Legal Problems? Say it isn't so!

On July 13, 2007, one of our indirect, wholly owned subsidiaries, Liberman Broadcasting of California LLC, or LBI, entered into a settlement agreement with class action representatives to settle, subject to court approval, a previously disclosed class action lawsuit related to LBI’s classification of certain employees under California overtime laws and a recently filed class action lawsuit alleging, among other things, violations of California labor laws with respect to providing meal and rest breaks to LBI’s current and former employees.

In June 2005, eight former employees of LBI filed suit in Los Angeles County Superior Court alleging claims on their own behalf and also on behalf of a purported class of former and current employees of LBI. The complaint alleged, among other things, wage and hour violations relating to overtime pay, and wrongful termination and unfair competition under the California Business and Professions Code. Plaintiffs sought to recover, among other relief, unspecified general, treble and punitive damages, as well as profit disgorgement, restitution and attorneys’ fees. In June 2007, two former employees of LBI filed another suit in Los Angeles County Superior Court, alleging claims on their own behalf and also on behalf of a purported class of former and current employees of LBI. The complaint alleged, among other things, violations of California labor laws with respect to providing meal and rest breaks. Plaintiffs sought, among other relief, unspecified liquidated and general damages, declaratory, equitable and injunctive relief, and attorneys fees.

While LBI denies the allegations in both lawsuits, it has agreed to the proposed settlement of both actions to avoid significant legal fees, other expenses and management time that would have to be devoted to the two litigation matters. The preliminary settlement, which was subject to final documentation and court approval, provided for a maximum settlement payment of $825,000 (including attorneys’ fees and costs and administrative fees). As a result, we recorded a total reserve of $825,000 during the first and second quarters of 2007.

The final settlement amount that was approved by the court in January 2008 provided for a settlement payment of $469,000 (including attorneys’ fees and costs and administrative fees). Accordingly, in the fourth quarter of 2007, we reduced the accrual to our litigation reserve by $356,000. In consideration of the settlement payment, the plaintiffs in both cases agreed to dismiss the two class actions with prejudice and to release all known and unknown claims arising out of or relating to such claims. Because the settlement has received court approval, the settlement has become effective and binding on the parties.
We are a party to an ongoing dispute with Broadcast Music, Inc. (“BMI”) and the American Society of Composers, Authors and Publishers (“ASCAP”) related to royalties due to BMI and ASCAP in the amount of approximately $1.3 million. As of December 31, 2007, we had reserved approximately $0.4 million related to this dispute. On March 24, 2008, we submitted a formal offer to settle all amounts due related to all disputed matters with BMI and ASCAP totaling approximately $0.3 million. It is our position that the remaining portion of the total disputed amounts is attributable primarily to billings related to the our time-brokered and simulcast stations, as well as other differences, for which we were improperly billed. Neither BMI nor ASCAP have accepted or rejected our offer as of March 31, 2008.

We are subject to pending litigation arising in the normal course of business. While it is not possible to predict the results of such litigation, we do not believe the ultimate outcome of these matters will have a materially adverse effect on our financial positions or results of operations.

If you know ANY information about these cases, were part of the class(es), or can provide us with the names of attorneys, law firms, or copies of any documents in these cases, we'd be forever greatful. Simply email to LBIExposed@Gmail.com!