LAWSUIT—Primedia Accused In Options Dispute

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A federal lawsuit filed in Los Angeles against Primedia Inc. alleges that the New York-based media conglomerate defrauded at least 1,000 to 1,500 employees out of their converted shares and bonuses.

Primedia is the parent company of 220 consumer and trade magazines such as Channel One, Apartment Guide, Seventeen, Modern Bride and Soap Opera Digest. It also owns the former Petersen Publishing empire based in Los Angeles that holds 60 titles, including Motor Trend, Hot Rod and Guns & Ammo.

The Primedia lawsuit, for which class-action status is sought, includes federal charges of racketeering under the RICO statute. It was filed in U.S. District Court by an employee of Gr8ride.com Inc., the online Primedia subsidiary that caters to automobile enthusiasts.

“There were other people who were similarly situated that our class representative felt he needed to have the claims asserted on behalf of them as well,” said Todd Bonder, chairman of the litigation department of Rosenfeld Meyer & Susman LLP, which is leading the suit.

The suit has yet to receive class action status, and only one plaintiff has been listed in court documents.

The class includes all former and current employees of Primedia and its subsidiaries who were either promised shares of subsidiary companies to be converted to Primedia shares, or vice versa, and never received those shares.

Primedia executives declined comment, but issued this statement: “This lawsuit is completely frivolous and baseless. Although it purports to be a class action, there is only one named plaintiff Particularly infuriating is the RICO allegation, which has absolutely no basis in law or fact.”

While class actions are increasingly prevalent in litigation these days, charging a company’s executives of racketeering is a very difficult to prove.

The plaintiff, Grant Harrell, said he was to get 80,000 stock options in Gr8ride.com as part of his employment offer in July 2000. He never received those shares nor other Primedia shares that were promised, he said.

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