NEW YORK — In a sensational lawsuit�filed in 2004, two fired Billboard magazine editors accused their ex-bosses of creating an environment where sexual dalliances among employees were encouraged, erotic toys were�put on display�and "alliances" among minorities were considered a threat.

But the salacious claims will never go before a jury, after a last-minute settlement Tuesday morning brought jury selection in the case to a halt in New York Supreme Court.

"The case has been settled to all the parties' satisfaction," said lawyer Kyle Bisceglie, who represents former Billboard editor in chief Keith Girard and senior editor Samantha Chang in their $29 million discrimination suit against Billboard magazine owner VNU. "We're very happy."

Billboard magazine publisher John Kilcullen was also named in the suit, as was executive editor Ken Schlager.

Girard and Chang claimed the suit stemmed from their dismissal�less than a year after they were brought on to revamp the flagging trade publication.

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The�two�accused their bosses of retaliatory firing�after they complained to human resources and then to Kilcullen about the "atmosphere of sexual and racist intimidation" against female and minority employees.

Specifically, the suit alleged that Schlager kept a green vibrator in plain sight on a shelf in his office that he often used to "intimidate" female employees. On at least three occasions, Chang claimed in the suit, Schlager removed the vibrator from the shelf and showed it to her.

The suit also cited instances in which Schlager and Kilcullen allegedly engaged the company of a junior-level staff member in front of other Billboard staff members, leading them to believe the woman had received favorable treatment in exchange for sexual contact.

The plaintiffs also sought damages for racial discrimination based on allegations that Billboard's human resources administrators, at the behest of upper management, kept a close eye on "budding relationships" between minority employees, including Chang, who is an Asian-American, and an African-American employee named Carla Hay.

In a motion to subpoena Billboard magazine's former Los Angeles-based human resources manager to testify in the suit, lawyers for the fired editors attached internal e-mails between Judy Bellamy and her New York-based colleagues.

"I thought more about this possible Carla Hay/Samantha Chang alliance and I'm a little bit concerned," Lisa Garris wrote in an Oct. 27, 2003, e-mail to Bellamy, who stopped working for Billboard after the lawsuit was filed.

"Samantha is an attorney and is very bright. Carla Hay is also extremely bright. This is just something we should be mindful of," Garris wrote.

Along with the e-mail, Garris attached a chart of the demographic breakdown of the magazine's editorial staff, which consisted of six minorities among 33 employees.

Calls to Deborah Patton, VNU's vice president of communications, were not answered by press time.