Former Hollinger CEO Black wins legal round

$1.25 billion RICO suit is dismissed in Chicago

October 09, 2004|By James P. Miller | James P. Miller,CHICAGO TRIBUNE

A federal judge in Chicago dismissed Hollinger International's $1.25 billion lawsuit against ousted chief executive Conrad Black yesterday - but said many of the claims can be refiled in a state court.

Hollinger International said it intends to press its claims "aggressively," and may appeal the ruling, but it didn't provide details.

Although it is still free to pursue the case, the company has clearly suffered a setback. For one thing, yesterday's ruling by U.S. District Judge Blanche M. Manning means that Hollinger, a full nine months after it went to court, has been pushed back to square one in its legal pursuit of Black.

In addition, the size of any potential award has been substantially reduced. Because the judge ruled that Hollinger International can't claim triple damages, if the company prevails it is now eligible to recover just a third of the award it sought.

Hollinger International, owner of the Chicago Sun-Times and The Jerusalem Post, filed the suit in mid-January. The civil complaint said Black, along with longtime lieutenant F. David Radler and others, looted the company of more than $380 million.

In May, Hollinger International amended its complaint to assert that the former officers had also violated federal racketeering laws.

But Manning squelched that idea yesterday. The federal RICO statute, popular with plaintiffs because it allows them to seek treble damages, is restricted to certain circumstances, she noted. And Hollinger didn't clear the hurdle.

Manning ruled that the actions Hollinger ascribed to its former officers are "actionable" as securities fraud. And if a hypothetical plaintiff could make such a claim in the case, she explained, the law bars Hollinger from pursuing RICO claims.

She then dismissed the RICO charges "with prejudice," which means they can't be refiled.

Manning didn't rule on the merits of Hollinger International's remaining claims. But because her RICO ruling eliminated the aspect of the case that involves federal jurisdiction, she dismissed the remaining two dozen counts "without prejudice."

Black and Radler have denied wrongdoing; they face a separate lawsuit filed by the Securities and Exchange Commission. Hollinger Inc., the Toronto holding company through which Black controlled Hollinger International, was also a defendant.

The Chicago Tribune is a Tribune Publishing newspaper.

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