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Serving Northern St. Louis County, Minnesota

Court rules in favor of Timberjay, updated

Finds no basis for Albertson lawsuit; case dismissed with prejudice

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REGIONAL— A district court judge has dismissed, with prejudice, a lawsuit filed by Gary and Edna Albertson, owners of the Tower News and the Cook News-Herald, against the owners of the rival Timberjay Newspapers. The Albertsons, who are also minority owners of the Timberjay, began their lawsuit just over a year ago, purporting that Timberjay majority owners Marshall Helmberger and Jodi Summit, had engaged in fraud, illegal activity, and actions prejudicial to the Albertsons.

The Albertsons and their attorney John Colosimo ultimately provided no evidence to the court in support of their allegations, other than an affidavit from Gary Albertson that made false statements under oath.

The Albertsons purchased shares in the rival newspaper from a minority stockholder 19 years ago, without telling the paper’s majority owners in advance, and have been threatening the company with legal action ever since. Neither the Timberjay, nor Helmberger or Summit, received any proceeds from the Albertsons’ stock purchase, which was a private transaction between the Albertsons and former stockholder Madonna Shinkle.

The Albertsons had asked District Court Judge James Florey to order the Timberjay’s majority owners to buy the Albertsons’ minority shares in the business for more than their market value or dissolve the corporation to allow the Albertsons to recoup some of their investment. State law allows courts to intervene in corporate affairs, but only if majority shareholders act improperly. But Judge Florey found there was no evidence of improper behavior by the Timberjay’s majority owners. “The record before the court demonstrates that the Defendants’ [Helmberger and Summit] actions were in compliance with both Minnesota law and the bylaws of the corporation,” wrote Judge Florey in his Dec. 28 ruling.

Early on in the case, the Albertsons’ attorney acknowledged that he had no evidence for his clients’ allegations, but hoped to find evidence of something during discovery. As part of that process, the Timberjay turned over hundreds of pages of corporate records and Helmberger and Summit both sat for depositions in the case back in June.

Yet Colosimo and the Albertsons could ultimately cite nothing to the court that supported their claims. “Their case was baseless in every way,” said Timberjay Publisher Marshall Helmberger.

Judge Florey also noted that the court record contradicts the sworn testimony of Gary Albertson in an affidavit that Colosimo submitted as the sole evidence for his clients’ claims. In his sworn statement, Albertson alleged that the Timberjay’s majority owners had refused to provide him with annual financial reports, as is required by law, until the Albertsons served their lawsuit in December 2015. But Judge Florey notes that Albertson’s sworn statement is contradicted by numerous letters over the years from Albertson, in which he acknowledges receipt of the annual financial statements and comments on them.

“This was a flat-out lie by Gary Albertson, under oath,” said Helmberger. “And John Colosimo had good reason to know the claim was false, yet he submitted it to the court anyway,” added Helmberger. Making false statements under oath, otherwise known as perjury, is illegal, but is rarely subject to prosecution in civil matters.

Judge Florey noted that the Albertsons had purchased their stock without communicating in advance with the majority owners or requesting a stockholders’ agreement, that might have given them a stronger case for involvement in the management of the company. But given the Albertsons’ failure to take such steps, and given the majority owners’ compliance with state law and corporate bylaws, the judge said the Albertsons have no legal standing to request court intervention in the affairs of the company.

The Albertsons complained to the court that they have not received dividends from the Timberjay, but the judge noted that neither the law nor the company’s bylaws require such payments. He noted, as well, that the majority owners have a long-standing policy of reinvesting profits in the company as a means of improving the newspaper’s quality. The judge noted that given the circumstances, the Albertsons’ wishes regarding the management of the company are “irrelevant.”

Attorneys fees and motivations for lawsuit

The judge’s order made no mention of the Timberjay’s request that the Albertsons pay the newspaper’s attorneys fees in the case. “Given the bad faith exhibited by the Albertsons in this patently baseless lawsuit, we believe an award of attorneys fees is certainly warranted, particularly given Gary Albertson’s decision to make false claims under oath,” said Helmberger.

The Albertsons will have to pay certain court costs incurred by the Timberjay, including statutory fees and filing fees, totaling $634. The Albertsons are required by law to pay those fees given the outcome of the case.

The Timberjay’s attorney, Tom Torgerson, of Hanft-Fride, also questioned the motivation of the Albertsons’ claim, noting in legal briefs that the elderly couple has recently sought to sell their newspapers, so far without success. The Albertsons recently discontinued publishing their newspaper serving Biwabik and Aurora due to lack of profitability.

Torgerson noted in his legal brief supporting dismissal that by imposing high legal costs on the Timberjay, or by gaining a court order to dissolve the company, that the Albertsons likely hoped to put a competitor out of business, thereby increasing the value of their competing newspapers.

Helmberger agreed, and went further. “Using the courts to battle competitors you can’t defeat in the marketplace is a blatant abuse of the legal process,” he said.

Helmberger said the Timberjay will make a strong argument for an award of legal fees should the Albertsons opt to appeal the judge’s ruling. The Albertsons will have until Feb. 27 to submit an appeal.

Broad support for the Timberjay

The legal battle provided considerable fodder for the media, with the case drawing interest from a number of major newspapers and television and radio stations in the Upper Midwest, most of which noted the Timberjay’s outstanding reputation.

In its report, Minnesota Public Radio noted: “Since the Timberjay began printing in 1989, it has developed a stellar reputation for its coverage of northern Minnesota and its bullish advocacy for open data. Its support in the community showed once Gary and Edna Albertson filed their lawsuit: Helmberger set up a crowdfunding effort that pulled in more than $12,000 to help cover attorney fees.”

“We are extremely grateful for the amazing support we received from so many of our readers,” said Helmberger.

“We are happy to have the case resolved and these scurrilous charges dismissed.”