L.A. Times staffers' suit against Sam Zell filed; attorney says Zell's actions damage democracy

[DeepModem Mom]

Forbes: Putting Newspapers On Trial
James Erik Abels, 09.17.08

Sam Zell was sued in Federal Court in California yesterday by a group of current and former Tribune Company employees. They did a lot more than go after the billionaire they say ruined their company -- you could make the case that they've put the fast-changing newspaper business on trial, too.

The group says Zell, the Chicago real estate mogul-turned-newspaper-titan, has done nothing but run down Tribune since buying it last year. But the suit is so much more than an angry lashing by frustrated journalists. To the group of well-known reporters that include two Pulitzer Prize winners, the indictment of Zell is an angry answer to Wall Street’s pessimism about their industry. “The problem is not with the product, the problem is monetizing the product online,” says Dan Neil, a five-year employee of the Tribune-owned Los Angeles Times. “It’s not journalism’s problem, it might be publishing’s problem.” Neil won the Pulitzer Prize for criticism in 2004.

Leading the charge from the LA Times newsroom, Neil and his cadre of plaintiffs are claiming various violations of the Employee Retirement Income Security Act (ERISA). Essentially, they allege that as members of Tribune’s Employee Stock Option Plan (ESOP) -- which became the legal owner of Tribune during a complicated buyout in April of 2007 -- Zell has breached his duty of loyalty to Tribune’s employees. The group has asked the court to certify the case as a class action.

Zell took over Tribune last year by taking it private in an $8.2 billion dollar deal that left the company with more than $13 billion dollars in debt....

He has evaluated reporters by how many column inches they produce, turned editorial publications like the Los Angeles Times Magazine over to advertiser control and laid off at least 1,000 employees. And by all accounts, he has done it with little humility, famously cursing at a South Florida Sun-Sentinel staff member who challenged him in January during an open question and answer session with employees....

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The ramifications of Zell’s -- and Tribune’s -- actions are defined by the (Cotchett, Pitre & McCarthy) firm as nothing short of the destruction of American democracy. “Sam Zell exacted a severe, long-lasting damage to an institution that citizens in a democracy rely on and require to effectively speak truth to power,” writes lead lawyer Joseph Cotchett....

http://www.forbes.com/business/2008/09/17/newspapers-tribune-zell-biz-media-cx_jea_0917tribune.html