LEGAL BATTLE CONTINUES FOR EX-ZIFF DAVIS HEAD

Accusations Mount Between Jim Dunning, Willis Stein

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NEW YORK (AdAge.com) -- Ziff Davis Media's next earnings report, expected this month, could touch on the mounting legal battle between former Chairman-CEO Jim Dunning, who was ousted in August, and his former backers, Willis Stein & Partners.

Mr. Dunning's Sept. 6 suit filed in New York County Supreme Court -- alleging, in part, breach of contract, breach of fiduciary duty and intentional infliction of emotional distress -- seeks over $500 million in damages and punitive damages exceeding $300 million.

The counterclaim

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seeks unspecified damages and payment of extant promissory notes that Mr. Dunning disputes.

In the suit, Mr. Dunning alleges Avy Stein, managing director of Willis Stein, "issu[ed] directions to Mr. Dunning to ... overstate Ziff Davis' financial outlook to investment banks," and that other executives "concocted false numbers to perpetuate the continuing fraud" of investors.

This is denied in the Oct. 1 counterclaim, which accuses Mr. Dunning of "presenting inflated and misleading revenue results to Willis Stein" in attempts to secure outside financing for Internet operations.

A statement from Mr. Stein said Mr. Dunning's claims "lack merit," and that he and his firm "have no regrets about the decision we made to terminate him and continue to believe that it was the best decision for the company."

Mr. Dunning did not return a call seeking comment.

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