Time Warner settles lawsuit by CalPERS

Time Warner Inc. agreed to pay $117.7 million to settle a lawsuit brought by the California Public Employees’ Retirement System over the company’s 2001 merger with America Online Inc., CalPERS said Wednesday.

CalPERS’ 2003 suit alleged that there were accounting irregularities at AOL, the Internet company that combined with New York-based Time Warner in January 2001.

The settlement is Time Warner’s fourth this year related to the merger, for a total of $623 million. Time Warner set aside $1.05 billion to settle litigation arising from the merger.

“There are probably one or two others still to go,” said James Goss, an analyst at Barrington Research Associates Inc. in Chicago.

CalPERS said the settlement excludes the accounting firm Ernst & Young, another defendant in the case. CalPERS spokesman Clark McKinley declined to comment on how much the pension fund is seeking from Ernst & Young.

The fund is no longer seeking recovery from the other defendants in the complaint, including AOL co-founder Steve Case and unidentified financial advisors.

CalPERS received about 17 times what it would have gotten had it remained in a class-action suit, said Peter Mixon, the pension fund’s general counsel.