Big check was in the cards in suit against PCH
By STACEY WINAKUR
Daily Record Assistant Legal Editor
Plaintiff's Allan Hirsh Jr. and his son, Allan Hirsh III, settled their case for more than $10 million and perhaps as much as $20 million, the sources told The Daily Record.
Lawyers for both Publishers Clearing House and the Hirshes declined to comment on the settlement terms, which were sealed, although the Hirshes asked for almost $23 million in their complaint filed two years ago.
The Hirshes alleged that Publishers Clearing House reneged on its promise to purchase $180 million in greeting cards over five years from Creative Horizons, a 50-50 joint venture between PCH and the Hirshes. The company, after losing money since its formation in 1995, went out of business by the time the Hirshes filed suit in the fall of 1999.
The case, which was officially dismissed this week, was scheduled to go to trail on Nov. 5. A daylong settlement conference resulted in the sealed agreement, in which Publishers Clearing House did not admit wrongdoing.
According to another lawyer in the courthouse the day of the settlement conference, the Hirshes rejected an offer of $10 million and were asking for $20 million.
The Hirshes had been selling greeting cards to Publishers Clearing House through their own business, Ottenheimer Creations, but entered into the joint venture after several overtures from the publishing giant. Another of their companies, 110-year-old Ottenheimer Publishers, sold books to PCH from 1989 through 1994."There really wasn't any great incentive for them to want to partner with their customer because they would be giving back 50 percent of the profits," said Robert J. Weltchek, who represented the Hirshes with his partner, Arnold M. Weiner.
"But Publishers Clearing House in essence said to them, 'If you don't do this deal, we're not going to do any business with any of your other entities,' which was the lifeblood of their book-publishing business."
But instead of buying $180 million worth of greeting cards, PCH bought only about $14 million worth. "There was enough to keep hope alive," Weltchek said, but "it was just one disappointment after another."
"Publishers Clearing House claimed that they never made the commitments, never made the guarantees, never made the promises," Weiner said.
But according to court documents, a letter from a PCH executive promised "a tremendous amount of orders" and "guaranteed positive cash flow."
"That was a stake driven into the heart of their case, because no matter how much they tried to explain everything away, the letter couldn't be explained away," Weiner said.
According to Weiner, the PCH executives they deposed did not deny making promises to the Hirshes, saying they had no memory of the meetings or discussions.
It was remarkable that the people who negotiated the agreement would have no recollection of what took place during the negotiation, and it was astonishing that they were all uniform in their claimed absence of memory," he said.
PCH's attorney, Richard A. Mescon, a partner at Morgan, Lewis & Brockius in New York, said he could not comment on the facts of the case before speaking to his client.