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In re Interstate General Media Holdings, LLC

Court of Chancery of Delaware

April 7, 2014

In re Interstate General Media Holdings, LLC

Submitted: February 13, 2014

Dear Counsel:

On February 4, 2014, the Newspaper Guild of Greater Philadelphia, Local 38010, AFL-CIO, CLC (the "Guild") moved to intervene in this case pursuant to Court of Chancery Rule 24. On February 21, the petitioner in this matter, General American Holdings, Inc. ("General American"), filed its opposition to that motion. One of General American's stated grounds for opposing the Guild's motion was the Guild's failure to include a pleading setting forth the proposed claim or defense for which intervention is sought, as mandated by Rule 24(c). In response, on March 5, 2014, the day after submitting its reply brief in support of its motion, the Guild moved for leave to file an amended petition to intervene, which included the pleading required by Rule 24(c). No party opposed that aspect of the Guild's request to intervene. Thus, there are two motions before me on the question of intervention: the Guild's motion for leave to file an amended petition to intervene and the Guild's motion to intervene. For the following reasons, I grant both of the Guild's motions.

I. BACKGROUND

The Guild is a labor union representing approximately 550 employees working for Interstate General Media Holding, LLC's ("Interstate") principal holdings, which are The Philadelphia Inquirer (the "Inquirer"), Daily News, and Philly. com (collectively, the "Publications"). The employees represented by the Guild include reporters, editors, and photographers, as well as advertising, sales, circulation, finance, and online employees. The Guild is the largest of the unions representing Interstate's employees, and it has had collective bargaining agreements in place with owners of one or more of the Publications since 1939.

The Guild asserts that, since 2005, no fewer than five different ownership groups have taken control of, and then sold, the Publications. During that time period, the Guild claims that its members have been forced to endure multiple pay cuts and layoffs in exchange for promises by the Publications' owners that largely have been unfulfilled. The Guild asserts that the present owners of the Publications have followed this particular pattern of their predecessors.

The present group of owners purchased the Publications in April 2012, in a private auction held after the Publications' previous owner filed for bankruptcy. According to the Guild, the current ownership group was the only group permitted to bid on the Publications at that auction, despite the Group's lack of prior experience operating a newspaper.

On gaining control of the Publications, Interstate asked the Guild to negotiate a new collective bargaining agreement and to agree voluntarily to millions of dollars in concessions, including a wage reduction and buyouts. Interstate's stated purpose for seeking these cuts was that it was losing money and needed union concessions to become profitable again. According to the Guild, Interstate threatened to liquidate the company's assets if the Guild did not agree to the cuts. To prevent a liquidation, the Guild agreed to substantial concessions, including pay cuts for its members of 2.5 percent for 2013, which were to continue through 2014, as well as ten unpaid furlough days. These concessions benefitted the current ownership group and saved it over $6 million. In exchange, Interstate agreed, among other things, to provide Guild members with a right to share in the company's profits beginning in 2014. Recent events, however, make it unlikely that the Guild will realize any benefit from its concessions.

Since Interstate's acquisition of the Publications in April 2012, Interstate's managers have become embroiled in internal disputes, resulting in the filing of multiple lawsuits by members of the LLC's ownership group since October 2013, both against one another and against Interstate itself. These lawsuits have forced Interstate to incur substantial expenses and have resulted in a near paralysis of its operations, leading General American to file the Verified Petition for Judicial Dissolution of Interstate by which it commenced this action.

The Guild asserts that this action puts at risk the survival of the Publications, as well as the jobs of the approximately 550 Guild members who work for Interstate. Thus, the Guild seeks to intervene to encourage an appropriate dissolution of Interstate that will promote the long-term viability and stability of the Publications and thereby protect the interests of the Guild and its members. Specifically, because of the poor results of the last private auction in which the Publications were sold, and of the instability in the ownership of the Publications over the past decade, the Guild seeks to intervene to pursue its request that Interstate's assets be sold in a public auction, and that, regardless of the form of the auction, the Guild be permitted to participate in the bidding process as a potential purchaser.

General American opposes the Guild's motion to intervene on the grounds that the Guild lacks a legally cognizable interest in how Interstate is dissolved and that the Guild's petition for intervention fails to satisfy the technical requirements of Rule 24(c). I address first the Guild's unopposed motion for leave to file an amended petition to intervene, and then turn to the merits of, and General American's opposition to, the Guild's motion to intervene.

II. ANALYSIS

A. Motion to Amend

The Guild's motion for leave to file an amended petition to intervene technically is governed first by Rule 15(a), which provides that "[a] party may amend the party's pleading . . . by leave of [the] Court . . . and leave shall be freely given when justice so requires." Although "[a] motion for leave to amend a complaint is always addressed to the discretion of the trial court, "[1] the standard for ...


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