Murdoch's Grocery-Ad Lawyers Balking and Bailing as Their Final Battle Nears

(MoneyWatch)  Not long after News Corp. (NWS) lost the equivalent of its entire profits from the movie Avatar -- $500 million -- in litigation over its alleged monopoly in supermarket advertising, News' legal team fell into disarray.

One group of Rupert Murdoch's lawyers resigned on Wednesday, as a new monopoly trial looms, while the others begged the judge for more time to prepare. The maneuvering either signals desperate times in the News camp ... or it's yet another of the brazen gambits that have typified News' tactics in defense of its grocery-coupon empire: delay, delay, delay, even at the last minute.

News recently gave a $500 million settlement to rival Valassis (VCI), which alleged that its grocery coupon division, News America Marketing Group, used predatory pricing tactics to maintain an unfair dominance of supermarket advertising.

In the current case, another supermarket ad agency, Insignia Systems (ISIG), is making similar allegations. Minnesota federal judge John R. Tunheim has ordered both sides to be "ready for trial" on April 12, after six years of pretrial litigation. The case will put an end to litigation on this issue for the foreseeable future.

In mid-February, News lawyers wrote to the judge to say they were "not actually ready for trial," that the April date was counterproductive to settlement efforts, and that it would clash with a briefing schedule regarding expert witnesses. Insignia's attorneys called that move "disingenuous" because "News has shown no interest in even discussing settlement of this case." They pointed out that News has requested a variety of postponements that have added six months to the trial date already.

News then claimed that its lawyers have clashing trial dates on April 5, April 19, and May 3. Insignia responded that one of those trials is expected to last only two days while another isn't finished with pretrial discovery activity. Besides, Insignia said, with three law firms and 13 lawyers on News' side it would be virtually impossible to find a date without conflicts.

Then, on March 3, the law firm Constantine Cannon abruptly withdrew from the case. The firm's name partner, Jan Friedman Constantine, is a former chief ethics officer for News. News' lawyers offered no explanation for the withdrawal, saying only, "the withdrawal of Constantine Cannon LLP will not impact the schedule of this case." That statement is hard to believe in light of News' previous insistence that it isn't ready for trial.

Is News really unready for battle after six years of preparation? Insignia believes it's a ruse, telling the judge:

... if history is any guide, in each of the two settlements News reached with other competitors who were suing News for unfair competition, Valassis and FLOORGraphics, the lawsuits were settled only during or on the eve of trial.

Related:

• Valassis-News America Deal Raises History of FTC Antitrust Issues
• Rupert Murdoch, Down $530M in Antitrust Fight, Now Faces a Poker Champ Who Trained With Bill Gates