Pugh v. Tribune Company

521 F.3d 686 (7th Cir. 2008)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Employees at D falsely boosted the circulation figures of two newspapers. Schemes such as phony hawking programs, false affidavits that understated returns and overstated net sales, and directions to subordinates to pay distributors for bogus deliveries of newspapers were employed. In addition, many copies of the two papers were merely dumped, or delivered to people who had not paid for them. The overstated circulation numbers resulted in Newsday and Hoy charging higher advertising rates than would have been charged otherwise. D, along with an independent auditor, ultimately discovered and publicly disclosed the fraud, which resulted in a $90 million charge against earnings. The first case is a securities class action brought by purchasers of D common stock against D, four of its executive officers, and five employees of Newsday and Hoy. The second case is an ERISA class action brought by participants in D's pension plans that held shares in an employee stock ownership plan (ESOP) against the alleged plan fiduciaries. The district court dismissed both cases with prejudice. This appeal resulted.