Compass Lexecon Client Hearst Defeats Below Cost Pricing Claim

On January 20, 2020, the Court of Appeal of the State of California unanimously affirmed the trial court’s grant of Summary Judgment in favor of Defendant Hearst Corporation (owner of the San Francisco Chronicle), rejecting Plaintiff San Francisco Print Media’s (owner of the San Francisco Examiner) suit contending that Chronicle sold certain types of print advertising at prices below cost in violation of California’s Unfair Practices Act and Unfair Competition Law.

Compass Lexecon Senior Consultant, Professor Daniel Rubinfeld was retained by counsel for Defendant Chronicle to analyze Plaintiff Examiner’s expert’s analyses of “cost, causation and damages.” Professor Rubinfeld filed two reports criticizing the Examiner’s expert’s analyses on numerous grounds.

The trial court excluded the Examiner’s expert’s “cost, regression and yardstick” testimony pursuant to the Sargon standard. Because such exclusion meant that Examiner could not show a triable issue of fact as to the elements of below-cost sales (§ 17043), loss leader sales (§ 17044) or secret unearned discounts (§ 17045), the trial court granted Hearst Corporation’s Motion for Summary Judgment.

Professor Rubinfeld was retained by Stephen L. Saxl and Alan Mansfield of Greenberg Traurig LLP, counsel for Chronicle. Professor Rubinfeld was assisted by Duncan Cameron and Christopher Fasel in Compass Lexecon’s Pasadena office.