Harry Hoiles Fairly Paid, Lawyers Agree

Lawyers for dissident Freedom Newspapers Inc. shareholder Harry H. Hoiles agreed in court Wednesday that the media chain has provided him and his family with fair compensation since his falling-out with the other major owners, an admission defense lawyers believe is a key concession in the trial over Hoiles’ lawsuit to dissolve the company.

The Hoiles family and the families of his sister, Mary Jane Hoiles Hardie, and late brother, Clarence H. Hoiles, each own about a third of the Irvine-based chain, owner of the Orange County Register, 28 other dailies and five television stations.

The stipulation that Hoiles has been adequately compensated was made in Orange County Superior Court by Hoiles’ trial lawyer, Vernon W. Hunt Jr., as Robert E. Currie, attorney for the company, was trying to get Hoiles to acknowledge that the salaries, dividends and other compensation paid him and members of his family were fair.

“If the compensation is fair and adequate, then where’s the compulsion needed to show a squeeze-out? Where’s the unfairness?” Leonard A. Hampel, attorney for the majority shareholders, asked outside the courtroom.

To dissolve the company under state law and get a third of its assets, Hoiles must show that the majority shareholders treated him with persistent unfairness or subjected him to persistent and pervasive abuse of authority.

Currie and Hampel contend that previous appellate court cases recognize improper squeeze-outs only when minority shareholders are shut off from salaries, dividends and other income.

They pointed out that even Hoiles’ own expert witness, who testified last week, said that information about income would have been pertinent to his opinion that Hoiles was the victim of a squeeze-out attempt. The expert, Chicago financial consultant Chester A. Gougis, based his opinion on facts that did not include any details about income.

Hunt, however, said the case against the majority is based on the tactics and on other economic measures used by the majority.

He claims that a stock restriction agreement, a bylaw change on the way executive committee members are elected and a proposed stock recapitalization plan were among a series of acts that forced Hoiles out of top management and damaged the value of his family’s stock.

Hunt said in an out-of-court interview that while no one promised his client specifically that he would become chief executive officer, the Hardies and others talked in terms of Harry Hoiles’ being ready to “take over” in case Clarence died.

Hoiles said the only reason he moved to Santa Ana was because he understood that he would succeed his brother in operating Freedom Newspapers.