Danforth loses arbitration case with California paper | AspenTimes.com

Danforth loses arbitration case with California paper

John Colson

Dave Danforth, publisher of the Aspen Daily News and a resident of Aspen and San Francisco, recently lost a legal tug of war with his former partners at the Palo Alto Daily News in California.

An arbitrator’s decision in February ended a fight over the ownership and management of the paper that lasted for several years, almost since the paper was founded in December 1995.

Danforth founded the Palo Alto paper with former Aspen Daily News reporter (and Aspen Times Daily editor) Dave Price and another partner, Jim Pavelich, founder of the Vail Daily.

Danforth was ejected from the partnership that runs the paper in 1996, as a result of a dispute over editorial and payroll policies, but he still owns 40 percent of the company.

Danforth claimed that the partnership, named Priceless LLC, was violating stated policies in its own operating agreement by sitting on stories that might upset advertisers.

In addition, he charged, Price and Pavelich were overpaying themselves to the tune of $120,000 a year apiece by 1999, when he filed the lawsuit. He called the suit a “fiduciary duty action,” aimed at forcing his partners to act in what he considered to be the best interests of the paper and to report the news in a way he felt was professional and responsible.

Reached at his home Tuesday, Danforth accused them of “looting the company and diluting the news” and said one of his goals was to get his former partners to pay at least $400,000 he felt they owed the paper.

A clause in the operating agreement forced the matter into binding arbitration. And the arbitration ruling, according to the newspaper’s attorney, basically rejected all the claims contained in the lawsuit.

Price, speaking from his office in Palo Alto, declined to discuss the specifics of the decision but accused Danforth of misrepresenting the facts in his suit and noted that the arbitrator did not agree with Danforth’s version of the case.

Danforth admitted that the arbitrator “had a really hard time with all this … I think he just threw it up in the air and said, basically, `What the hell. This thing is making a lot of money, and all of you are doing fine.’ “

Attorney Steve Gerrish, who represented the newspaper, Price and Pavelich, said Danforth was ordered by the arbitrator to pay the arbitration fees of Price and Pavelich, which Gerrish said amounted to more than $5,000.

“If that’s the case, I haven’t seen it,” said Danforth, adding that he would pay the fees if ordered to do so.

Price declined to say what the arbitration decision means for the future of the Palo Alto Daily, other than to note that “the legal part is entirely over with.” But he said that there may be future business ramifications resulting from the affair.

But in general, he said, “We’re so delighted with this decision. All he [Danforth] has to do now is pay us.”

Price and Pavelich, in addition to owning the Palo Alto paper, have started companion dailies in the nearby towns of San Mateo, Burlingame and Redwood City.

Danforth, aside from being publisher of the Aspen Daily News, has interests in The Berkeley Daily Planet and the San Mateo Daily Journal, both in California, and in the Conway Daily Sun and the Berlin Daily Sun in New Hampshire.

Asked what he plans on doing next concerning the Palo Alto paper, Danforth said simply, “keep an eye on them,” explaining that part of his reason for suing was to “let them know there was someone who was watching what they’re doing.”

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