The Denver Post won a clear victory in court earlier this week in its battle against three former sales executives, when a Denver judge granted a preliminary injunction preventing the trio from making use of the company's alleged "trade secrets," soliciting Post clients, or recruiting other disaffected employees to join them in competing against the paper.
But it may be too early for the newspaper's corporate honchos to celebrate. Still ahead is a potentially embarrassing trial in the matter, one that could reveal details about internal operations and marketing strategies. The case has already raised sticky questions about morale at the highest levels of Denver's one surviving daily, the impact of its hedge-fund owners' relentless cost-cutting, and whether the paper can fairly cover a dispute in which its management has such a huge stake.
"Their strategy has been clear from the beginning — shut us down at all costs," says Reid Wicoff, the paper's vice president of advertising until his abrupt resignation a month ago. "I have got to assume that they must be very scared about our ability to compete."
Among other tidbits, last week's hearing on the injunction request contained an admission that the Post is planning to move its newsroom out of Denver entirely, in yet another effort to trim expenses. As detailed in last year's feature "Bloodsucking Freaks," the paper has endured wave after wave of buyouts and layoffs, slashing its editorial staff to less than a quarter of what it was just a few years ago — not because it's losing money, but to boost profits for its principal owners, the hedge-fund firm Alden Global Capital; among investors, the end-game strategy of squeezing every last drop of revenue out of an asset while spending as little as possible to maintain it is known as "harvesting cash." The decision to abandon the Post's downtown offices in favor of cheaper digs at its Adams County printing plant will provide physical confirmation of what critics of Alden Global say is already happening on a journalistic level — that the once-mighty Voice of the Rocky Mountain Empire has been reduced to a squeak in the suburbs.
The Post now leases one floor in the downtown building that bears its name — and will soon move its newsroom to Adams County.
Photo by Michael Roberts
That doesn't mean, of course, that the paper's parent company, Digital First Media (DFM), is reluctant to devote resources to protecting its bottom line. After Wicoff and two other key salespeople — Nicole Brennan, director of digital advertising, and top account executive David Staley — tendered their resignations in early April, the Post promptly filed suit, accusing the defectors of downloading hundreds of confidential files, including client contacts, contracts, and other proprietary information, before their departure. The group was also accused of trying to lure one of the company's largest advertisers, Greystar, a $6-million-a-year account, to sign with Digible, a new ad agency they were forming.
Earlier this week, Denver District Court Judge Edward Bronfin ruled in favor of the paper's motion for an injunction, an indication that enough evidence had surfaced during the hearing that the Post was likely to prevail at trial on its claims of civil conspiracy, unjust enrichment and so on. But a preliminary hearing isn't a trial, as Bronfin noted at the outset, and Wicoff's side managed to raise some intriguing defenses, too.
Much of the testimony dealt with how DFM had spent millions developing Adtaxi, a kind of glorified in-house ad agency, as well as hush-hush, proprietary online marketing tools — and the potential losses the company might endure if these weapons of mass seduction fell into the wrong hands. But amid these speculations, there wasn't much in the way of hard evidence that the defendants had shared confidential information with anyone outside the company; the defense contended that, amid the staff cuts and other turmoil, the handling of such material at the Post was so casual that you could hardly classify the material as "trade secrets." Both Wicoff and Brennan had signed confidentiality letters, but none of the three had signed non-compete agreements.
Even what was perhaps the most brazen evidence of misappropriation was less damning than it appeared to be. Adtaxi's mission statement, a key component of a $120,000 "rebranding effort" by DFM, showed up on a prototype of Digible's website. But the defense contended that the statement was mistakenly put up by a web technician as a "placeholder" and taken down within 48 hours.
In an e-mail exchange with Westword, Wicoff expressed his disappointment in Bronfin's ruling: "Being enjoined from competing with the Post while not having signed a non-compete is frustrating. However, we are still very confident headed into trial. I believe the limited amount of time we had to prepare for the preliminary injunction hearing was our biggest hurdle, which clearly won't be the case at trial."
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Wicoff notes that other former employees of the paper have gone on to form their own companies or join competitors, even when they had signed confidentiality agreements. "With those former employees, the Post engaged in some saber-rattling, but none were actually sued," he writes. In court, Michael "Mac" Tully, the paper's CEO, drily observed that none of the others had "stolen" so many internal documents.
Whether the pre-emptive strike on its former execs is warranted or not, the Post faces an undeniable challenge in trying to report on the internal squabble with anything approaching evenhandedness. Wicoff says that the paper put up its first report of the lawsuit before he was even served with the complaint; he first learned about it when a Post reporter contacted him for comment while he was on an airplane. The story remained on the paper's home page throughout the day. "They went on to push it on Facebook and even tagged me, ensuring my personal network would see the story," he says. "Later the tag was removed."
He may have jumped ship himself, but Wicoff claims to still care about the welfare of his former colleagues: "Notwithstanding all of these cuts, the Post still has some remarkable talent left in both the newsroom and the ad department. I still hope that some day all their efforts and sacrifices will be greeted with a different outcome."