Former Star-Ledger staffer Philip Read sues paper for fraud

Former Star-Ledger journalist Philip Read has sued the Advance-owned newspaper for fraud, claiming he was misled into accepting a buyout in 2010.

Read says in his suit that he felt forced to accept the buyout package after being told the paper would resort to layoffs if it couldn’t achieve $10 million in required savings.

“The defendant knew or believed that these statements were false when they were made insofar as it would not be making layoffs if it did not reach the said amount of savings,” his suit says. “The statements were made with the intention of inducing the plaintiff to rely upon them.”

* Star-Ledger fraud suit claims newspaper lied about buyouts (law360.com/sub. req.)

Read the lawsuit after the jump.

The Plaintiff Philip Read (“Read”)(“the Plaintiff”), complaining of the Defendant, Newark Morning Star Ledger Co. (“The Star Ledger”; “the Defendant”), alleges:

1. Read is an individual of approximately 57 years of age and in the profession ofjournalism.

2. The Star Ledger is New Jersey Company duly authorized to conduct business in the State, in the business of reporting and publishing news, with a principal place of business in Newark, New Jersey.

3. In or about September 1997, Read was hired by The Star Ledger as Deputy Business Editor, with a $5,000 signing bonus and a salary of $1,500 weekly ($78,000 per annum, with a year-end bonus of $1,000).

4. The Plaintiffs salary rose annually, as did his bonus, and by 2008 he was earning approximately $109,000 per year.

5. In or about 1997, The Star Ledger issued and the Plaintiffs received a document entitled “Job Security,” stating:

Our goal is to maintain a staff of dedicated professionals who feel secure and utilize their skills and abilities to the fullest. Therefore, The Star Ledger is proud to provide this pledge of job security after the successful completion of a three month probationary period:

If you perform in a responsible, productive manner without misconduct, you will not be laid off, regardless of changing economic conditions or the introduction of new technology or processes, as long as the paper continues to publish.

6. In or about November 1998, in a memorandum to staff, Publisher Martin Bartner announced “significant” improvements in The Star Ledger’s retirement benefits, with an addition of a 401k and fifty percent (50%) match over and above the company’s defined benefit plan.

7. In or about 2000, Read became the Bureau Chief of the newly created Newsroom in Essex County. Read remained in that position until the Bureau closed amid the post-911 downturn.

8. At the same time, Read began reporting duties and won in-house writing awards despite hiring and salary freezes. His job performance was at all times superior.

9. In or about 2006, The Star Ledger announced its consolidation with its sister paper, The Times of Trenton, along with a voluntary buyout to be offered at both papers. At the same time, Publisher George Arwady (“Arwady”) stated in a memorandum, “As always, both newspapers will stand behind the Job Security Pledge to non-represented, full time employees.”

10. In or about 2008, Arwady stressed the importance of the Defendant’s job security pledge by stating, inter alia, that the pledge would be honored “as long as the paper continues to publish daily in its current newsprint form.”

11. On or about July 28, 2008, Arwady informed non-union staff in a memo that company-paid retiree health benefits would be replaced, effective January 1, 2010, with Retiree Healthcare Insurance Premium Accounts, an amount to be determined based on years of service.

12. On or about July 31,2008, Arwady issued two memoranda in which he cited a “steep decline” in advertising revenue as reason for needing 200 employees to accept buyouts. Additionally, the memos indicated that the unions had to accept new agreements to prevent the paper from being put up for sale. An October 1, 2008 deadline was set. The memo reemphasized the importance of the job-security pledge to non-represented, full-time employees.

13. During that time, it became common knowledge that some staff members were being told that painful reassignments (e.g., overnight shifts) would occur if they failed to sign up for the buyout. Employees were also told that the Defendant would be shut down if a buyer was not found; and received Federal Plant Closing Notices in their mailboxes.

14. In or about September 2008, just days before the deadline, Read spoke directly with Editor Jim Willses (“Willses”) to gauge his position on the matter. Willses responded, “I’d like you to stay.” Based on this statement, Read decided to remain at the Defendant.

15. In or about early 2009, the Defendant launched LNS, an off-site shadow newsroom staffed by young journalists to help compensate for dramatic loss of experienced staff. By January 2010, it had fifteen (15) reporters, three (3) photographers, and approximately ten (10) editorial assistants, as well as The Ledger’s “retired” Managing Editor, Rick Everett.

16. In or about March 2009, Arwady announced mandatory, unpaid 10-day furlough for all full-time employees and freezing of the Defendant’s pension plan.

17. In or about May 2009, Arwady announced in a memorandum that employees would start paying twenty-five percent (25%) of the cost of their medical benefits, and that year-end bonuses would be ended. He further announced staff-wide pay cuts on a tiered system reaching to fifteen (15) percent or more.

18. In or about October 2009, Arwady announced a need to reduce staff further by “at least 50 people” via “a voluntary buyout.”

19. In or about August 2009, Arwady informed staffers that the job security pledge would end on February 5, 2009, and that layoffs, though not planned, could occur after that date.

