According to a report on the Tribune news Web site, in addition, U.S. District Judge Rebecca Pallmeyer of the U.S. District Court for the Northern District of Illinois refused to cap damages against GreatBanc Trust Co. for purchasing $250 million in unregistered shares from Tribune Co. rather than buying Tribune stock on the open market in the first stage of the $8-billion deal that bankrupted the media conglomerate.
The news report said plaintiffs contend that about 11,000 current and former Tribune employees were harmed by the transaction and are eligible to collect damages. The class is limited to Tribune ESOP participants who received an allocation of Tribune stock and were employed on December 31, 2008.
However, the Tribune reports that Pallmeyer indicated she may be willing to narrow the class, dropping about 4,000 workers who were layed off or took buyouts and signed waivers to Employee Retirement Income Security Act (ERISA) litigation as part of their severance packages.
In December 2009, Pallmeyer dismissed claims against several Tribune board members, ruling they had delegated their fiduciary duty to Greatbanc, and moved forward claims against the trustee (see Tribune ESOP Fiduciary Breach Suit Moves Forward). Last year, the judge also relieved Zell of liability in the suit (see Judge Relieves Zell of Liability for Tribune ESOP Losses).
Six workers filed the suit alleging that the buyout deal was imprudent because of the great amount of debt Tribune took on. The company filed for bankruptcy protection about a year after the buyback, and it was announced that the ESOP would be terminated (see Tribune Co. ESOP to be Terminated).The U.S. Department of Labor is also investigating the ESOP (see DoL Subpoenas Tribune on ESOP).