge Sam and Chief Judge Benson), the case was randomly assigned to Judge Stewart on July 16, 2001. DNPC moved to intervene in the case in July, 2001, arguing that under the JOA it had the right to prevent SLTPC from exercising its option. Judge Stewart eventually ruled that the Option Agreement was valid and that SLTPC could enforce the agreement over the objection of DNPC.
A second related but unconsolidated case was filed by SLTPC and randomly assigned to Judge Stewart in June, 2003.4 The issue in this case was the appraisal value of The Tribune. The Option Agreement gave SLTPC the right to reacquire The Tribune at "Fair Market Value." Under the terms of the agreement, each side was to provide an appraisal of The Tribune. If each party's appraisal differed by more than ten percent, the parties were to jointly agree upon a third appraiser. MediaNews' appraiser suggested a fair market value of $380 million. SLTPC's appraiser suggested a fair market value of $218 million. After some wrangling, a third appraiser was agreed upon. The third appraiser suggested a fair market value of $331 million. Under the terms of the agreement, the final fair market value was to be determined by averaging the value of the two closest appraisals. The result was a declared fair market value of $355.5 million.
SLTPC filed suit challenging the third appraisal. Judge Stewart ruled that the appraisal process established by the Option Agreement was effectively an arbitration subject to the Federal Arbitration Act, which meant that great deference was owed to the arbitration, and that SLTPC had not presented sufficient reasons to set aside the third appraisal. The Tenth Circuit reversed on technical grounds, holding that the appraisal process was not meant to be binding arbitration under the Federal Arbitration Act, and remanded for further proceedings.5 Still left to be determined is what standard of review should be applied to the appraisal.
In the third related case, the McCartheys have alleged that they have the right, individually, to reacquire The Tribune. To enforce this right, on November 20, 2001, the McCartheys filed suit in a Colorado state court. The Colorado court stayed the proceedings, however, pending resolution of the related Utah federal court case. In an attempt to resolve all of these issues in one proceeding, on February 14, 2003, Kearns-Tribune and MediaNews filed a declaratory judgment action in this court, seeking to have the court declare that the McCartheys have no individual claim to ownership of The Tribune through the Merger Agreement, the Option Agreement, or the Management Agreement.6 That case was assigned to Judge Stewart on May 30, 2003, and was consolidated with SLTPC's lawsuit. The McCartheys were not a named party to any part of this litigation until the declaratory judgment action was filed.
On May 13, 2002, approximately ten months after Judge Stewart was assigned the first case, SLTPC sent a letter to Judge Stewart requesting that he make a formal disclosure of any facts which might be relevant to his ability to sit impartially on the case. The letter raised three specific requests. First, the letter noted that President Thomas S. Monson, a member of the First Presidency of the Church of Jesus Christ of Latter-Day Saints, would be a "key witness" in the litigation, and that SLTPC intended to question his credibility. The letter noted that Thomas Monson was formerly the president of DNPC and a signator of the 1982 JOA. The letter requested that Judge Stewart disclose whether he was a member in good standing of the LDS Church, along with any past interaction with Thomas Monson or other members of the hierarchy of the LDS Church. Second, the letter noted that SLTPC intended to seek significant damages from DNPC and that DNPC is owned by Deseret Management Company, which is in turn owned by the LDS Church. Any damages assessed against DNPC would affect the LDS Church. The letter further noted that some of the LDS Church's assets were held in the DMC Reserve Trust, of which all Church members are the ultimate beneficiaries. The letter requested information as to whether this meant that Judge Stewart, as a member of and contributor to...
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