By S. Pajot
By Tim Elfrink
By Tim Elfrink
By Kyle Munzenrieder
By Tim Elfrink
By Michael E. Miller
By Kyle Munzenrieder
By Kyle Munzenrieder
It's been one year since Knight-Ridder's Miami Herald Publishing Co. notified independent operators who deliver the Miami Herald and El Nuevo Herald to stores and newsracks across Dade County that their sales to hawkers - the men and women who peddle papers to motorists and passersby - would be curtailed. The turnabout triggered financial hardship for the distributors, who responded with a lawsuit in which they are seeking ten million dollars in damages.
Filed last September, the suit remains mired in federal court while the two sides battle for concessions. Attorney Coleman Rosenfield, who represents the distributors, blames the lack of progress on the Herald's legal counsel. "Generally speaking, mature lawyers, when they get involved in a case like this, exchange courtesies. We've been told by the Herald that we will get no courtesies."
According to Rosenfield, the loss of hawker revenue has caused distributors' sales to plummet anywhere from twenty to sixty percent. For Mike Temples, a distributor whose route consists of Kendall's east end, the hawker business amounted to one-third of his total sales. "I was selling in the vicinity of 11,000 daily newspapers per week. Now I'm down to 7000," says Temples. "They took away from me between $800 and $1000 a week in gross income. I'm a middle man, and they just cut me out." Four times in the past year, Temples laments, he has nearly lost his home to foreclosure. "I have never come that close to losing anything in the past. I have a family to raise."
Attorney Mark Silverio, who also represents the distributors' association, believes the Herald is deliberately squeezing the distributors in order to drive them out of business. "These are hard-working guys," he says. "The Herald is cutting down their income while their costs stay the same. They can't afford it."
About four years ago the Herald formally incorporated the hawkers into its distribution program by hiring independent contractors to manage street sellers exclusively. These hawker contractors had to buy papers from the distributors because the Herald would not sell to them directly. That changed last May, when the company allowed the hawker contractors to begin purchasing papers at the same wholesale price it charged distributors. The distributors resisted the change, which the Herald implemented by invoking a clause allowing the company to cancel existing contracts with 90 days notice and without reason.
In early August Rosenfield presented the Herald with a draft of a civil complaint and a list of prospective plaintiffs for a lawsuit some of the distributors planned to file if negotiations did not turn out satisfactorily. Two weeks later the company terminated the contracts of four distributors whose names had appeared on the list, and allegedly threatened to cancel those of three other distributors who were prospective plaintiffs, purportedly for not bringing in enough revenue. (A clause in the new contract requires distributors to maximize sales and market penetration of the Herald in their distribution areas. If this stipulation is not met, the contract can be revoked.)
Richard Rice, one of the distributors who lost his contract, had built up his route for ten years, covering Overtown and parts of Liberty City and creating one of the company's largest territories. Rice says the Herald called him the evening of August 17 to say his contract was canceled, effective immediately. "They never told me why," says Rice. "My attorneys asked for the reasons. They said I didn't maintain the newsracks, which wasn't true, and that customers complained about me. That wasn't true, either."
Attorneys for Rice and the other plaintiffs believe the firings constituted punitive action against their clients in retaliation for the planned lawsuit. Sam Terilli, an attorney for the Herald, refutes that claim. "The Herald was dissatisfied with the performance of some distributors because they weren't selling enough papers," he says simply. "The terminations were isolated cases unrelated to the contract negotiations. Distributors are terminated from time to time when there are problems, and they are warned about that." Such problems, Terilli elaborates, may include failure to maximize sales, pay bills owed to the Herald, maintain proper insurance, or return unsold newspapers.
Included amid the scores of allegations distributors have made against the Herald is one accusing the company of targeting distributors who are members of the Florida Association of Independent Newsdealers (FAIND), a nonprofit corporation that holds conventions and meetings to discuss ways to improve the distribution of newspapers and the status of distributors. Again, Terilli's response is dismissive. "Some people think we coddle members of the association, and others think we retaliate against them," he says. "Frankly, we just don't care."
Herald attorney Jerold Budney bristles at charges that direct sales to hawkers constitutes restraint of trade in that hawkers have pre-empted other sellers by stationing themselves in distributors' territories. Rather, he contends, the company's new relationship with the hawkers merely served to open up competition between distributors and hawker contractors to encourage more single-copy sales overall. "[The distributors are] accusing us of monopolization when in fact the lawsuit is intended to let them monopolize the Herald. They want to control the hawkers." Budney claims that the added competition should result in more opportunities for the public to buy the Herald, and says that if distributors run their businesses properly - by putting out more newsracks, refilling them, and picking up additional retail outlets - they should be able to increase their profits.
Only the Herald knows for sure whether the decision to sell directly to hawkers has yielded the hoped-for overall sales increase; as Terilli explains, such information is "privileged." In the meantime, the lawsuit lives on, stagnating in the system as distributors scurry to find ways to abate their financial losses. "They've been having to fire people, work longer hours, get rid of trucks, and try to cut back on their overhead. Some are borrowing money to avoid foreclosures," says Rosenfield, who was warned by the Herald in the beginning that the fight wouldn't be an easy one. "They told us we would bleed for anything we get, that we were not going to get anything without fighting to the last decimal point.
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