U.S. District Judge Barrington D. Parker ruled yesterday that the profit-sharing plan of U.S. News & World Report employes must be included as a defendant in a lawsuit brought by former employes of the company.
The ruling could reduce the amount of money each of the current employes have been expecting to receive from the magazine's recent $176.3 million sale to Boston real-estate magnate Mortimer B. Zuckerman.
The former employes claim they are entitled to part of the money from the sale, alleging that the company deliberately undervalued employe-owned stock so that the employes did not receive a fair price for the company stock that they sold back to U.S. News when they retired. If the former employes' charges are upheld, then the profit-sharing fund may have to distribute some of the proceeds of the sale slated for the current employes to the former workers.
Until last week, U.S. News employes had thought that Zuckerman had agreed to pay any liability for the profit-sharing trust fund above $10 million if the former employes succeed in their suit. The first $10 million is to come from the profit-sharing plan, employes said. However, in a memo to employes, Zuckerman said he had never assumed that liability when he agreed to purchase the magazine. But he added that he intended to vigorously defend the employes against the lawsuit.