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Fight over legal notice ads spills into the courts

Two judges said Media General lacked standing, then gave asked-for relief

The effort by The Wall Street Journal to pursue legal notice advertising in Virginia has generated some extraordinary rulings and caused an apparent conflict among circuit courts.

The newspaper has obtained orders in at least nine Virginia localities in Northern Virginia, Hampton Roads and the metro Richmond area authorizing it to accept legal notice advertising.

A spokesman for Dow Jones Inc., publisher of the WSJ, refused to comment on the litigation but said the newspaper began soliciting legal advertising in two states, Colorado and Virginia, in late spring.

The advertising is published in regional editions.

Media General, publisher of the Richmond Times-Dispatch, has had the orders giving the WSJ permission to accept legal advertising vacated in two localities, even though both Richmond Circuit Judge T.J. Markow and Henrico County Circuit Judge Daniel T. Balfour found that Media General “is without standing to assert its position.”

That position was that Virginia Code § 8.01-324(A) says nothing about judicial approval of a right to accept such advertising. Craig T. Merritt, an attorney for Media General, argued successfully that the judges were without jurisdiction to issue an order under § 8.01-324(A) asserting that a newspaper is authorized to publish legal notices.

To publish the notices, a newspaper must have paying subscribers, print in English, disseminate “news of a general or legal character” in the area in which the notice is required to be published at least once a week for 24 consecutive weeks, and hold a periodical mailing permit issued by the U.S. Postal Service.

By contrast, Code § 8.01-324(B), requires a court order for legal notice advertising if a newspaper does not have a periodical mailing permit. Such newspapers do not have to have paid circulation but must meet a more stringent definition of a newspaper, including employment of a full-time news staff, an editorial page and status as, “in general, a news forum for the community in which it is circulated.”

In its pleadings, Media General emphasized that its argument went only to the jurisdiction of the court to enter an order under § 8.01-324(A), but it argued that The WSJ “is attempting to leverage the orders by publishing them in interstate commerce in an effort to drive Virginia legal notice to WSJ and its business partner. This aggressive, and improper, use of the statute turns the courts of Virginia into an unwitting arm of the WSJ marketing department.

“Legal advertisers who rely principally on these orders may have a false sense of security, as the advertiser’s legal advertisements remain at risk of due process challenge based upon claims that WSJ fails to meet the criteria set forth in Va. Code § 8.01-324(A).…

“[T]here are serious concerns whether a publication with such minimal penetration of households in the City of Richmond can offer legal notice consistent with the requirement of due process.”

The Virginian-Pilot and The Washington Post have raised the due process argument in Virginia Beach and Prince William County Circuit Courts in their efforts to set aside orders granting the WSJ permission to accept legal advertising in those localities.

Conrad M. Shumadine, an attorney for The Pilot, said the newspaper wanted the opportunity to show that the WSJ does not have a “general circulation” that would permit it to publish legal advertising.

However, Virginia Beach Circuit Judge A. Bonwill Shockley ruled last month that she had the authority to enter an order in May that the WSJ could publish legal advertising and that The Pilot lacked standing to challenge her jurisdiction to do so.

Attorneys for The Post argue that the WSJ is ineligible to publish legal advertising in Prince William because it has a circulation of 991 in a county of 130,405 households.

Moreover, the WSJ markets itself as “the world’s leading business publication” but “does not cover local or regional news in Virginia or Prince William County that is not otherwise of national interest,” The Post alleges in its pleadings.

The pleadings also note that Prince William has one of the highest foreclosure rates in the country.

“From the perspective of the homeowners in Prince William County, it is important that a wide audience be given notice of a foreclosure, because that will increase the likelihood that a fair price will be paid for the home at auction, according to the pleadings.

“The notice of foreclosure also can prompt the homeowner – or the family or friends of the homeowner, who may not have known of the imminent foreclosure – to cure the delinquency prior to foreclosure. There are crucial public policy goals served by requiring such notice to be published in a newspaper of ‘general circulation’ within the county.”

Attorneys for the WSJ have countered that newspapers in the state are merely trying to stifle competition.

A hearing on the dispute in Prince William is set for Aug. 31.

Ginger Stanley, executive director of the Virginia Press Association, said the association believes that no court order is required for any publication of general circulation with a periodical permit.

The orders entered by the circuit judges need to be vacated because most of the state’s major newspapers have operated without one for decades, she said. Granting the orders to one such paper invites a challenge to the legal sufficiency of the notice of a foreclosure or other legal proceeding published in a paper that does not have such an order.

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