Markets

Hidden Cameras at Ralph's? News America Alleges 'Sting Operation' in Supermarket Ad War

By Jim Edwards

Updated on: January 13, 2010 / 1:08 PM EST / MoneyWatch

Insignia Systems (ISIG) launched a hidden camera "sting operation" using private detectives in a failed attempt to catch News America Marketing Group staffers removing Insignia's ads from supermarkets, according to papers filed in a suit between the two companies.

Download NAM's motion here.

Insignia and NAM are embroiled in a long-running legal war over whether NAM controls a virtual monopoly on those little but enormously lucrative ads that appear on shelves and checkouts at your local grocer. Insignia claims in federal court that NAM has illegally poisoned clients against using any agency but NAM, which is owned by Rupert Murdoch's News Corp. (NWS).

Part of Insignia's claim alleges that NAM staffers tore out ads placed by Insignia for its clients in supermarkets that NAM wanted to control. But a recent motion filed by NAM alleges that, in fact, there's no evidence that ever happened -- despite Insignia's cloak-and-dagger attempt to catch NAM execs in the act.

The motion urges that a former Insignia executive, Richard Rodriguez, either be precluded from testifying at trial or that he be dragged into a deposition about the alleged sting operation he ran in Ralph's supermarkets against NAM. The motion says:

News America sought to question Rodriguez about the "Ralph's Monitoring Project." According to documents produced by Insignia, the Ralph's Monitoring Project was a covert "sting" operation whereby Insignia management was hoping to catch News America representatives removing Insignia signs from retailer shelves without authorization. Insignia hired a team of private investigators (from Cannon Street Incorporated) to conduct surveillance and monitoring with hidden cameras at four Ralph's grocery stores in Southern California, Rodriguez's territory.
The investigation report, which is subtitled "Litigation Support," shows a calculated effort by Insignia to gather evidence of News America removing Insignia signs in order to support its unproven claims in this case. ... Despite spending no less than $61,000 on the Ralph's Monitoring Project, however, Insignia's documents also reveal that the investigation uncovered no evidence whatsoever of News America improperly removing Insignia signage.

Insignia has yet to file a response.