News this week--well, last week, really--that The Dallas Morning News is offering buyouts to some 40 (or 60 or more) of its folks before firing 'em outright has rekindled memories of the October 2004 massacre that left 250 Belo Corp. employees jobless. And it's raised the specter of the circulation scandal that has haunted Belo since August 5, 2004, when the company admitted it had been juicing circulation figures in order to keep ad rates high (Belo bosses fessed up to the fact it overstated daily delivery numbers by 1.5 percent and Sunday stats by 5 percent). But most likely, unless you work for the News, you've forgotten all about the federal class-action lawsuit brought against Belo by lead plaintiff Operating Engineers Construction Industry and Miscellaneous Pension Fund on behalf of Belo stockholders who purchased the stock between May 12, 2003, and August 6, 2004. The suit names as its six defendants Belo chairman and CEO Robert Decherd, News publisher and CEO Jim Moroney III and Jack Sander, Belo's president of media operations, among others. Also named is Barry Peckham, who was the executive vice president in charge of circulation till he resigned on August 5, 2004--when Decherd was breaking the bad news and announcing the company's own internal investigation.
Turns out you probably can forget about the suit, which claims that not only did Belo execs know about the circulation fraud but encouraged it, even demanded it. Despite the company's own admission it bent and broke the rules, on March 30 U.S. District Judge Sidney Fitzwater tossed out the case, claiming "at most Decherd and Moroney engaged in acceptable management techniques intended to increase DMN circulation and corporate revenues by emphasizing personal employee responsibility and increasing employee awareness of the adverse consequences of failure." In other words, they were just doing their jobs by demanding their people hit their numbers or else.
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Attorneys for the plaintiffs, who are in Los Angeles and Dallas, will not take no for an answer: On May 12, they filed an amended complaint in federal court here that, they claim, stregthens their case against Belo. If nothing else, at 142 pages, it lengthens it. Tomorrow we'll have a review of the document, which is this summer's must-read for the CJR set, but today Belo filed for an extension, claiming it can't respond in the required 45 days because Peckham's attorney is seriously ill and "will likely undergo follow-up hospitalization." Expect a response by July 13, when Belo will likely file yet another motion to dismiss, and then expect the plaintiffs' motion to oppose Belo's opposition by Labor Day. So the suit's still there. And maybe it's about to get more interesting; did someone mention "secret tape recordings"? Not me. --Robert Wilonsky