Zell To LAT Staffers: We're In This Together; Lawsuit Charges Are 'Frivolous' and 'Unfounded'

(PaidContent.org)  This story was written by David Kaplan.

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Tribune chairman and CEO Sam Zell struck back at a class action lawsuit brought against him by a group of current and former LATimes staffers alleging that he misused the employee stock ownership plan (ESOP). Zell said the complaint, filed Tuesday in federal court, is filled with "frivolous and unfounded allegations." In apublic statement, Zell also said "I hope every partner in this company is as outraged as I am at having to spend the time and money required to defend ourselves against it." With the media industry in crisis, the ad climate worsening and the economy tanking hard, this is no time for such distractions, Zell said.

Separately, in a staff memo (via Romenesko), Zell sought staffers' understanding, saying that the companylike other newspaper publishers in this difficult environmenthas had to take some tough steps. And he also hoped to quell further public actions against his stewardship, arguing: "there is a difference between questioning authority or challenging the 'business as usual attitude,' and maligning the company in public. That's just bad judgment and does no one any good. It's a distraction that's unnecessary. We are partners. We need to act like it. "

Zell acquired a controlling interest in the company through use of the ESOP. And staffers at the struggling LATimes seem to feel that that their stock ownership was used against them through layoffs and other cutbacks at the paper. Buzzmachine's Jeff Jarvis took the suit's plaintiff's to task, contending that Zell is being made a scapegoat for wider institutional problems in the newspaper business. Jarvis: "The Times veterans should not be suing Zell. They should be suing themselves. Oh, I, too, am angry at the state of newspapers in America but I'm angry at the right people. The LA Times' problems like those of other papers were caused by by decades of egotistical and willfully ignorant neglect by the owners, managers and staff at the paper."

But over at Portfolio, Jeff Bercovici defends the suit: "doesn't that still leave you with the central question of whether Zell made improper use of the ESOP structure, raided employee pensions, and all that? Are Tribune employees supposed to surrender their legal rights because their bossesor predecessors' bossesshowed a lack of vision?"


By David Kaplan