The Business Journal of Milwaukee - May 8, 2002


May 8, 2002

Journal Communications settles ex-employees' suit

Journal Communications Inc. and a group of employees forced to take early retirement at the time of the Milwaukee Journal-Milwaukee Sentinel merger announced they had reached an $8.9 million settlement in the ex-employees' lawsuit against the Milwaukee-based communications company.

The former employees filed a class action suit in May 1999 that alleged Journal Communications and trustees of the Journal Employees Stock Trust Agreement -- the company's employee-ownership plan -- did not follow an agreement that allows some departed employees to sell back their stock shares in Journal Communications over a period of up to 10 years. The former employees claimed the company later forced them to sell 20 percent of their stock per year over a five-year period, resulting in large financial losses.

In March 1995, 252 former employees of the Milwaukee Sentinel and The Milwaukee Journal newspapers were fired when the two dailies merged. Journal Communications is the parent company of the newspaper redubbed the Milwaukee Journal Sentinel.

The $8.9 million settlement amount results from a compromise between the company and the former employees on the value of their stock holdings, said Kevin Demet, a Milwaukee attorney who represents the former employees. Accounting firms for the company and former employees gave differing expert opinions on the value of the stock, Demet said.

The class group includes about 150 people, one third of whom the experts determined had suffered no damages and two thirds of whom will receive a larger portion of the settlement, Demet said.

The "no damage" group will receive payments of $2,000 each, Demet said. The larger group will receive a wide range of settlement money, depending on the amount of stock they held and how long they held it. The average payment to the latter group will be about $40,000, plus the right to resume holding their stock for up to 10 years, Demet said.

Journal Communications and the attorneys for the former employees said in a joint statement that the settlement "is preferable to protracted litigation because each party knows what the outcome will be and saves the considerable risks and expenses incurred when a trial or appeal is involved."

A Journal Communications spokeswoman declined any further comment.

Journal Communications management had disagreed with an April 2000 ruling by Milwaukee County Circuit Court Judge Thomas Donegan that favored the former employees. The company appealed the matter to the Wisconsin Court of Appeals. The company lost the appeal and in 2001 took a $10 million charge for "potential adverse outcomes" of this and other lawsuits.

A preliminary hearing on the settlement will be held Thursday before Donegan. A final hearing will be scheduled later on distributing the settlement to former employees, Demet said.

Journal Communications has a trial pending on another lawsuit involving the employee stock trust and former employees. Employees who lost their jobs in 1995 after Journal Communications sold Perry Printing, a commercial printing firm in Waterloo, sued in April 2000 contending that some ex-Perry employees were required to sell their stock quickly rather than over 10 years, as allowed in the employee stock trust bylaws.

The plaintiffs claim damages of $20 million but have offered to settle for an unspecified smaller amount, Demet said. The case is scheduled for trial in November in Jefferson County Circuit Court.

© 2002 American City Business Journals Inc.

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