Several former and current Los Angeles Times employees filed a lawsuit Tuesday against the newspaper’s corporate parent, Tribune Co., and its chief executive, Sam Zell, contending that reckless management is destroying the value of the company.
The suit, filed in U.S. District Court in Los Angeles, alleges that Zell and former Tribune CEO Dennis J. FitzSimons devised a plan to take the company private to enrich themselves to the detriment of employees.
The lawsuit seeks class-action status on behalf of employees of The Times and Tribune., which owns a variety of newspapers, television stations and other assets including the Chicago Tribune, KTLA-TV Channel 5 and the Chicago Cubs baseball team.
Tribune’s roughly 18,000 employees became owners of the company when it was taken private in a transaction that saddled the business with $12.5-billion in debt and also created an employee stock ownership plan late last year. As part of deal, FitzSimons received nearly $21 million in bonuses, severance and other payouts, according to the lawsuit.
Tribune management declined to comment.
“We have not seen the lawsuit and will decline comment,” spokesman Gary Weitman said.
Dan Neil, The Times’ auto columnist and the newspaper’s only current employee listed as a plaintiff, said the lawsuit was necessary to protect the interest of Tribune employees and news institutions such as the Los Angeles Times and the Chicago Tribune.
“We don’t think the management of the company has been in the best interests of the employee-owners. The Los Angeles Times is too important to be left in the hands of corporate raiders,” said Neil, who in 2004 won the Pulitzer Prize for criticism for his automobile reviews.
Other plaintiffs from The Times include former legal affairs reporter Henry Weinstein; Jack Nelson, a retired Washington bureau chief; and three other former reporters.
The plaintiffs seek to recover losses to the employee stock-option plan, or ESOP, and want to replace the Tribune board of directors and the ESOP trustee. They also want a full accounting of pension plan assets. It was filed by San Francisco law firm Cotchett, Pitre & McCarthy.
Since taking Tribune private in December, Zell has slashed about 2,000 jobs and cut the number of pages the newspapers publish as the company seeks to make annual debt payments of close to $1 billion.