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Palo Alto Online

Publication Date: Wednesday, March 21, 2001


Daily News prevails in lawsuit Daily News prevails in lawsuit (March 21, 2001)

Co-founder had sued his former partners

by Don Kazak

In a dispute that pitted one of the three original co-founders of the Palo Alto Daily News against the other two, the current management of the newspaper has prevailed.

David Danforth, one of the co-founders, sued Dave Price and Jim Pavelich in 1999, three years after they ousted him from the management of the newspaper.

A court arbitrator has ruled in favor of Price and Pavelich, awarding them arbitration fees. Danforth had asked for unspecified general damages, and was awarded nothing.

While the lawsuit was filed as a civil action, the newspaper's operating agreement stipulates that disputes between the partners be decided by binding arbitration.

Steve Gerrish, attorney for Price and Pavelich, said there is limited opportunity for appealing a binding arbitration decision. "We think they are nonexistent in this case," Gerrish said.

Price and Pavelich said they are glad to put the dispute behind them.

"We got a decision where we prevailed on every single point," Price said.

"It seemed like a nuisance suit from the beginning, so we feel vindicated," Pavelich said.

Danforth and his attorney could not be reached for comment.

Danforth and Pavelich each originally owned 40 percent of the company, and Price 20 percent. But in 1996, Pavelich and Price voted to make Price co-manager of the newspaper with Pavelich, removing Danforth from the newspaper's management.

Danforth's lawsuit claimed that the newspaper had an "anti-freeze-out" provision which prohibited such a change.

The three men founded the Daily News in late 1995. Danforth and Pavelich had published similar newspapers in Colorado.

Since then, the Daily News has inaugurated sister publications in Redwood City, San Mateo and Burlingame in 2000 while Danforth started publishing the Daily Planet in Berkeley and a paper to compete against Price and Pavelich in San Mateo.1 


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