Insignia Uses Valassis Trial to Bludgeon News America in Minn. Federal Case

Last Updated Sep 10, 2009 5:22 PM EDT

Insignia Systems is using the $300 million verdict in the recent Valassis trial to bludgeon News America Marketing in its case, which is winding its way through Minnesota federal court.

Insignia recently filed a motion requesting reports and backup data used by two of NAM's expert witnesses in the Valassis case, Dr. Robert Topel and Dr. Kevin Murphy.

In the Valassis case, Topel and Murphy were used by NAM in an attempt to demonstrate that Valassis lost market share because it raised prices, not because NAM holds a monopoly over supermarket advertising that it leverages to steal share from the newspaper coupon market. NAM is now using a similar argument against Insignia.

Insignia is arguing that because a Michigan state court jury didn't buy Murphy and Topel's analysis, nor should the Minnesota federal court.

Through some selective quoting, Insignia argues that NAM is trying to have it both ways. In the Insignia case, NAM argued that it obviously did not have a supermarket monopoly because it had not been able to do the one thing that monopolists want: increase its prices. A NAM lawyer is quoted in Insignia's motion saying:

In fact, Your Honor, what the undisputed evidence demonstrates is that News America's pricing has gone down by almost 35 percent on average during the relevant time period.
But in the Valassis case, Murphy suggested that these price decreases came because NAM was offering to apply discounts given on its newspaper coupon business onto its supermarket business. In other words, what price decreases occurred did so because NAM has the ability to manipulate prices in two separate markets, offering discounts in one to gain business in the other.

For its part, NAM argues that the discovery request comes way too late and that Michigan state law and federal law are too different for the request to be relevant.

Separately, one of the key issues in Insignia v. NAM is whether NAM gave Insignia's customers false information about their relative compliance rates (i.e. how often they actually managed to get clients' ads into supermarkets). NAM told clients that Insignia had only a 16 percent execution rate, Insignia claims, whereas NAM's allegedly 10,000-strong field force had a much higher execution rate. NAM, obviously, denies this.

In oral arguments back in May -- but only unveiled by the Minnesota court system a few days ago -- Insignia lawyer Bill McLeod told this charming anecdote about NAM's execution rate on its own work for drug giant Pfizer:

News America had come out with a product called Price Pop, and that product Price Pop was delivering a very bad performance in the marketplace.
News America was finding that it was only being installed about 20 percent of the time, 20 percent of the time it had undertaken to the manufacturers that it would be able to get those signs up, and in these October 17, 2002, notes of a meeting with Pfizer ... the president of News America Marketing at the time reports that he confessed to Pfizer that they were having trouble getting their signs up. They were achieving compliance only 20 percent of the time.
NAM attorney Matthew Cantor had a different take: Insignia failed to gain share because it wasted $3 million acquiring ValuStix, a POP-delivery system in the form of an accordion booklet that was almost completely nonfunctional. Insignia ended up suing the maker of ValuStix when sales estimates of $13 million a year failed to materialize.

And finally: It ain't Jarndyce and Jarndyce, but it's getting that way. At the time of writing, Insignia v. NAM was five years old and had 582 documents filed in its case jacket. The last trial date given on the docket was May 1, 2009.

Image: Alistair McGowan as Jarndyce's lawyer Kenge, from the BBC's production of Bleak House.