Sara Lee "Rape" Memo Emerges: Client Alleges "Unforgivable" Behavior by News America

UPDATE: NAM-Valassis Settlement Falls Apart: Just When You Thought It Was Safe to Go Back Into the Supermarket ...

News Corp. (NWS)'s $500 million settlement with Valassis (VCI) will prevent trial testimony about an explosive email that was potentially the most embarrassing piece of evidence regarding the way Rupert Murdoch's supermarket advertising empire treats its clients: The infamous Sara Lee "rape" memo.

Download the Sara Lee "rape" memo here.

The memo, written by Sara Lee marketing executive Debra Lucidi (pictured), describes the fury that News America Marketing Group (the News Corp. unit at the heart of the litigation) generated within Sara Lee over its pricing and provision of supermarket and grocery coupons. The memo had previously been referred to in court but, until recently, the item itself had not emerged.

NAM asked the court to exclude the memo from the trial on the grounds that it was inflammatory hearsay, but the two sides reached a deal before the judge could rule on its admissibility. In the case, Valassis alleged NAM maintained an illegal monopoly on supermarket advertising through predatory pricing policies.

BNET, however, has obtained a copy. It offers a riveting, raw picture of a furious client that believes it is being cheated by one of the biggest coupon ad agencies on the planet. In the advertising world, clients and agencies like to keep their battles behind closed doors. It is highly unusual for such a memo to be seen publically.

Lucidi, a former director of business services procurement at Sara Lee, uses words like "pissed," "livid," "intolerable" "unforgivable," "ludicrous," and "ridiculous" to describe dealing with NAM. Most controversially, it contains the sentence:

"Feels like they are raping us and they enjoy it..."

(Click to enlarge.) Lucidi wrote the memo to herself in order to record a conversation she had with an unnamed female colleague at Sara Lee. The memo is slugged, "Off the record." (Speculation: There's a good chance that colleague was Pamela Wesson, a former senior manager/consumer promotion at Sara Lee, who had dealings with NAM rep Michele Moody in 2002.)

The memo appears to have been written after Sara Lee assigned its newspaper coupon business ("free-standing inserts," in industry jargon) to Valassis. Sara Lee kept the remainder of its supermarket ad business with NAM, but "they raised rates because they did not keep FSI," Lucidi wrote. NAM's actions cost the agency, as Sara Lee cut its in-store advertising program in response:

"Told them she does not appreciate the tactics; this is not the way we work with suppliers. It is intolerable and unforgiveable. Cut in-store as a result. Was just livid with them."

The rest of the first half of the memo is a stream-of-consciousness attack on NAM's practices.

The other reason NAM wanted the memo kept out of court was due to its second half: A glowing endorsement of Valassis which, by contrast, is "wonderful" at handling Sara Lee's business:

"Valassis has been a wonderful partner. Would rather change dates on an FSI before going to News. Valassis will help us with anything. Very flexible with dates. Wonderful Incredible account service."

After her encomium to Valassis, Lucidi summed up her thoughts with a single sentence:

"News took advantage of us."

Sara Lee was previously named as one of a number of NAM clients that were overcharged by the agency.

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