News America Claims Ex-Sara Lee Exec Filed "Sham" Evidence in Monopoly Case

Whether Sara Lee (SLE) was misled in allocating its marketing dollars between 2002 and 2006 remains the subject of a heated controversy between News America Marketing and Insignia Systems (ISIG), two ad agencies battling for control of the supermarket advertising business.

Download NAM's letter to the judge here.

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

On Dec. 16, NAM's lawyers wrote to Judge John Tunheim of Minnesota federal court asking him to reconsider a summary judgment ruling because the testimony of Pamela Wesson, a former Sara Lee exec, is a "sham declaration, disproven by her deposition, and concocted [by Insignia] solely to defeat summary judgment." (While the wording of NAM's letter makes it look like Sara Lee or Wesson is accused of filing false evidence, the intent of the letter seems to be to persuade the judge that Insignia is portraying Wesson's evidence in a false light.)

Wesson is a former senior manager/consumer promotion at Sara Lee. She switched jobs and eventually became a senior brand manager at Newell Rubbermaid's Levolor Custom Shades (where she was probably expecting a quiet life).

Wesson testified about a meeting she had with a NAM rep, Michele Moody, in 2002, when she was at Sara Lee. In that meeting, Wesson said NAM's Moody told her that NAM had the contractual power to tear down signs placed in stores by Insignia, and thus Sara Lee would be wasting its money by going with anyone but NAM. Sara Lee thus did not give any business to Insignia between 2002 and 2006, Wesson said.

Download Insignia's reply here.

NAM, however, believes that Wesson's testimony is misleading because as Sara Lee did no business with Insignia in the first place, Insignia could not possibly have lost business because of the conversation. Sara Lee did eventually sign a deal with Insignia in 2006. NAM hauled Wesson into a deposition on the matter as recently as Nov. 24.

Insignia, obviously, has a different take on L'Affaire Wesson. In a reply on Dec. 17, its lawyers wrote:

News challenges only a few statements in Ms. Wesson's 1600 word, 5 page declaration. Yet, in an effort to create the appearance of material inconsistency, News craftily splices short quotes with paraphrasings of Ms. Wesson's deposition and declaration.

Actually, she testified that she, not all of Sara Lee, did no business with Insignia while she was at Sara Lee before 2006.

NAM and Sara Lee have an unhappy history together. In a separate case, it emerged that Sara Lee's Debra Lucidi, a former director of business services procurement, described dealing with NAM as "[it] feels like they are raping us and they enjoy it." She also testified that NAM's control of supermarkets led to inflexible pricing and "they never seemed to care that much."

And finally: The full details of the legal settlement that resulted in NAM acquiring Floorgraphics Inc. in March may yet be made public if Insignia has its way. BNET reported earlier this month that NAM paid $29.5 million in the secret deal. But Insignia wants all the deal paperwork. In a motion filed Dec. 8, Insignia argues it has a right to examine the deal in case it includes evidence of NAM's monopolistic policies:

... Insignia seeks production of the settlement agreement between News America and FGI. ... The document is highly relevant because it evidences the acquisition by News America, a monopolist, of the lone remaining competitor, apart from Insignia, in the relevant in-store advertising antitrust market. Insignia also anticipates that the document might contain provisions that further evidence News America's anticompetitive objectives, such as non-compete provisions binding on the senior executives of FGI.

Insignia is also seeking copies of all the exhibits entered into the aborted FGI trial, which was stopped after just a couple of days -- and some embarrassing testimony about NAM CEO/New York Post publisher Paul Carlucci -- when the two sides agreed on their settlement/acquisition.

NAM has yet to respond to Insignia's motion.

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