By: M.L. Stein
Suit questions profits, bonuses, conflicts ? but seeks to avoid disinheritance
A quiet legal action involving the Hearst Corp., its trustees and the estate of William Randolph Hearst is about to play out in a Los Angeles courtroom.
The proceeding is so quiet that all the documents are sealed by court order and attorneys for both sides will say little or nothing about the case, which stems from a family feud.
John A. Sturgeon, a Los Angeles attorney representing three dissident members of the Hearst family, did provide a sketchy outline of the case, however. He said he has filed a petition asking the Los Angeles Superior Court to determine whether his clients’ challenge of Hearst Corp.’s business practices will result in their disinheritance.
When Hearst died in 1951, he left a 125-page will ? the longest and most complex in California history ? that included an in terrorem clause designed to discourage beneficiaries from challenging its provisions. The clause ? translated from the Latin as “in terror” ? gives Hearst Corp.’s 13 trustees the power to disinherit any of the 35 Hearst heirs for violating the will’s dicta.
Sturgeon said his clients ? William R. Hearst II, Deborah Hearst Gay and Joanne H. Castro, whose places of residence he refused to give ? are unhappy with Hearst Corp.’s financial practices and want to examine all its books and records. “And they want the trustees, or at least most of them, removed,” the lawyer added. “One of the things we want to look at are their bonuses and possible conflicts of interest.”
But first Judge Gary Klausner must decide whether or not the challenge subjects the plaintiffs to losing their inheritance. The petition is scheduled to be heard May, 28 but could be postponed. If he wins the first round, Sturgeon said, he’ll file a full-blown lawsuit to press his clients’ demands.
Los Angeles attorney Wick Stevens II, who represents the Hearst Family Trust comprised of the 13 trustees, declined to comment on the case.
According to Sturgeon, the trustees obtained an order closing the files of the Hearst estate in 1975 following the kidnapping of Patty Hearst. A judge agreed disclosure could pose a threat to family members and extended the seal to the current petition, Sturgeon said. He said the estate consists primarily of Hearst Corp., though “there may be some artwork and real estate.”
A business consultant to William R. Hearst II who requested his name not be used said his client believes the trustees are “not living up to their fiduciary responsibilities” and have kept Hearst and other owners in the dark about Hearst Corp. The company owns the San Francisco Examiner, Houston Chronicle, Seattle Post-Intelligencer, San Antonio Express-News, five other newspapers, 13 consumer magazines, 20 business publications, six TV stations, seven radio stations, Avon Books and King Features Syndicate, and is a partner in two cable networks. “What are they doing with their assets? If you owned a single share of IBM stock you would get more information from the company than Mr. Hearst gets from the Hearst Corporation ? and he is one of its owners,” the consultant said.
He said the plaintiffs want to know the value of the corporation’s assets, what re-turns they are generating and what managers are paying themselves. “Mr. Hearst has asked those questions and has been denied the information,” the consultant said. “He wants to know what he’s getting for his money.”
?(Hearst Corp founder William Randolph Hearst (inset) and, gathered for his funeral in 1951, widow Millicent Willson Hearst and sons (seated, left to right) John and Randolph, and (standing) George, David and William Jr.) [Photo & Caption]
?( Editor & Publisher Web Site: http://www.mediainfo.com) [Caption]
?(copyright: Editor & Publisher May 30,1998) [Caption]