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Zell sees fables in ESOP suit

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Even being the top executive of a huge media conglomerate apparently doesn't provide protection from bad press.

Just ask Sam Zell, the legendary investor and dealmaker who is chairman and chief executive officer of Tribune Co., which among other things, publishes the Chicago Tribune and the Los Angeles Times, operates a number of television stations and owns the Chicago Cubs baseball team.

Late last year, Mr. Zell engineered a complex deal in which a Tribune Employee Stock Ownership Plan became the majority owner of Tribune Co. Mr. Zell invested more than $300 million and received warrants to buy about 40% of the company.

But a suit filed in Los Angeles federal court by several current and former Tribune employees alleges that the Tribune and Mr. Zell failed to uphold their fiduciary duty to the ESOP and want to recover any losses incurred by the ESOP.

The suit also says Mr. Zell is mismanaging the company.

But Mr. Zell, not known for keeping a stiff upper lip, has returned fire. In an e-mail to Tribune employees, Mr. Zell said the lawsuit "is filled with frivolous and unfounded allegations."

"The publishing industry is trying to deal with the challenges posed by a tough advertising environment and an economy in turmoil," Mr. Zell wrote in the e-mail.

"This lawsuit is a mere distraction, and we will work quickly to see that it is dismissed. It will not deter us from completing the work ahead," Mr. Zell said in a subsequent statement.