Profits or Politics? The Timberjay newspaper is being sued by its prime competitor

October 5, 2016

 

Jennifer Martin-Romme
Zenith News

It’s a fight that makes Duluth Reader publisher Bob Boone and me look like BFFs.                                 

 

On December 2, 2015, Marshall Helmberger and Jodi Summit—the husband-and-wife team behind the Timberjay newspapers on the Iron Range—were served with a lawsuit. The plaintiffs are Gary and Edna Albertson, owners of Tower News and the Cook News-Herald, both of which compete with the Timberjay.


But, wait, it gets weirder: The Albertsons own nearly half the Timberjay. In 1997, they bought 46 percent of its stock. They now allege that they were denied financial information and “input into the operation of the business.”


Oh, but it gets even weirder still: The Albertsons are essentially suing their competition for not making enough money. “Plaintiffs believe that said corporation was supposed to operate for a profit and...would pay dividends.”  


In a May 15, 2000, letter, Albertson wrote, “A newspaper should return a profit of 15 to 25%. I believe that with proper management, the Timberjay could do that...my share of the profits should have come to around $75,000.”


Helmberger’s response (dated May 19, 2000) gave as good as he got, even channeling Orson Welles in Citizen Kane: “You criticize our marginal profitability. Yet the real story of this company is that it exists at all. While virtually every other long-established weekly newspaper in this area (including your own) continues to lose subscribers, lose advertising and market share, this company has done the exact opposite...And you are going to tell me how to run a newspaper?”


“[The lawsuit] is totally frivolous,” says Summit. “When the Timberjay was formed, the employees were given stock. The stock wasn’t worth anything at the time. This one employee left an abusive marriage and she moved to Duluth. [Albertson] offered her $33,000 for her stock...He called and said he was going to shut us down.”


According to Summit and Helmberger, Albertson initially pursued a seat on the board of directors, but he was denied because it’s illegal under anti-trust laws to serve as an officer or director for two competing companies. The Timberjay’s board is comprised of Helmberger and Summit, who own the other 54 percent of the paper’s stock.


“The moment he bought that stock, he sent me an email saying, ‘I’m your boss now,’” says Helmberger. “He tried to order our employees around. He thought he was going to be telling us what was what. He was either going to drive us out of business or keep us under his thumb.”


Under Minnesota law, the Timberjay is a “closely held corporation,” meaning it has no more than 35 shareholders.

 

The Minnesota Business Corporation Act defines the rights of minority shareholders as:
•The right to seek relief in the event of “unfairly prejudicial” conduct or a “failure of the shareholder’s reasonable expectations with respect to his relationship to the corporation” (e.g., minority shareholders are often employees and this might come into play if they are terminated or if the company changes its buy-back policy);
•The right to dividends declared by the board of directors, although the board is not required to declare dividends and closely held corporations typically don’t;
•The right to some degree of “corporate governance,” usually participation in shareholder meetings and a vote on major issues, such as electing the board of directors or approving mergers or sale of major assets. Though like dividends, shareholder meetings are optional unless the company’s bylaws require them; and
•The “absolute right, upon written demand, to examine and copy” corporate and financial records.


That last one in particular posed a conundrum for the Timberjay: What do you do when your competitor buys half your company and now wants to open up your books?


“The law very clearly describes what you have to give them, which we have done,” says Helmberger. “They can request additional information, but only for a proper purpose. Most of the time, we actually have provided it, but the Timberjay’s attorneys have always advised that we don’t have to provide anything that would give Albertson a competitive advantage.”


But Albertson says he was not seeking any competitive advantage when he purchased the Timberjay’s stock. “It was an investment. I got the stock at a good price. I’m pretty good at making newspapers profitable...I could buy stock in the Duluth News Tribune. It doesn’t matter [that it’s a newspaper competing in the same market].”


Albertson characterizes the lawsuit as “not a lawsuit between me and the Timberjay. It’s between two shareholders. [Helmberger’s] keeping it all to himself...The remedy would be for them to start running the business properly and giving me a return on my investment.”


However, in documents filed with the court so far, Albertson is asking for either the Timberjay to buy out his stock or for the Timberjay to be dissolved altogether. All the court documents name Timberjay, Inc. as a defendant.


“To me, there’s no story here,” says Albertson. “Lawsuits are very, very touchy. When you’re a reporter, you have to be careful when you’re writing about a lawsuit or you might find yourself involved in it.”


Albertson clarified that he was referring to Helmberger, who has published two stories in the Timberjay about the lawsuit—except that Helmberger has been involved in the lawsuit all along, so Albertson’s comment still felt vaguely like a threat directed at the Zenith.


When asked why the initial complaint states that he’s received “no financial information,” but then in his deposition, Albertson said that he received tax returns every year, “but they were very late,” Albertson replied, “I’ve got nothing else to say about this,” and hung up the phone.


Albertson’s attorney, John Colosimo, was out of the office and could not be reached for comment. Helmberger and Summit’s attorney, R. Thomas Torgerson, declined to comment on the record.


Helmberger believes that Albertson’s motives are more sinister than industrial sabotage and that Albertson, as well as his attorney, are retaliating against the Timberjay’s coverage of the Iron Range School District, which commenced its own facilities plan in 2010—similar to Duluth’s “Red Plan” and just as bitterly controversial. Both districts hired Johnson Controls to oversee their plans.


John Colosimo was the attorney for the school district. Helmberger was a tireless watchdog, chronicling the district’s descent into overspending and duplicity, culminating in a 2013 state Supreme Court case against Johnson Controls for refusing to release their contracts. Ultimately, Johnson Controls won, but it was a Pyrrhic victory when the state legislature passed the “Timberjay law,” expressly making government contracts public information.


But Colosimo did not represent the district in that case. “Oh, no,” says Helmberger. “Johnson Controls hired the top lawyers in the state, not the J-team from Virginia.”


Three years prior to that, Helmberger filed a complaint against the school district for using public money to promote the facilities plan and then failing to report the expenditure. “In the end, [the court] agreed with us that, yes, they do have to file a campaign finance report. In the meantime, the school district had switched attorneys to John Colosimo...When the school district finally issued its report, it was grossly inadequate. So I pointed out to them at that time that they needed to amend their report. They referred my complaint to John Colosimo, who told them, ‘Just ignore everything you get from [Helmberger].’ Finally, after they said they weren’t going to do anything, I filed a complaint. It went to a three-judge panel, which ordered the school district to amend the report.”


The amendment showed that the district spent $54,000 more than it had initially claimed. Six months later, the Timberjay was served with the current lawsuit, which Helmberger believes Colosimo filed purely out of spite, using Albertson as a front because of his newspapers’ credulous editorial positions towards the school district. “[Albertson] lives in the school district’s back pocket. He thinks when you’re the official newspaper, your coverage has to be glowing and supportive.”


Tower News and the Cook News-Herald are the “legal” newspapers for the St. Louis County School District, meaning the district has selected them to publish its legal notices, typically after a bidding process. “There’s been some shenanigans with the bidding. [The school district] usually gives [Albertson] the bid. We put in a bid, but then they call him and he puts in a bid for one penny less.


“After eight months of discovery, they have absolutely nothing...The only question in our minds is whether the judge will award us attorney’s fees.”


The next hearing is October 11 in Virginia.

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