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FINAL RULING ISSUED IN 'ROSIE' MAGAZINE TRIAL

25-Page Document Awards Nothing But Defeat

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NEW YORK (AdAge.com) -- The bruising legal battle between onetime business partners Rosie O'Donnell and Gruner & Jahr USA Publishing ultimately ended today with no surprises.


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Judge Ira Gammerman issued a ruling that found both parties were in breach of the contract governing their Rosie magazine co-venture, and that neither party was entitled to any damages.

Two lawsuits
After the Rosie partnership dissolved in acrimony and Ms. O'Donnell terminated her involvement on September 18, 2002, G&J and Ms. O'Donnell filed competing $100 million lawsuits against each other. In the aftermath of court proceedings, both parties significantly reduced their damage claims.

The 25-page ruling ends a very noisy legal battle on an anticlimactic note, albeit one that had been telegraphed by the Judge. When courtroom proceedings concluded last November, Judge Gammerman said that "neither side, leaving aside the issue of attorneys' fees, has proved any damages." In his ruling today, he found the former partners' joint venture agreement left neither party with a claim on legal fees. (Ms. O'Donnell was reckoned to have spent around $8 million in legal fees by the end of the battle's courtroom phase, said individuals familiar with the matter.)

Unprofitable venture
At the heart of Judge Gammerman's decision was his finding that neither party had proven Rosie magazine, which lost $18 million in it short life, would ever turn a profit.

The Judge found that G&J was in breach of Ms. O'Donnell's right to editorial control by hiring new Editor Susan Toepfer and having her report directly to G&J's former President-CEO Dan Brewster. Ms Toepfer's predecessor, Cathy Cavender, reported to Ms. O'Donnell. He also found G&J in breach for hiring a temporary art director after the firing of Creative Director Doug Turshen without Ms. O'Donnell's approval.

Ms. O'Donnell's breach
He also found Ms. O'Donnell to be in breach of the joint venture agreement, via her "disruptive" conduct which he said "made it extraordinarily difficult" for the magazine to function. He concluded that G&J breached first.

Ms. O'Donnell was vacationing, said her spokeswoman, and could not be reached for comment. Painting the outcome in victorious terms, the spokeswoman said "what Rosie said all along was they tried to take editorial control away from her and that is exactly what the Judge found." The spokeswoman added "Clearly, she does feel vindicated."

Judge Gammerman dismissed Ms. O'Donnell's most stinging accusation-that G&J sought to manipulate financial data in order to avoid posting losses big enough to allow either party to terminate the venture.

G&J's spokeswoman said in a brief statement that the company disagreed "to the extent the court found G&J USA breached, and G&J USA is exploring its options at this time." Mr. Brewster did not respond to messages and other G&J officials declined to comment.

Long and nasty
Judge Gammerman's ruling ends a long and nasty legal and public-relations stuggle that pitted former talk show host Ms. O'Donnell against a publishing company, in a battle that spilled prominently into newspapers and other glossy magazines.

Ms. O'Donnell hardly came out of the trial unscathed, as lavish descriptions of her operatic temper tantrums came to light and, most famously, at one point told a survivor of breast cancer that liars "get cancer."

But G&J sustained the most damage from the legal fight, and much of it was self-inflicted. The storm of negative publicity infuriated its buttoned-up German corporate parents, and two of the company's key players in the venture -- Mr. Brewster and chief marketing officer Cindy Spengler -- have been removed from their positions.

Courtroom revelations that the company knowingly submitted overstated estimates of newsstand sales for Rosie magazine outraged both advertisers and other publishing companies, who feared being tarred with the same brush.

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