ENTERTAINMENT : Time Warner Says Morris Firing Tied to Sales Probe : Music: Lawyer’s comments on ‘alleged improper practices’ contrast with Fuchs’ statements.

In an escalation of one of the music industry’s nastiest feuds, Time Warner Inc.’s top lawyer alleged Wednesday that it fired domestic music head Doug Morris in part because of “alleged improper sales practices” at its Atlantic Group unit that Morris ran until late last year.

The reasons contrast with public statements made by Warner Music’s top executive, Michael Fuchs, who in interviews has stressed that he fired Morris because the company’s music operations had become destabilized by the corporate politics practiced by Morris and his lieutenants.

But in an affidavit filed in connection with a $50-million lawsuit Morris filed against Warner Music stemming from the firing, Peter R. Haje, vice president and general counsel of Time Warner, said Morris “is well aware of the underlying reasons for his termination.”

Haje then cited a six-month investigation into a sales scandal, which surfaced publicly early this year, in which some Atlantic employees allegedly sold compact discs under the table to distributors and retailers, pocketing the money. The court papers also suggest that Time Warner will seek in court to rescind Morris’ employment agreement to force him to return more than $10 million paid to him since December.

A lawyer for Morris called the allegation “a desperate act by people who are trying to muddy the waters.” Time Warner declined to elaborate on Haje’s statement. Sources at Warner Music also said they were surprised by the allegation because top executives there were told in April that the investigation was in effect closed.

Haje’s affidavit comes in response to an affidavit Morris himself filed last week in which he said he was “completely shocked” by his firing by Fuchs on June 21 as chairman of Warner Music U.S. He said he had been given no advance warning and that Time Warner had agreed to promote him to president and chief executive of the music group.

Morris’ lawyers argue that Morris initiated the investigation himself, resulting in several firings, and that Morris was complimented by Time Warner executives for doing so. They also contend that Time Warner executives were fully aware of the investigation when Morris was promoted in December, although Haje alleges that he and other executives did not find out until after Morris signed a new contract.

Times staff writer Chuck Philips contributed to this report.