Press Democrat sued for libel over coverage of campaign spending

A Santa Rosa businessman and his son-in-law have filed a libel lawsuit against The Press Democrat, alleging they were defamed in a series of stories about unprecedented campaign spending in last year's Santa Rosa City Council election.

In a lawsuit filed last month in Sonoma County Superior Court, Bill Gallaher, a banker and developer, and his son-in-law, Scott Flater, claim their reputations were harmed by four stories published in October and November detailing $195,000 in independent expenditures reported by Flater to support three council candidates.

The suit alleged the stories contained statements falsely suggesting that Gallaher may have provided the money to Flater. Gallaher denies he was the source of the money.

A lawyer for The Press Democrat said the newspaper stands by its reporting on the record independent expenditures in the City Council race. The paper investigated the origin of the unsolicited money, citing experts, other candidates and a related complaint to the state's Fair Political Practices Commission, attorney Thomas R. Burke said.

“The Press Democrat is being sued for fairly and accurately reporting on the source of $195,000 in political contributions to the City Council election. As a part of its reporting, the newspaper made repeated efforts to interview Mr. Flater and Mr. Gallaher about the source of the contributions, but they repeatedly refused to comment. The Press Democrat will vigorously defend its reporting on this matter of significant public interest,” Burke said.

Gallaher and Flater seek unspecified damages from the newspaper's owner, Sonoma Media Investments, staff writer Kevin McCallum and David McCuan, a Sonoma State University political science professor who was quoted in the stories.

“Plaintiff William Gallaher has never used anyone, including family members, to make political contributions on his behalf,” the suit said.

Michael Miller, an attorney for Gallaher and Flater, said Monday neither he nor his clients would comment.

The fall race for six council seats was marked by historic spending. More than a quarter-million dollars poured in from outside groups and individuals that spent money independently to influence local races - more money than was raised by all six candidates combined.

Under state law, people or organizations can spend unlimited amounts as long as they report the contributions and don't work directly with candidates or campaigns.

Flater, who listed his occupation as homemaker in campaign filings, reported spending $195,000 to support Ernesto Olivares and Jack Tibbetts, who won, and Don Taylor, who did not.

Starting in October, the newspaper reported the steep cash outlay for mailers and other materials that drew widespread speculation about Flater's motives.

One story quoted McCuan, who said Gallaher has a pattern of “sprinkling money around” to family members. A second story reported allegations in a new complaint to the FPPC over the independent expenditures. The FPPC complaint, filed in November by Santa Rosa contractor Chris Grabill, alleges the spending by Flater was financed with money that has been “laundered and bundled” by others. The complaint remains under investigation.

The lawsuit by Gallaher and Flater maintains the allegations are untrue, causing “upset, embarrassment, humiliation and anguish.”

It accused the newspaper of acting with malice in a deliberate and intentional manner to injure the two men. Gallaher, a Santa Rosa developer and chairman of First Community Bank, has built hundreds of homes in Oakmont and Fountaingrove including luxury senior living facilities. He also owns property in east Santa Rosa on Elnoka Lane that he has been trying to develop for more than a decade.

He was the subject of a past investigation by the state's political watchdog into allegations of contribution bundling. The FPPC cleared him of those allegations last March.

David Snyder, executive director of the First Amendment Coalition, said state and federal laws protect reporting on elections and other matters of public interest. A California statute meant to discourage meritless defamation claims against news outlets requires plaintiffs to pay defense costs, Snyder said.

“I'd say this lawsuit stands a good chance of being thrown out,” he said.

Over the past few years, Snyder said wealthy plaintiffs have sued journalists in a number of high-profile cases across the country. He said the goal appears to be to harass and penalize the media “simply for reporting the truth.”

“For someone who is worth hundreds of millions of dollars or even a billion dollars, it doesn't take that much to file a complaint and litigate a long time,” Snyder said. “But the cost to small or nonprofit media is enormous.”

You can reach Staff Writer Paul Payne at 707-568-5312 or paul.payne@pressdemocrat.com. On Twitter @ppayne.