20. In or about January 2010, Ramona Barnes (“Barnes”), head of the Defendant’s Human Resources (“HR”) Department, circulated an email to employees reminding them that the security pledge would expire on February 5 and that the employees would become “at will.”

21. On or about September 7, 2010, the Defendant’s Publisher, Richard Vezza (“Vessa”), issued a memorandum in which a new buyout offer and “wage adjustment”was described. The offer applied only to those hired before January 1,2006.

22. Subsequent to the memorandum, employees were told by, inter alia, Associate Editor Tom Curran (“Curran”) that there would be additional salary cuts of up to twenty percent (20%).

23. The Plaintiff was told that he would really be “taking a hit” (losing the full twenty percent (20%) on top ofthe previous seventeen percent (17%) cut if he stayed.

24. In or about the Autumn of 2010, Vezza held numerous meetings with employees, answering direct questions that, yes, there would “positively” be layoffs in the first quarter of 2011 if “at least” $10M in savings were not achieved by the latest departures from The Star Ledger.

25. In or about September 2010, Forbes Magazine reported that Donald Newhouse (“Newhouse”) of New Jersey, co-owner of Advance Publications, the parent company of The Star-Ledger, grew his wealth from $4 Billion to $5.4 Billion, a $1.4 Billion personal gain.

26. In or about October 2010, the Plaintiff met with Barnes individually and told her that he was concerned about being laid off given Vezza’s statements to staff.

27. Barnes stated that the $10M figure in required savings was “growing every day,” and therefore there was an even greater chance of layoffs. These statements were made less than forty-eight (48) hours before the deadline to accept the buyout.

28. The Plaintiff told Barnes that he felt he had no choice but to accept the buyout given the real prospect of being laid off and getting a “far less generous” separation package.

29. Barnes responded, “You’re just going to get laid off. This is not the same company it used to be.”

30. Based solely on these representations, the Plaintiff chose to accept the buyout offer.

31. These representations were untrue at the time that they were made and the persons making them knew they were untrue.

32. In fact, the “$10 million in savings” was never achieved and yet the Defendant made no layoffs.

33. The Agreement that he signed, in or about October of2010, stated that, in exchange for the Plaintiff’s execution of the Agreement and General Release, the Defendant would pay him severance equal to one (1) year’s salary ($93,804.88), payable in equal weekly payments, and extending the Plaintiffs medical, dental, and vision benefits through the period of severance.

34. In addition to the Agreement, the Plaintiffsigned a General Release.

35. The Plaintiff remains unemployed to this day.

Count I: Fraud

36. The Plaintiff repeats and realleges the statements made in Paragraphs 1- 40.

37. The Defendant made statements of purported fact when it claimed that it would be making layoffs if it did achieve various targeted amounts of savings.

38. The Defendant knew or believed that these statements were false when they were made insofar as it would not be making layoffs if it did not reach the said amount of savings.

39. The statements were made with the intention of inducing the Plaintiff to rely upon them.

40. The Plaintiff relied upon the statements to his detriment.

41. The conduct ofthe Defendant in inducing the Plaintiffs retirement was wanton and willful.

42. As a result, the Plaintiff suffered damages.

Count II: Breach of Contract

43. The Plaintiff repeats and restates the allegations contained in Paragraphs 1-40.

44. The Defendant agreed in writing not to terminate the Plaintiffs employment in the Security Pledge so long as the Plaintiff did not engage in misconduct.

45. The Plaintiff performed his job in a responsible, satisfactory manner.

46. In breach of its Pledge, the Defendant revoked the Security Pledge and threatened to lay off the Plaintiff due to economic circumstances.

47. As a result of the Defendant’s breach, the Plaintiff suffered damage.

Count III: Breach of Covenant of Good Faith and Fair Dealing

48. The Plaintiff repeats and realleges the allegations contained in paragraphs 1-40.

49. The Defendant was motivated by bad faith in its misrepresentations about upcoming layoffs, insofar as its motive was to induce the premature departure and/or retirement of senior persons from its employ.

50. As a result ofthe Defendant’s bad faith, the Plaintiffwas denied the right to receive the fruits of his employment contract.

51. As a result of the Defendant’s bad faith, it breached the covenant of good faith and fair dealing, and the Plaintiffsuffered damages.

Count IV: Negligent Misrepresentation

52. The Plaintiff repeats and restates the allegation made in Paragraphs 1-40.

53. The Defendant made a material misrepresentation of a presently-existing fact.

54. The Plaintiff reasonably relied upon the statement.

55. As a result, the Plaintiff suffered damages.

WHEREFORE, the Plaintiff demands judgment against all Defendants, jointly and severally, for:

(1) Compensatory Damages;
(2) Damages pursuant to N.J.S.A. 10:5-13;
(3) Punitive damages pursuant to N.J.S.A. 2A: 15-5.12(b);
(4) Attorneys fees pursuant to N.J.S.A. 10:27.1;
(5) All further relief which the Court deems just and proper.

Law Offices of James CJDeZao, P.A

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