'Newsday' Suit Claims Several Distributors Got Down in the Dumps

By: Jennifer Saba The class-action lawsuit brought by advertisers against Newsday and Hoy, which alleges elaborate schemes timed and coordinated by many people, is worthy of its own Rube Goldberg diagram. Filed on Feb. 10 in the U.S. District Court, Eastern District of New York, the suit claims that both papers puffed up circ numbers and duped advertisers in the process.

Kew Gardens, N.Y.-based attorney Joseph Giaimo is representing the advertisers: College Point Restaurant, Crab House of Douglaston, and Ron Bon Pub. (East Coast Realtors dropped out because they still need to advertise with the papers.) The plaintiffs make very specific claims on how Newsday and Hoy pulled off inflating circ figures since as early as August 1995. Tribune Co. Vice President of Communications Gary Weitman says that the "allegations are without merit" and they are separate issues from the latest revelations about Newsday and Hoy's circulation miscues.

The suit claims that newspaper executives, including Robert Brennan, the Newsday circulation vice president who was recently placed on administrative leave, and Louis Sito, formerly the publisher of Hoy and vice president at Tribune Publishing, "secretly and fraudulently padded and inflated the circulation volume through various means."

There were many alleged means to an end, according to the lawsuit:

Executives created a fake hawker program and then dumped unsold papers in the garbage.

Newsday would "force-feed" two to three times the number of papers to distributors and then told them to get rid of them; the bill was adjusted accordingly.

Anytime there was a major local news story, distributors were told to "pad" the sales volume by at least 50% or more.

Newsday delivered 3,000 to 5,000 papers to be sold by hawkers. When distributor Robert Vaca protested, he was told by Robert Garcia, a sales manager for Newsday who later became Hoy's circulation director, "Don't be silly; put out as many newspapers as you can, and dump the rest. You can find dumpsters any place. Dump early in the morning."

Newsday continues to contest all of the above. As E&P went to press, Giaimo filed a 100-page amendment to the lawsuit, with seven new plaintiffs and new allegations. According to Newsday, the new charges claim numbers were also fudged on home delivery. New York's Daily News reported the suit asserts that Newsday was dumping circulars. One carrier, Luz Fondeur, quoted in the suit, told the Daily News she was fired after she refused to discard extra circulars. "You get crazy with all these papers they give you," she told the paper. Weitman told Newsday that the company had not been served and therefore couldn't comment.

Yet reports on the scam keep rolling in. Newsday, in its own extensive article on July 19 delving into the circulation misstatements, uncovered some allegations similar to those asserted in the lawsuit. Randy Green, who worked for American Media Distributors in the mid-'90s, told the paper, for example, that Garcia would doctor circulation affidavits to suit his needs as well as over-provide papers. "His attitude was, make up numbers. Any numbers you want, and we'll credit your bill for you," Green told Newsday. The paper said that neither Garcia nor Brennan would respond to calls.