O.C. Register, Dealers Reach Settlement : Newspaper: Agreements with 20 distributors who sued over the loss of their contracts are estimated to cost over $3.6 million.
By returning them to their routes, the Orange County Register has settled its multimillion-dollar dispute with 20 independent dealers who sued the newspaper over the loss of their contracts last spring.
“The Register case is resolved, and it resolved itself on terms that are delightful to all parties involved,” said Taylor Daigneault, a Torrance lawyer who represented 18 of the 20 dealer-distributors who sued the newspaper. Two other distributors who filed individual suits similarly announced out-of-court settlements.
The lawsuits never specified an exact amount of alleged damages, but Daigneault estimated the total to exceed $3.6 million “because the average value of these dealerships is $200,000.”
Terms of the agreements are not being publicly disclosed. However, one distributor privately revealed that the settlement calls for the Register’s re-contracting with the independent dealers, reimbursing them for most of their monetary losses and paying their attorney fees.
The settlement, reached Monday night, saves the paper from a potentially embarrassing civil trial in Orange County Superior Court. The distributors’ lawsuits, among other things, alleged that the newspaper had dismissed them as part of a scheme for “falsely reporting the circulation of the paper.”
The Register denies the allegations. But the paper has acknowledged that a recently concluded independent audit found discrepancies in the circulation figures the Register claimed last spring.
In the wake of that audit, the Register in September dismissed its two top circulation officials, hired a new circulation chief and worked to resolve, out of court, the legal dispute with its former distributors.
The settlement with the distributors essentially brings to a close a stormy period for the newspaper. After eliminating contracts with the independent distributors, who stocked newspaper racks and convenience stores, the Register earlier this year took over those operations. Register officials at the time said the change would enhance the newspaper. And, indeed, by March 31, the paper claimed phenomenal circulation increases, despite the economic recession.
The Register told the independent Audit Bureau of Circulations (ABC) that its average daily circulation for the six-month period ending March 31 was 372,750--a nearly 24,000 increase over the same time a year earlier. Based on that circulation claim, the newspaper took out a front-page advertisement in the June 15 edition of the publishing trade magazine Editor & Publisher that proclaimed it was “the fastest-growing newspaper in the nation.”
The ABC began a routine annual audit of the Register in early summer, which continued through the summer as discrepancies were found and the scope of the audit was expanded.
On Oct. 26, the Register disclosed in a news story that it no longer considered its March circulation to be 372,750 and revised it down to 354,843.
John Schueler, the Register’s new vice president for circulation, said he “has a lot of confidence” in the returning distributors. And the distributors themselves predicted that their return would be a big boost for the newspaper.
“You’re going to see circulation go up at the Register because of this,” predicted Frank Sullivan, one of the independent distributors who sued the newspaper. He said that the distributors’ many years of experience and sales ability would be a big boost to the newspaper.
