Settlement Reached in Milwaukee Circ Suit

By: The owner of the Milwaukee Journal Sentinel and Shorewest Realtors Inc. announced a settlement Tuesday in a lawsuit based on allegations that the newspaper inflated its circulation numbers.

Shorewest contended that the Journal Sentinel had made multiple public statement of false circulation figures, which were intended to generate advertising customers.

A judge dismissed one previous count in October which accused the Milwaukee Journal Sentinel of breach of contract and breach of its obligations of good faith and fair dealing.

But the case moved forward on two counts, one relating to potential violation of the Wisconsin Deceptive Practice Act. The second count alleged that the Journal Sentinel received "unjust enrichment" because advertising rates were based on artificially inflated circulation rates.

The settlement announced Tuesday is on behalf of a proposed class of advertisers similar to Shorewest who placed ads between Jan. 1, 1999, and Dec. 31, 2005, in the Milwaukee Journal Sentinel. If approved after a public hearing, class members will be able to receive a credit to be used in future advertising in the paper.

Journal Communications Inc. and its counsel continue to believe the claims lack merit and Shorewest and its counsel continue to believe the claims have merit. But the parties decided to avoid the costs of additional litigation through the settlement.

The suit contended the newspaper deliberately overstated circulation since 1996 and used the "artificially inflated rates to surreptitiously overcharge" the home-seller for advertising.

It claims the Journal Sentinel counted as circulation papers distributed free to homes, businesses, on the street and at large gatherings; thrown into trash bins without ever having been distributed; donated to schools; and distributed to apartment tenants as part of a scheme in which the subscription cost was included in the rent, then kicked back to the apartment complex manager.

The Journal Sentinel had argued that its advertising contract with Shorewest did not make any reference to the newspaper circulating a particular number of papers.