After lawyers clash, Inquirer partners huddle with judge

Posted: October 30, 2013

After their lawyers had spent an hour clashing over what state was better suited for hearing their dispute, the two partners grappling for control of The Inquirer met behind closed doors Monday with a Philadelphia judge.

Lewis Katz and George E. Norcross III spent 44 minutes in the City Hall chambers of Common Pleas Court Judge Patricia McInerney - who sources said had privately pushed both sides to consider a settlement in the days before Monday's hearing.

Katz and Norcross emerged from McInerney's chambers shortly before noon, then huddled with their lawyers while a scrum of reporters and others watched.

Katz walked to his lawyers, who were leaning forward to hear his remarks, but then glanced toward the reporters. "Anything I say is going to be written down," he told the attorneys, "so I'm not saying anything."

Norcross left the courtroom a few moments later. As he walked down the sixth-floor hallway amid a pack of reporters, Norcross was asked if McInerney had urged him and Katz to settle the matter themselves.

"We respect the judicial process and we're not going to offer any comment at all, other than that we are hopeful that we can build this enterprise in the future and make it an organization that benefits the entire region," Norcross said in response.

The meeting followed courtroom arguments over whether Katz's lawsuit challenging the firing of Inquirer editor William K. Marimow should be heard in Philadelphia, where it was filed, or Delaware, where the newspaper's parent company, Interstate General Media, was incorporated.

Katz, joined by co-owner H.F. "Gerry" Lenfest, sued publisher Robert J. Hall and IGM on Oct. 10, saying Hall's firing of Marimow three days earlier was invalid. Katz did not approve the ouster and his lawsuit contends that the partnership agreement governing the company requires major business decisions to be approved by both Katz and Norcross, the two directors on the management committee.

Norcross countersued in Delaware Chancery Court, accusing Katz of breaching their contract by allegedly interfering in newsroom matters.

Monday's gathering in McInerney's courtroom was the second in a week. At least 17 attorneys attended.

All but one of the partners who together own The Inquirer, the Philadelphia Daily News, and also came to the hearing.

William P. Hankowsky, chief executive of Liberty Property Trust, and Joseph Buckelew, a partner with Norcross in the New Jersey-based insurance firm Conner Strong, were there in addition to Norcross, Lenfest and Katz. Krishna P. Singh II did not attend.

The men bought the newspapers and website in April 2012 for $55 million in a public auction after bankruptcy proceedings. The company sold for $515 million to another group of local investors in 2006.

Robert Heim, an attorney for Norcross, argued that the case is about the internal affairs of a corporation and thus must be heard where the company is chartered - in this case, Delaware - unless there is an otherwise compelling reason.

"You don't think it is relevant that it is the Philadelphia Inquirer, and citizens of Philadelphia can come and sit in court to follow what's going on?" McInerney asked.

No, Heim told the judge. By incorporating in Delaware, the partners "chose to have Delaware law apply to any disputes among them," he said.

C.J. Seitz, a Wilmington lawyer on Katz's team, said Delaware courts defer to other states unless there is a unique legal issue or the venue is inconvenient for the parties. This case is about the violation of a contract, the IGM partnership agreement, he said.

"What's being claimed here is a denial of [Katz's] right to vote," Seitz said. "It's as clear as that."

The lawyers also debated whether Lenfest had standing to sue, because he is not on the company's two-director management committee, and if Hall could be sued, because he is not a partner.

McInerney took the arguments under advisement, and did not indicate when she might rule.

215-854-2718 @tomfitzgerald

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