Publisher Wendy McCaw, a Billion-Dollar Divorcee, Loses Bundle to Former Editor

The official amount Wendy McCaw received to exit her marriage with Eastside telecom billionaire Craig McCaw 14 years ago is pegged at $460 million, thought to be the world's 4th largest divorce settlement, although attorneys say it was actually twice that payout figure. Wendy McCaw went on to buy a newspaper, get into a fight with her staff, and end up in court seeking yet more money - suing one of her editors for $25 million. This time, however, it's her turn to pay.

A California appellate court on Wednesday rejected McCaw's attempt to overturn an arbiter's ruling awarding more than $900,000 to Jerry Roberts, the former managing editor of McCaw's Santa Barbara News-Press.

Stemming from a 2006 staff dispute that tore apart her newspaper, McCaw sued Roberts for defamation and breach of contract, and the case went to arbitration. After McCaw proved unable to substantiate any of her claims, the arbitrator awarded Roberts $748,022 in attorney's fees and $167,516 in legal costs.

Santa Barbara attorney Craig Smith reports on his blog that the appeals finding is likely the end of a long and ruthless legal trek for McCaw. She can petition the California Supreme Court, he observes, "but that court picks and chooses the cases it wants to hear and the vast majority of petitions for review are turned down."

McCaw sparked the dispute by spiking a potential story about the sentencing of one of her paper's executives for drunken driving. That and other editorial conflicts - including reprimanding a reporter and three editors for publishing the address of friend and actor Rob Lowe's planned "dream home" - ignited a staff revolt: Seven of the paper's top eight editors and a columnist walked out (a ninth quit later).

When the uprising turned into national headlines, McCaw ran a front-page editorial accusing the ex-employees of distorting the news.

She also instructed her own reporters and others to not comment when asked about the dispute and sent notices to three of the former employees threatening to take them to court if they exercised their right to speak freely. Roberts in fact did.

McCaw employed up to eight attorneys at a time to pursue the long war against her editor. But she had the deep pockets to do so. Her epic 1998 Seattle court battle over $2 billion in family holdings with then-hubby Craig produced the state's biggest divorce settlement ever. It was where Wendy learned to wage law using legal shock troops. As we reported back then:

Craig McCaw enlisted 33 forensic financial experts and turned over 147,000 pages of paperwork to Wendy's attorneys in an attempt to prove what was his and what was hers. She countered with 30 experts of her own and 58,000 pages of paperwork, plus sought volumes of confidential records from other McCaw family members. She also served papers on Craig's business partners, Bill Gates and Boeing, who cried foul.

When the legal dust and the feuding McCaws finally settled, Wendy walked away with somewhere around $1 billion in cash, stocks and assets, attorneys estimated, including several boats and planes and four homes in California.

Court records indicate she spent about $3.5 million in the futile effort to punish editor Roberts. But the socialite and animal-welfare activist continues to live the good life in Santa Barbara where today, according to her website, she "enjoys golfing and resides...with her fiancé, Arthur von Wiesenberger, their cat and two donkeys."

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