Lawsuit imperils future of Iron Range newspapers – Duluth News Tribune
At issue in the civil action is the management of the Timberjay newspapers, which publish in the Tower-Soudan, Ely and Cook-Orr communities.
The suit, brought by minority owners Gary and Edna Albertson, accuse majority owners Marshall Helmberger and Jodi Summit of financial improprieties and violations of shareholder rights.
The Albertsons purchased a 46 percent share in the Timberjay company from a third party in 1997 at the cost of $33,000, according to court documents. They also own the Cook News Herald and Tower News, two newspapers that directly compete with the Timberjay products in a saturated northern St. Louis County media market.
The suit asks a judge to order an appraisal of the Timberjay and force the sale of the Albertsons’ shares to the majority owners; or, in the alternative, liquidate the company and sell its assets.
“The fact is that (the Albertsons) have never received a dime on their investment in all those years,” said Virginia attorney John Colosimo, who represents the couple. “They have never been allowed to participate in the decisions of the corporation. They’ve been denied access to financial affairs. They just want their shares bought out for a fair market rate.”
Helmberger and Summit, who are married, own 54 percent of the company and serve as publisher and general manager, respectively.
Helmberger described the case as “frivolous.” He said he suspects that the Albertsons are attempting to either drive the competing newspaper out of business or extort money through the legal proceedings.
“We’re very confident we’ll prevail,” Helmberger said. “There is absolutely no basis for these claims.”
Helmberger said the Albertsons have had access to financial records and tax returns over the years and have maintained the right to ask for shareholder meetings but have never done so. Further, he said it would be against state law for either of the Albertsons to serve on the company’s board of directors because of their ownership of competing entities.
Helmberger also disputed allegations that he and Summit have mismanaged finances and taken salaries larger than approved by the corporation’s board.
“They have no evidence to begin with,” he said. “These allegations are flat-out false, and we can easily disprove them.”
Colosimo asserted that the Albertsons have only recently started receiving financial information through the legal action. He said the couple want to sell their shares because their rights as shareholders have not been honored.
Colosimo added that his clients are not seeking to dismantle the Timberjay but said it would be a last-resort situation.
“That is not the desired outcome,” he said. “My clients have invested a lot of money and simply want a fair return on their investment.”
While acknowledging that the small newspaper chain likely would not render significant profits, Colosimo said his clients have the right to expect some return on their investment.
“He and his wife run it as though they’re the only owners and the only ones who have any interest in the corporation,” Colosimo said of Helmberger. “They have ignored all other shareholders for 25 years.”
Helmberger said the company’s modest profits have been reinvested. He cited the company’s survival in a sparsely populated area that includes competing newspapers in each town it serves.
“The fact that we’re even here, that we’ve been able to build a newspaper that I think has a lot of credibility, is pretty remarkable,” he said. “We’ve invested in making the product better. That has always been my approach.”
Helmberger went further to allege that the lawsuit was filed by Colosimo in retaliation for a yearslong battle the paper had with the St. Louis County school district over access to documents related to an $80 million district construction project.
The Timberjay received accolades for the 2011 David-versus-Goliath lawsuit, which was defended by Colosimo. The case received significant statewide media attention and ultimately was decided by the Minnesota Supreme Court in favor of the Timberjay.
Colosimo denied that his history with Helmberger played a role in bringing the Albertsons’ suit.
“That is pure hogwash,” he said. “I’m a professional. I don’t retaliate against people. I take and pursue cases that have legitimacy. I think there’s some degree of paranoia on his part.”
Both parties acknowledged that discussions were held for Helmberger and Summit to purchase the Albertsons’ shares outright, but negotiations broke down.
The lawsuit was served on the defendants in December but not filed in court until Aug. 18.
The suit asks a judge to order the appraisal of the business and order that the Albertsons’ shares be sold to Helmberger and Summit “at fair market value but in no event less than what plaintiffs initially paid for the stock, plus a reasonable return.”
In the alternative, it seeks an order for the corporation and its assets to be sold, with proceedings being distributed based on shares.
A scheduling conference before 6th Judicial District Judge James Florey is set for Oct. 6.