Largest verdict of 2009 settles for $500M, leads to new business deal

On the eve of the second of three major trials, one of the largest business lawsuits in Michigan history has settled for $500 million.

Livonia-based Valassis Communications, Inc. reached an agreement to settle its outstanding lawsuits against News America Marketing (NAM), a division of Rupert Murdoch’s News Corp.

U.S. District Court, Eastern District of Michigan Judge Arthur Tarnow OK’d the agreement, which would have prevented a Feb. 2 trial in asserting violations of the Sherman Act. If Valassis had prevailed in this suit — as it did in a $300 million July 23, 2009, trial asserting unfair competition and tortious interference — the damages would have been trebled.

Besides paying Valassis $500 million, NAM also will enter into a 10-year shared mail distribution agreement with Valassis Direct Mail, a Valassis subsidiary. In addition, the judge will issue a permanent injunction related to certain business practices at issue in the lawsuits, and Valassis also will drop a pending state court case in California.

“It has become evident to our legal advisors from pre-trial proceedings over the past couple of weeks that significant risks were developing in presenting this case to a jury,” said News Corp. Deputy Chairman, President and Chief Operating Officer Chase Carey in a statement. “That … led us to believe it was in the best interests of the Company and its stockholders to agree to a settlement.”

Valassis asserted that, over a six-year period, NAM tried to monopolize the free-standing coupon insert (FSI) market. Valassis contended that, by 2006, NAM had more than 60 percent of the FSI market, and did so by illegally bundling deals on its FSIs with its other consumer marketing division, in-store and point-of-purchase media.

Valassis was represented by Gregory L. Curtner and A. Michael Palizzi of Miller, Canfield, Paddock and Stone, P.L.C., and David Mendelson of Birmingham-based Law Offices of David Mendelson.

The $300 million verdict was the highest 2009 verdict reported in Michigan Lawyers Weekly. By comparison, the top verdict in 2008 was $9.1 million — a difference of 97 percent.