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Anderson News Hit with Lawsuits

Following closures, more turmoil for ex-magazine wholesaler.



By Jason Fell
02/25/2009

The situation at magazine wholesaler Anderson News keeps getting worse.

A little more than two weeks after ceasing ‚Äúnormal business activity‚ÄĚ and laying off much of its staff, the Knoxville, Tennessee-based company has been slapped with at least two lawsuits.

The owner of Clearwater, Florida-based Downtown Newsstand has petitioned a court to freeze Anderson‚Äôs assets, alleging breach of contract. Downtown Newsstand filed suit February 20 in U.S. District Court in Tampa, Florida claiming that its contract with Anderson included a return policy that allowed it to receive full credit for unsold inventory, for which Anderson owes ‚Äúin excess of $20,000‚ÄĚ for magazine stocks.

The second suit, filed February 17 in U.S. District Court of Eastern Tennessee by a former employee, alleges that Anderson, along with its Twin Rivers Technology Group, failed to notify employees of their termination in line with terms of the U.S. Department of Labor’s Worker Adjustment and Retraining Notification Act. The act offers protection to workers, their families and communities by requiring employers to provide notice 60 days in advance of plant closings and mass layoffs.

The former employee, who worked in Anderson’s Knoxville offices, is seeking lost wages, vacation pay and benefits. Approximately 2,500 Anderson employees were laid off, according to the suit.

An Anderson spokesperson did not immediately return a request for comment.

Anderson announced plans to suspend ‚Äúnormal business activity‚ÄĚ earlier this month, roughly three weeks after it, along with fellow wholesaler Source Interlink, threatened publishers with separate 7-cents-per-copy price hikes. Publishers largely balked at surcharges and refused to pay, upset at the wholesalers' sudden and "unilateral" decision to boost costs.

Source Interlink 'Conspiracy' Lawsuit

Meanwhile, Source Interlink filed an anti-trust lawsuit against several major magazine publishers and rival wholesalers, alleging that the defendants ‚Äúconspired‚ÄĚ to force the company to sell its distribution business at a steep discount to rivals Hudson News and News Group. The court awarded Source a temporary restraining order prohibiting publishers and national distributors from denying shipments to its magazine distribution business.

Source later came to an agreement with defendants Time Inc. and Time Warner Retail to distribute its magazines.

A preliminary injunction hearing was scheduled for February 23. A Source spokesperson and an attorney representing the company in the lawsuit did not return requests for comment.

By Jason Fell
02/25/2009




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