On May 27, Valassis will face off against News America Marketing in Michigan's Wayne County circuit court. As that trial progresses, the federal court case which covers substantially the same issues is on hold, according to page 21 of this SEC filing.
This is probably to the advantage of News America, because the state court is not online and thus it will be more difficult for the media to report on revelations in the trial. But it also raises the question of why the federal court should allow the state court to go first when discovery in both cases has already been combined for convenience.
Conspiracy theorists may want to look at the federal judge who is currently causing the delay -- Judge Arthur Tarnow. Tarnow has presided over the News America soap opera before. In 2007 he was asked to enforce a subpoena against Susan Griffin, a former employee of Floorgraphics Inc. who handled the Kmart account and later went to News America.
Floorgraphics alleged that News America had hacked into its computers to steal competitive information, and wanted to seize Griffin's personal home computer to see what information was on it. Valassis is alleging substantially similar claims against News America.
News America resisted the subpoena, claiming variously that the desktop was not used by Griffin, was broken, would not boot up and did not have a video monitor.
Tarnow ruled in favor of Floorgraphics, and Griffin's busted computer was (presumably) subjected to CSI-style forensic analysis.
Unfortunately, we don't know what Floorgraphics found. We do know that Floorgraphics went to trial on its evidence and extracted a settlement from News America after just a couple of days of testimony -- before the Griffin data made it into the trial. And we know that News America took out $1 billion in debt to pay for "general corporate purposes" right before that happened.
You can fill in the gaps yourselves: One possible interpretation is that Tarnow wants everything -- including the Griffin stuff -- to spill out in state court first, making his life easier if the matter gets to the federal venue. (The other, perhaps more reasonable, interpretation, is that Tarnow saw a chance to get a big piece of litigation off his docket and took it.)
Side note: It will be interesting to see if bankrupt News America whistleblower Robert Emmel shows up at the state trial. Here's why.
- See BNET's previous coverage of the in-store marketing wars:
- UPDATED: News America Marketing's Acquisition of Floorgraphics Not Big Enough to Show Up in Q1 Numbers
- Valassis Q1: Legal Bills Running at 22% of Profits; Hints of Layoffs?
- News America Marketing Sues Valassis Alleging Bogus Web Posts
- Valassis Accused of Using Hidden Identities in Online War With News America Marketing
- News America Marketing Forces Whistleblower Into Bankruptcy
- News America Marketing Whistleblower: Clients Were Charged for Ads That Never Appeared
- Was N.Y. Post's Carlucci the Reason for News America Marketing's Settlement With Floorgraphics?
- News America Marketing's Alleged Plans to Seize Safeway Account Outlined in Suit
- Valassis to Stick With "Majority" of Newspapers; Settles Fraser Billing Dispute
- Valassis, Insignia Stock Jumps on News America Marketing Group Settlement
- Valassis CEO Got Big Raise Despite Company's Losses
- News America Marketing Group Wins Summary Judgment Against Whistleblower Robert Emmel
- News America Marketing Group Buys Floorgraphics Just Hours After Settling Spying Lawsuit
- News America Marketing Group Settles With Floorgraphics; Valassis, Insignia Likely Rejoicing
- Valassis May Not Be Able to Pay Debt; Litigation May "Materially Harm" the Company
- Trial: Did News America Marketing Group Break Into Floorgraphics' Computers?
- Valassis Stock Threatened With De-listing by NYSE
- Valassis' Plan to End Newspaper Coupons Outrages Middle America
- Valassis Suit vs. News America Being Conducted in Secrecy
- Valassis: Layoffs Will Continue as It Reduces Newspaper Coupon Business; It's All News America's Fault
- Valassis Writes Down $245 Million in Assets; Legal Bills Running at 10% of Profits
- Valassis Angers Blogger Moms by Yanking RedPlum Coupons From Newspapers
- Valassis Reduces the Cost of Fun for Employees
- Direct Mail Giant Valassis Is "Not Paying Its Bills"; Stock Is "Worth $0"
- The Cost of Valassis' Suit vs. News America Is Eating Its Profit