Publishers Services Exchange Beaten in Court

Publishers Services Exchange Beaten in Court

Byline: RAY SCHULTZ

Try to imagine this. A sub-agent you don’t do business with is selling renewals to your magazine with an offer you didn’t approve.

But you can’t do a thing about it. The agent doesn’t stop, and then sues you when you print a notice about it in your publication.

That was the situation Amos Press found itself in 2001.

The publisher of titles like Coin World and Cars & Parts was slapped with a $5.4 million defamation suit by I.C. Marketing, a firm that does business under the name Publishers Services Exchange.

But Amos fought, and it was rewarded when I.C.’s case was thrown out of court. U.S. Magistrate John P. Cooney wrote last fall that Amos is entitled to a summary judgment closing the case, and that finding was accepted on Dec. 2 by U.S. District Judge Ann Aiken.

Cooney ruled that Amos did not defame I.C. Marketing when it urged Coin World subscribers in a notice in that magazine not to renew through Publishers Services Exchange. In addition, he wrote that Amos “has the right to set prices and terms as to its own product,” and ordered I.C. Marketing to stop selling Coin World subs.

I.C. Marketing is appealing, and even if the decision holds, it only pertains to Coin World, and not to other Amos publications. But the ruling as written should embolden two other publishers fighting similar cases – the Taunton Press and Outdoor Empire Publishing. Those cases are before the same magistrate – Cooney.

What are the grounds for the appeal? Alan Herson, attorney for I.C. Marketing, plans to argue that Cooney’s opinion was wrong as a matter of law.

“I’m not sure I believe they suffered irreparable harm under law, or any harm entitling them to an injunction,” he said of Amos Press. “And it was wrong to say that there was no defamation.”

But Jill Meyer Vollman of the Cincinnati law firm of Frost Brown Todd LLC, countered: “I’m confident that our position will prevail.” Every suit is different and no publisher should get tough with a sub-agent before consulting a lawyer. But here are the facts of the case:

The dispute started in 2001 when Coin World received complaints from subscribers who had received direct mail renewal offers from Publishers Services Exchange. According to I.C.’s complaint, Coin World published a notice urging subscribers not to renew through the sub-agent.

“Coin World subscribers need to be aware that an unscrupulous firm is conducting a scam masked as a subscription renewal offer to Coin World,” the notice said.

As quoted in the complaint, the notice also took issue with the three-year renewal offered by I.C. Marketing – 36 issues for $89.95. The magazine noted that “Coin World does not currently offer a three-year subscription, but if it did it would be 156 issues (since Coin World is a weekly) for $94.95.”

The article continued that the mailing piece sent by I.C. “looks very professional and official – similar to renewal notifications that Coin World itself sends.” And it added that readers who had responded to the offer should contact their banks to stop payment.

Cooney’s opinion, based on hours of depositions, found that the statements published in Coin World had “qualified privilege,” because Amos was protecting its own interest when it made them. Moreover, the opinions were covered by the First Amendment, he wrote.

He continued that words like “scam” and “bogus” would not be understood by readers as stating a fact, and that they therefore were not defamatory.

Herson disagreed, saying that the article included “pretty nasty things.”

On a separate issue, Cooney ruled that Coin World had the right to stop the sale of its subs through I.C. Marketing, despite the fact that they had been sold by the firm for years and fulfilled. The magistrate did not take issue with these prior sales, but noted that Amos Press has the right to order I.C. Marketing to stop.

As a result of these notices, I.C. Marketing “no longer had authority to continue to solicit subscriptions or sell renewals or multi-year subscriptions,” Cooney added.

Cooney noted that I.C. Marketing was “improperly” hired to market the subs by an authorized agent of Amos Press. And that Amos was not informed of this. Amos authorizes agents to sell only new subscriptions to Coin World, and – except in rare cases – only by direct mail, according to court papers. It also sets terms and rates.

Herson commented that this part of the ruling won’t hurt I.C. Marketing’s business. On the contrary, it will hurt Coin World, he commented. But he added that it was “an odd conclusion of the court.”

Meanwhile, I.C. is involved with at least three other cases, including the two defamation suits it filed last July.

In the case against Outdoor Empire, I.C. alleges that the firm published a libelous notice on Fishing & Hunting magazine Web site, stating that I.C. was not authorized to sell that publication. The case against Taunton Press is also based on a Web site notice. I.C. had no comment on the cases.

And the firm is embroiled in a suit with Time Inc. Time filed suit in 2002, alleging that PSE sent mailing pieces containing counterfeit versions of Time trademarks. A Time spokesperson said at the time that “PSE has never been authorized by us to sell or advertise any of our magazines.” Herson says the case is still pending.

Founded by former Navy officer Dennis Simpson, I.C. Marketing is a subsidiary of Rabor Management Inc., Medford, OR. Rabor, which recently acquired Back 2 Backs Inc. and Freedom financial Inc., reported third-quarter revenue of $7.4 million, compared with $3.9 million in the third quarter of 2002.

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