18 Dealers Sue Register for Contract Breach : Courts: The newspaper says the independent contractors misrepresented sales, “significantly” reducing numbers supplied to a circulation bureau.

A group of 18 independent dealers Monday sued the Orange County Register for allegedly wrongly terminating or threatening to end their contracts to deliver the newspapers to stores and outdoor racks.

The lawsuit, filed in Orange County Superior Court, charges that the Register breached the contracts with the dealers by acting without cause, notice or any provision for compensation. The dealers said the action effectively stripped them of their franchises, some of which are valued at more than $100,000.

Patrick Elster, the Register’s vice president for circulation, denied that the newspaper has acted improperly in its dealings with the contractors. He said the paper has decided to end its relationship with the dealers and handle distribution in-house.

The dealers will go to court today to seek an order halting the Register from terminating any more contracts and reinstating eight dealers that have been let go in the last three months.

The suit also seeks unspecified damages, rewritten contracts to reflect actual terms and a permanent injunction.

“When you look at the activity of these people over 26 years, they have provided an enormous value to the Register,” said their lawyer, Taylor J. Daignault of Torrance. “And they are being let go without even the 30 days’ notice provided in their contracts.”

A number of the independent contractors had paid $100,000 to $130,000 to former dealers for the rights to deliver the papers. The suit charges that the transactions were aided and approved by the Register, which sometimes even instigated the sales.

Elster said the newspaper originally gave the distribution rights to dealers without charge and now feels no obligation to compensate the contractors for their businesses.

He said that the newspaper has 27 independent dealers and that those let go in the last three months were all done “for cause.” He alleged that they misrepresented certain matters, which resulted in the Register paying them “substantial” amounts of money they didn’t deserve.

More disturbing, he said, was that misrepresentations about the amount of papers sold “significantly” reduced the number of street sales that the Register reports to an independent circulation bureau that tracks paid circulation for all newspapers.

The paper asserts that some dealers were inflating the number of unsold papers brought back for refunds. This increased the amounts refunded to the dealers, while decreasing the number of street sales, Elster said.

Circulation figures are important for setting advertising rates and for the newspaper’s battle for readership with The Times Orange County Edition, the other dominant daily newspaper in the county. Single-copy street sales constitute about 17% of the Register’s circulation, or about 56,000 papers daily and 70,000 Sunday.

“What instigated this is that our numbers did not look right,” said Elster. “We conducted undercover audits in the field last fall and found that a substantial number of dealers were improperly taking money from the company by misrepresenting the number of papers sold.”

The dealers denied the Register’s charge in declarations filed with their lawsuit.

Louis W. Leseberg and John H. Bergstrom, two dealers who were let go Wednesday, said they did not misrepresent the number of papers sold. Even if dealers were inclined to cheat, Leseberg said, the amount of alleged losses per dealer would be so insignificant that it wouldn’t be worth the bother.

Bergstrom, who mortgaged his home and borrowed from family to buy a dealership last March for $100,000, said he had been praised by Register management for his work. He was so highly thought of, he said in his declaration, that the Register approached him last summer about buying a larger dealership from someone the newspaper was unhappy with.

When his contract was terminated without cause, he said, he and his sons were offered jobs. But because he planned on suing the paper, the offer was withdrawn.