MEDIA
10/17/2008 05:12 am ET Updated May 25, 2011

Los Angeles Times Reporters File Class-Action Lawsuit Against Sam Zell, Tribune

It would be hard to argue that Sam Zell really knows his way around the newspaper business. But does his floundering constitute grounds for legal action?

A group of former Los Angeles Times staffers say it does. Calling Zell's takeover of Tribune "a scam" and "a classic grift," they filed a class-action suit in federal court today, seeking to force Zell to hand over control of the company.

"This is basically a workers'-rights issue," says Dan Neil, a former car critic who won a Pulitzer Prize for his work at the Times. The suit hinges on what he and his fellow plaintiffs allege is Zell's misuse of the employee stock ownership plan through which Zell was able to acquire a controlling interest in Tribune for a mere $500 million. "The ESOP law was not written so companies could be taken over like this. It's an abuse of the ESOP structure and, I think, a fairly obvious effort to avoid paying taxes."

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