Sonny

Billionaire and Santa Barbara News-Press Owner, Wendy P. McCaw, Found to Have Engaged in "Despicable Conduct" and Ordered to Pay $14.8 Million in General and Punitive Damages

The conduct of Wendy P. McCaw, the owner and CEO of the Santa Barbara News-Press, in connection with her business dealings, including the News-Press was recently found to be "despicable" by Justice Eagleson, Associate Justice of the California Supreme Court (Ret.). The ruling was made in an arbitration brought by Mrs. McCaw against her former employee, Greg Parker.

McCaw tried to avoid paying sums Parker earned under several contracts which a host of blue chip lawyers and financial advisors drafted for her. McCaw forced arbitration and also claimed defamation and other damages which her spokesman declared as being "tens of millions of dollars." Mr. Parker countered, claiming McCaw had breached several contracts and had engaged in fraudulent conduct. The damages awarded Mr. Parker against Mrs. McCaw and her related entities, including punitive damages and interest, are in excess of $14.8 Million. Justice Eagleson's conclusion regarding McCaw's claims was that "McCaw shall recover nothing".

In a written arbitration award made public today, Justice Eagleson found that McCaw's overall conduct was "oppressive, meaning despicable" and merited the imposition of punitive damages. The award stated that there were many examples of her conduct that Justice Eagleson found despicable, and describes three: McCaw "stripped [the incentive compensation vehicle in which Parker had an interest] of its assets, and used part of [those assets] to support a line of credit needed to purchase the Santa Barbara News-Press." She also hired a public relations firm, Michael Sitrick & Company, "to place articles in her newspaper complimentary to herself and derogatory of Parker in an effort to create a community animus towards Parker." She then filed a complaint against Parker with the State Bar that was "completely without merit" "out of spite to harass and intimidate Parker."

The award shows it was based on credibility. It describes McCaw and her personal lawyer (and Santa Barbara News-Press former Publisher and current President) Joseph Cole as not being credible: "As far as McCaw's testimony is concerned she waffled, contradicted herself, was generally uncertain, suffered from unusual lack of recollection, was evasive and expressed denial of events even in the face of written evidence to the contrary. Put differently, she was a totally unconvincing witness." The award continued: "Cole was a completely compromised witness... [H]e was not able to testify forthrightly about the events in which he was directly involved and with respect to which he should have had much better recollection. He too was an unconvincing witness."

In contrast, Justice Eagleson found that Mr. Parker and others not in Mrs. McCaw's employ testified truthfully. The award states: "The arbitrator finds that Parker's testimony is more credible." "Parker's testimony was direct, responsive, unequivocal and consistent with the written documentation introduced into evidence. So was the testimony of lay third party witnesses, many of whom were McCaw's legal and accounting advisors."

Parker, who was represented by the Santa Barbara law firm of Foley & Bezek, said: "Justice Eagleson's conclusion of 'despicable' pretty well sums Wendy McCaw's conduct in attempting to avoid paying me what I earned. The fact that she is now attempting to avoid compliance with the arbitration award is entirely consistent with her past behavior "

Thomas Foley, Parker's lawyer, said: "The award specifically finds that the contracts were prepared at Mrs. McCaw's initiative, and that their provisions were fair and reasonable to her. The fact that Mr. Parker prevailed on every material element of his claim in this arbitration is a complete validation of his case, and a complete rejection of Mrs. McCaw's case. We prevailed in arbitration, and we will continue to prevail in the Courts."

"The litigation war she waged through her hired Los Angeles law and
public relations firms was intense but Mr. Parker stood his ground,
constantly bringing her back to facts she could neither prove nor defend. He proved that her claims were merit-less and that she, like everyone else, must honor the contracts she so carefully negotiated with him. In arbitration, an award of punitive damages is rare but the award against Mrs. McCaw speaks volumes about the legal and personal attacks launched against Mr. Parker in her case and through her newspaper."

Justice Eagleson found that Parker insisted that McCaw have independent counsel and advice respect to the employment contracts. The award specifically found that all contracts were fair and reasonable to McCaw at the time she signed them, and that Parker had complied with all applicable rules.

McCaw had claimed that notwithstanding all of her independent advisors, she was the victim of "undue influence." Justice Eagleson wrote that while Parker was working for McCaw, he was doing, in McCaw's own words, a "near perfect" job. Justice Eagleson found that she had been advised at least ten separate times by her independent advisors when developing the contracts with Mr. Parker, and that Mr. Parker "had nothing to do with the intrinsics of the [shared appreciation agreement]". Justice Eagleson concluded "That [dramatic increase in the value of the shared appreciation interest] is what provoked McCaw, not undue influence."