Businessman Names Inquirer, Publisher In Libel Action

The Legal Intelligencer
By Shannon P. Duffy

January 8, 2009

The Philadelphia Inquirer and its publisher, Brian P. Tierney, have been hit with a libel suit by a Gladwyne, Pa., businessman who claims the newspaper set out to retaliate against him after negotiations between his company and the newspaper’s parent company to launch joint business ventures ultimately soured and were called off.

A lawyer for the Inquirer said the suit’s allegations are “unfounded” and that the newspaper looks forward to defending itself in court.

The suit by Vahan H. Gureghian and his company, Charter School Management Inc., was filed just eight days after theInquirer published a two-part series and an editorial that focused on Gureghian’s role in founding and operating Pennsylvania’s largest charter school, Chester Community Charter, and raised questions about the propriety of the school’s financing.
A third article focused on the political connections of Gureghian — a lawyer who is a former partner of two firms, Clark Ladner and Obermayer Rebmann Maxwell & Hippel — and his frequent hosting of political fundraisers at his 30,000-square-foot mansion.

Gureghian quit practicing law to run the charter school and in June was chosen to serve as finance chairman of Montgomery County’s Republican committee. He also owns Matt Outdoor, a billboard company that has permits for 11 signs in Pennsylvania, New Jersey and Delaware.
The suit was filed in the Delaware County Court of Common Pleas by attorneys Clifford E. Haines and James A. Wells of Haines & Associates and Joseph Fioravanti, and names as defendants Philadelphia Media Holdings, the Inquirer , Tierney, three reporters — Dan Hardy, Derrick Nunnally and Martha Woodall — and education editor Rose Ciotta.

In its opening paragraphs, the suit outlines the alleged failed business deal between Gureghian and PMH.

It alleges that ever since Tierney and PMH bought the Inquirer in 2006, the newspapers have been plagued by “declining circulation” and “dwindling revenues,” and that, as a result, Tierney sought out Gureghian because he was attracted by Gureghian’s successes in managing charter schools and developing billboard locations.

The suit alleges Gureghian and Tierney met several times and had numerous phone conversations to “discuss potential joint ventures in both businesses.”

But although the two had reached agreements on “substantial aspects” of the joint venture, the suit alleges that the negotiations ultimately ceased when Tierney “unexpectedly and inexplicably” refused to agree to a confidentiality agreement.

According to the suit, the confidentiality agreement would have forbid Tierney and PMH from publishing or using any of the “financial and proprietary” information they had obtained through their business dealings with Gureghian.

Tierney’s “sole reason” for refusing to sign, the suit alleges, was his claim that he does not interfere with the Inquirer’seditorial decisions.

But the suit alleges that Tierney’s claim was “untrue,” and that recent articles in The New York Times and Philadelphia Magazine have said that Tierney used his power and influence to press for an “unprecedented dual endorsement” of both Barack Obama and John McCain in the 2008 presidential election.

The suit alleges that “immediately after” the business negotiations were called off, three Inquirer reporters “began researching and probing Mr. Gureghian’s private life and business interests with the preconceived and malicious intent of writing an unfavorable and negative story about Mr. Gureghian and his businesses.”

While researching the story, the suit says, Hardy allegedly showed his “obvious bias” in correspondence with Gureghian, prompting Gureghian to warn PMH that he would sue if he were portrayed in a “false or misleading light.”

But the suit says Gureghian’s warnings “fell on deaf ears,” and that the Inquirer published three articles and an editorial over three days in late December that “falsely, misleadingly and maliciously” accused Gureghian and his company of misusing taxpayer funds for their own private interests and of depriving the charter school students of educational resources.
The suit alleges the articles also omitted facts and juxtaposed facts to falsely imply that Gureghian and his company were misusing charter school funds, engaging in nepotism and ignoring conflicts of interest.

The suit alleges that Tierney was aware that the articles included false and misleading statements, but nonetheless permitted them to be published “because he wanted to curry favor with state officials with regard to his own business interests.”

Tierney’s motive, the suit alleges, stems from the fact that Tierney himself is “contemplating or actively seeking to obtain approval for charter schools in Philadelphia,” and is also hoping to secure a “$10 million bailout” for PMH.

The suit alleges the four articles have “harmed the good name and reputations” of Gureghian and his company and exposed them to ridicule, and have deterred others from doing business with Gureghian.

“Even true statements in the four articles are juxtaposed in such a manner so as to give the overall false and misleading impression that plaintiffs are or were operating their businesses in an improper and untoward manner,” the suit alleges.

The suit alleges claims of defamation, invasion of privacy, commercial disparagement, tortious interference with existing and prospective business relations and civil conspiracy.

Scott Baker, PMH’s general counsel, said in an interview that he had only recently obtained a copy of the suit and had not yet reviewed all of the allegations.

“What I will say is that all news coverage decisions at the Inquirer are made by our news editor, Bill Marimow, and that any assertions to the contrary in the complaint are untrue,” Baker said.