Download the 70-page legal brief


Additional Court Complaints Filed in Bitter Magazine Dispute

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NEW YORK ( -- The bitter fallout from the implosion of Rosie magazine continued today, as former talk-show host Rosie O'Donnell filed an amended
Photo: AP
Rosie O'Donnell alleges that G&J manipulated the books.
Download a .pdf of the 70-page amended complaint.
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series of counterclaims against her onetime business partner, Gruner & Jahr USA Publishing, seeking at least $125 million in damages.

The hottest of the counterclaims accuses G&J of "manipulating the magazines books" in order to prevent Ms. O'Donnell from exercising a contractual automatic right of termination. According to the legal filing, a clause in the joint-venture contract between G&J and Ms. O'Donnell's Lucky Charms Entertainment allowed either party to terminate the agreement if earnings from Rosie "fell below a certain dollar amount on June 30, 2002."

'Manipulated' financials
According to the filing, "G&J decided to manipulate the Magazine's financial statements to ensure the targets were met so that O'Donnell would not have the option of simply exercising her right to terminate the contract without other grounds."

An attorney for G&J declined to comment immediately on many allegations in the counterfiling, saying the company itself would respond after today's filing had been reviewed. An executive for G&J would not comment on what those targets were, nor other aspects of the contract between G&J and Ms. O'Donnell's comapny.

A G&J spokeswoman issued a statement confirming a termination clause existed, and that the title bettered the stated financial threshold "by nearly $500,000." A subsequent adjustment of that figure, the statement said, necessitated adjustments for newsstand sales, which sometimes takes a few months to be complete, and ended up with "a financial impact of less that $10,000."

Records audited
"Rosie's auditors completely reviewed G&J's accounting records immediately following the close of the fiscal period," the statement said.

The legal battle between G&J and Ms. O'Donnell was initiated by G&J, which sued Ms. O'Donnell last October for breach of contract and breach of fiduciary duties, but today's filing by Ms. O'Donnell claims G&J provoked her to leave the magazine that "was itself another breach of the parties contract, and it is O'Donnell and not G&J who is entitled to relief."

Personal feud
Today's filing also continues a remarkably nasty and personal split between Ms. O'Donnell and Dan Brewster, president-CEO of G&J USA. G&J's suit in October claimed Ms. O'Donnell at one point told Mr. Brewster, "If I have to go down, I'll take G&J down with me, even if I have to spend every last cent I have." Ms. O'Donnell's filing today asserts that Mr. Brewster began the exchange by telling her "in substance, 'I'll ruin you.' "

Some new details of the agreement between Ms. O'Donnell and G&J are brought to light in the filing. It claims while G&J and Ms. O'Donnell's Lucky Charms were equal partners, Ms. O'Donnell's would only pay 50% of its losses until a cap of $6 million was reached, after which G&J was responsible for all of the losses. According to the filing, Ms. O'Donnell lost $6 million by summer of 2002.

Lesbianism discussed
Ms. O'Donnell also claims that she told G&J of her lesbianism during contractual discussions, and that she planned to leave her show in the spring of 2002, as she did. (This required an additional unspecified "contribution" from Ms. O'Donnell that she honored, according to the filing.)

The filing comes after Vanity Fair published a lengthy article late last year on the dissolution of the magazine. Top G&J staffers had been nervously bracing themselves for that article, but it ultimately focused primarily on Ms. O'Donnell.

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