News America Marketing Group Settles With Floorgraphics; Valassis, Insignia Likely Rejoicing

(MoneyWatch)  News America Marketing Group has settled the case against it from Floorgraphics Inc. before FGI finished presenting its case in court. As blogger Daniel Low points out:

... the timing ?€" in the midst of trial after compelling testimony from Floorgraphics' first few witnesses -- suggests that it is for a substantial sum.

The settlement will be greeted with cheers by executives at Valassis and Insignia, two companies that have also sued News America, both making similar allegations that News America engaged in predatory pricing and anticompetitive contracts with clients and supermarkets.

The court heard three witnesses, including testimony from Gary Henderson on whether News America (owned by Rupert Murdoch, pictured) had hacked into FGI's computer systems.

The court also heard from Robert Emmel, a former account director at News America who left the company in 2006 taking with him copies of a computer that contained a large amount of News America's internal information.

When News America sued Emmel to get its documents back (in a separate case), it opened a can of worms. (Read a selection of those documents here.) Emmel's declaration in that case said that he had provided internal News America documents to the SEC, two Senators, the New York State Attorney General, and the Senate Committees on Finance and Banking:

My purpose in providing NAMIS documents and information to the two Committees and the two members of the U.S. Senate, the S.E.C., and to the N.Y. State Attorney General was to document for federal and state authorities what I believed in good faith was NAMIS's illegal anticompetitive conduct against NAMIS competitors and NAMIS's fraudulent conduct against its own retailer-customers.

... I was notified by Nicolas Podsiadly acting on behalf of the U.S. Senate Judiciary Committee that the Committee was weighing a referral of my information about NAMIS's illegal activities to the U.S. Department of Justice and Federal Trade Commission.

News America counts Kraft, Nabisco, P&G, and Coca-Cola as clients; and deals with A&P, Safeway, Food Lion, Rite Aid and other chains. In a cloak-and-dagger move, Emmel contacted the government about News America using a false name, his declaration said:

Emmel merely used the pen name "Courter-Zanger" to protect his anonymity as a whistleblower and avoid any publicity, benefit, notoriety, or adverse consequences that may result from his actions.

News America said Emmel was fired because his job duties became less cushy than he wanted them to be. He had been asked to split his time between retailer relationships and sales instead of just concentrating on retailers. News America produced this email from Emmel, written to a colleague on Nov. 22, 2006:

... all of these requirements is making the job less and less like the country club atmosphere it once was. I don't like it none at all.

It also emerged that FGI and Insignia are splitting Emmel's legal fees, between them, which have come to at least $421,000 so far.

Coming out of the FGI trial looking bad was Dominick Porco, president of News America. He wrote this inaccurate letter about Insignia to his customers:

Insignia POPS was found to have executed in less than 20% of the stores we surveyed.

That, FGI argued, wasn't true.

• See BNET's previous coverage of the in-store marketing wars:
• Valassis May Not Be Able to Pay Debt; Litigation May "Materially Harm" the Company
• Trial: Did News America Marketing Group Break Into Floorgraphics' Computers?
• Valassis Stock Threatened With De-listing by NYSE
• Valassis' Plan to End Newspaper Coupons Outrages Middle America
• Valassis Suit vs. News America Being Conducted in Secrecy
• Valassis: Layoffs Will Continue as It Reduces Newspaper Coupon Business; It's All News America's Fault
• Valassis Writes Down $245 Million in Assets; Legal Bills Running at 10% of Profits
• Valassis Angers Blogger Moms by Yanking RedPlum Coupons From Newspapers
• Valassis Reduces the Cost of Fun for Employees
• Direct Mail Giant Valassis Is "Not Paying Its Bills"; Stock Is "Worth $0"
• Alloy Beats WPP, IPG et al in Network Efficiency Ranking
• The Cost of Valassis' Suit vs. News America Is Eating Its Profit