A federal judge yesterday cleared the way for U.S. News & World Report to go forward with plans to distribute to current employes the remaining proceeds from the $176 million sale of the magazine to Boston real estate magnate Mortimer B. Zuckerman -- despite a pending lawsuit from retired employes who are seeking part of the proceeds from the sale.

U.S. District Judge Barrington D. Parker said that the retired employes had presented "an intriguing case" against the company, its former directors and appraiser.

However, he noted, it would be unfair to hold up distribution of the funds pending the outcome of the case because the people who would be hurt the most would be "the employes of U.S. News who are completely innocent of any wrongdoing."

As a result, he turned down the former employes' request for a preliminary injunction and told U.S. News it could begin distributing $135 million that had been held in an employe profit-sharing plan.

Zuckerman hailed the judge's decision: "Ever since we paid the full purchase price to the employe-controlled profit-sharing plan, we have hoped that any impediments to the distribution to the employes would be eliminated. We believe the decision is a major step in that direction and look forward to the funds being made available to the employes."

Nonetheless, attorneys for the former employes said there may be several hurdles left and hinted that they planned to file an appeal Friday -- just two days before the date U.S. News had indicated it would begin distributing the profit-sharing funds.

As a result, the four U.S. News employes who have been appointed to manage the distribution issued a statement yesterday cautioning employes that while the judge's decision was "good news . . . this does not necessarily clear the way for an immediate distribution."

About 230 former employes -- who left the company before 1981 -- charged that U.S. News, its directors and an outside appraiser had intentionally undervalued the stock in the employe-owned company by failing to take into account the true worth of valuable real estate holdings in the West End area of the District.

As a result, the former employes say they were cheated out of a total of $45.4 million when they sold their stock back to the company. The former employes say that when interest is added they are entitled to $90 million.

Attorneys for the former employes had argued that, to compensate for their loss, the former employes should receive some of the proceeds of the magazine's sale to Zuckerman. To guarantee that they were compensated, they filed the request for a preliminary injunction to block any distribution until the suit was resolved.

Parker said that he found it "disturbing" that U.S. News failed to keep its appraiser fully informed about its development plans for the West End property during the late 1970s, when the magazine was meeting with developers to discuss development plans.

As a result, he noted, the appraiser did not adjust the price of the land upward until 1981 when a contract was signed with a developer. At that point, Parker noted, the stock jumped from $151 to $470 a share. "Common sense suggests that the mere fortuity of an executed contract should not inure to the sole benefit of those individuals who happened to be employed by U.S. News when the contract was signed," he said.

Even so, Parker said that there should be plenty of money to cover the former employes' damages if they win their case. The current employes of U.S. News have set aside $10 million of the $176 sale price to cover potential damages; meanwhile, the appraisal company has insurance policies up to $50 million to cover at least some of the liability and the directors who are also involved in the suit have at least $5 million in liability insurance coverage, either collectively or individually.