Rancho Santa Fe Review Publisher Threatens in Letter to Sue Rancho Santa Fe News

There’s a legal storm brewing between local publications Rancho Santa Fe News and Rancho Santa Fe Review.

According to a March Coast News article, which portrayed the Santa Fe News as a David facing the Review’s Goliath, MainStreet Communications president and CEO Anthony Allegretti is threatening to sue News publisher Jim Kydd for allegedly violating state law by selling ads at below cost. The Coast News is also owned by Kydd.

In a Feb. 14 letter from Allegretti to Kydd, which was released in conjunction with the online Coast News article, Allegretti said the News has caused the Review “to lose sales and profits of no less than $300,000 during 2010.”

Allegretti further claimed in the letter, under California law, the Review is “entitled to injunctive relief awards of no less than three times the amount of actual damages, or $900,000, plus attorney fees.”

Allegretti's letter also pointed to the 2008 Bay Area Guardian case, which resulted in a $20 million award. He went on to describe how the Guardian won a predatory pricing lawsuit against local rival, the SF Weekly, “based on allegations the Weekly undercut the Guardian by selling display advertisements below cost.”

“MainStreet Media has been in communication with the legal team representing the plaintiffs in that dispute,” writes Allegretti in the letter.

Allegretti ended his Feb. 14 letter with the following ultimatum: “If the below cost selling of advertising does not cease by March 15, 2011, MainStreet Communications will instruct its attorneys to commence drafting a lawsuit. Once that process begins, MainStreet Communications will not settle until the court has ruled.”

Allegretti’s actions amount to nothing more than a scare tactic, said Kydd, who has since retained an attorney and sent a cease-and-desist letter to Allegretti. Kydd said he has no qualms about suing Allegretti if he does not stop pursuing the matter.

The Feb. 14 letter is not the first from Allegretti to Kydd. On Feb. 9, 2011, Kydd received a similar letter in which Allegretti refers to a 1971 case in which the state courts determined newspaper advertising to be a “service or output of a service trade, which falls within the purview of the Unfair Practices Act.”

In the Feb. 9 letter, Allegretti wrote, “MainStreet’s attorney’s estimate that to take this matter thru trial will cost up to $2,000,000.”

Allegretti wrapped up the Feb. 9 letter with: “Jim, MainStreet has an extremely strong case that The Coast News Group ie ‘Rancho Santa Fe News’ has violated the ‘below cost selling’ statute. Our only concern is that these practices stop immediately. The rates offered need to be adjusted above cost and other rates offered to advertisers of the same nature need to be rescinded.”

Allegretti’s MainStreet Communications publishes 17 newspapers in addition to the Review. MainStreet also owns Carmel Valley News, Del Mar Times and Solana Beach Sun. According to Kydd, the Review operates on much larger payroll than the Rancho Santa Fe News, which has about 15 paid employees on staff.

The bimonthly News has been around for 25 years and mails 10,000 copies to Rancho Santa Fe, Santaluz and Rancho Pacifica. “I see a future for community print for quite a while,” said Kydd. “Since we are a ‘demand’ publication, only people that want it, get it. Our print readership has not dropped at all.”

Kydd said the News has been audited and estimated at around 100,000 print readers. “We have a considerable online presence as well.”

Patch.com was unable to reach Allegretti for comment.