Orange County Register Settles Suit Brought By Carriers for $42M

newsboy.jpgUPDATED WITH REGISTER'S TAKE ON THE SETTLEMENT:

The Orange County Register
agreed today to shell out $42 million to settle a class-action lawsuit by newspaper carriers that was hailed as "the first of its kind in the United States" by the delivery workers' Santa Ana-based law firm.

Daniel J. Callahan of Callahan & Blaine, which represented carriers along with Timothy Cohelan of San Diego's Cohelan & Khoury, broke down settlement as follows in an email sent to the Weekly that announced the settlement: the Reg will pay $36 million in past damages and attorneys' fees and an estimated $6 million worth of benefits going forward to existing and future carriers.

The Register posted a settlement story on its website that included this statement from Scott Flanders, president and chef executive officer of the Register's parent company, Freedom Communications: "I am pleased that the five-year protracted litigation has been resolved through a settlement that is fair to both sides. With this resolution, we bring certainty and finality to this issue, and we can move forward to address other challenges and to strengthen our business." The suit was first brought against the Santa Ana-based daily five years ago. About 5,000 present and former carriers who delivered papers between July 7, 2003, through August 22, 2008, will receive notices of the settlement, according to Callahan & Blaine.

Many newspapers treat their delivery people like independent contractors rather than employees, but because the Register "controls the manner and means employed by the carriers to deliver the newspaper," plaintiff lawyers argued their clients were essentially employees.

"In the Register's case, the Register gave detailed routes for the carriers to follow, instructions for delivery, and penalties for non-compliance," the Callahan & Blaine statement noted. "The Register also trained and supervised the carriers in the performance of their duties." It goes on to quote Callahan as saying, "These are the hallmarks of an employment relationship and The Register engaged in this practice in an apparent attempt to avoid providing benefits otherwise required by California law."

The smoking gun was apparently evidence presented that showed the Register controlled every aspect of delivery at its eight Orange County warehouses, evidence the Register's own managers corroborated, according to the statement.

The court still must grant final approval to the settlement, but that is a formality. Freedom shareholders must also give their consent to cutting a $42 million check amid horrible economic times in the fish wrap biz.

But Callahan is showing no mercy. His firm's statement includes a warning that he will next go after other newspapers with similar delivery systems "and are in direct and knowing violation of the California Labor Code."

Start breaking out those wallets, boys!

To get what's coming to them from the Register, "carriers will have to submit individual applications for the money, which represents a settlement of their claims that they were due overtime, mileage and additional compensation," their story says.

It goes on to report carriers will remain independent contractors and that the Register denies any wrongdoing. It also spun the settlement as a financial victory, since the plaintiffs' suit demanded $88 million.

Using that logic, our headline should have read "Orange County Register Settles Suit Brought By Carriers, Saves $46M."


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