Part two of two
On one issue, the legally dueling former editor of the state’s largest news organization and its ex-owner are in total agreement:
In those halcyon days of early 2014 when Alaska Dispatch owner Alice Rogoff and editor Tony Hopfinger were giddy over her purchase of the Anchorage Daily News – the 49th state’s dominant newspaper and biggest source of online news – she promised him a cool $1 million.
The promise was immortalized on a cocktail napkin signed and dated by Rogoff on 4/18/14 that said simply this:
About eight months later, on Jan. 1, 2015, all parties are also in agreement that Rogoff made the first of those 10 promised payments.
Beyond that the stories diverge. Rogoff contends she wasn’t just buying Hopfinger’s interest in the company he and his then wife Amanda Coyne started and built into the enterprise to which The McClatchy Company was willing to sell the 49th state’s most storied news operation, a newspaper that claimed two Pulitzer prizes.
Instead, court filings and earlier court arguments could be read to indicate the soon-to-be 67-year-old Rogoff believed she was buying Hopfinger’s loyalty. His attorneys have a simpler, more straight-forward view.
The deal, they write in their briefs for the trial set for mid-month, “arose as part of Rogoff’s May 5, 2014 purchase of the Anchorage Daily News and her decisions to merge the operations of the (Alaska) Dispatch and Daily News, draining the Alaska Dispatch of its assets.”
The latter move was destined to leave Alaska Dispatch Publishing (ADP), the company that traces its roots back to the Hopfinger-Coyne dream, worth nothing. Hopfinger wanted payment for what he’d built before Rogoff sealed the deal with McClatchy. But Rogoff, who by all indications had stretched herself to the limit in order make a $34 million purchase, was balking.
It has since been revealed that Northrim Bank, which loaned her $13 million as part of the ADN deal, had her on a tight leash. She’d reportedly agreed with a bank demand that she not make any formal commitments to deals requiring payment of more than $50,000 per year without Northrim’s approval.
Enter the cocktail-napkin agreement.
Rogoff had been there before with Hopfinger and was somewhat proud of the frontier imagery of a deal sealed with a promise and a handshake. She bragged about it to Washington Post reporter Julia Duin in 2015 when Duin was profiling “this Washington insider and billionaire’s wife…in Alaska.”
By the last 2000s, Duin wrote, the then 50-something Rogoff – estranged from husband David Rubenstein (they’re now divorced) and transitioning to a new life in Alaska – ”had already tried to establish an Alaskan arts television network and was musing about starting a web site that would focus on underreported stories about the 49th state when she was introduced to the three journalists behind a year-old online news organization named the Alaska Dispatch.
“An hour of conversation over buffalo burgers, a handshake and an agreement inked on a napkin led to Rogoff’s purchase of 90 percent of the Dispatch in July 2009. ‘She gave us this amazing opportunity to open offices and hire … a team of people willing to take a risk,’ said Tony Hopfinger, who had been running the site out of a spare bedroom. Over the next five years, about 30 reporters and sales staff came onboard.”
More than a handshake
The ADN purchase was far more complicated than the Dispatch buy, and it had been months in the making. From late 2013 into the spring of 2014, Hopfinger, Rogoff and others associated with Rogoff’s business enterprises had been in negotiations with McClatchy to buy the Daily News.
By early 2014, the negotiations were known to so many on the Dispatch editorial staff that the failure of the Anchorage media to catch wind of the negotiations became something of a running joke as to the fading reporting capabilities in the 49th state.
It was hard for most of the Dispatch staff to avoid scratching their heads in disbelief when the ADN editorial staff expressed “shock” at an April 8 press release from the California-based owners of the newspaper announcing that McClatchy had “reached a definitive agreement to sell the Anchorage Daily News to Alaska Dispatch Publishing LLC for $34 million. The transaction is expected to close in the second quarter of 2014.
Hopfinger knew before that deal was cut that the business he and Coyne started in their kitchen in a home in an old Anchorage neighborhood was destined to die. By then, he, Rogoff and others had also talked many times about how to handle the after-sale logistics.
Hopfinger was not a naive and idealistic journalist wholly wrapped up in the idea he was doing good works for humankind. He was a businessman. He and Coyne started Alaska Dispatch as a for-profit business hoping to become the first in the country to make a news website work as something other than a struggling nonprofit.
For him, the decision on what to do with the Dispatch after the purchase of the Daily News was simple. The latter owned the more recognizable online brand in the form of ADN.com, and thus this was a no-brainer.
The Alaska Dispatch would be rolled into ADN.com, and the name of the newspaper – the lesser of the company’s products going forward in Hopfinger’s view – would be changed to the Alaska Dispatch News to mimic the ADN acronym in use as the website address.
But with his dream of a successful, standalone, for-profit newsite dying and the years of effort spent building the Dispatch into an entity that challenged the ADN enough to encourage a McClatchy sale, Hopfinger wanted compensation from his old friend Rogoff, a largely silent partner in the Dispatch years who was making clear her plans to play a dominant role in the new, higher-profile business.
Hopfinger was a little uncomfortable with the latter, and more than a little uncomfortable with some of the people Rogoff had suggested she might bring in as new partners to help firm up the ADN’s finances. He envisioned possible disagreements over the direction of the newspaper’s reporting and wanted an exit strategy.
Against this backdrop, a deal was cut. Rogoff would buy out Hopfinger’s shares in the company to compensate him for his past efforts and contract with him to run the new combined organization. But there was the problem with the restrictions Northrim had placed on the huge personal loan to Rogoff.
Rogoff had promised to buy Hopfinger out. But after five years of working closely with Rogoff, Hopfinger knew she was a woman of good intentions who couldn’t, unfortunately, be always counted on to keep a promise.
Thus, he wanted more than her word she’d pay him for his interest in Dispatch and was pressuring her for some sort of written commitment.
Given the ADN had just sold for $34 million – an exorbitant price that led Hopfinger and others to advise Rogoff against closing the deal – a market value had been established that should have made his 5 percent worth $1.7 million.
But he agreed to settle for less. The $1 million would equate to a 5 percent share in a company valued at $20 million, which was probably still more than the Daily News was worth at the time but a more realistic figure.
The Boston Globe – a newspaper with eight times as many paid subscribers as the Daily News – had sold only a year earlier for $70 million. Based on the per-subscriber price paid in that case, the ADN would have been worth only $9 million to $10 million – less than a third of what McClatchy convinced Rogoff to pay even if one ignored the reality that newspapers were devaluing by the minute in the wake of the internet attack on the news.
Rogoff would later display some buyer’s remorse at her purchase of the ADN, telling one former Daily News executive “you sold me a dead baby” and eventually suing McClatchy. In a lawsuit filed two years after the purchase, she claimed McClatchy took advantage of her.
In that 2016 filing, she asked for more than $780,000 in compensation for what she alleged were underhanded dealings during the sale. The suit was later quietly dropped. The terms of a settlement, if any, were never revealed. The Dispatch News’ bankruptcy filings a year later did not show any large infusion of cash from McClatchy.
By the time Rogoff took the business into bankruptcy, Hopfinger had moved to Chicago where his new wife took a job. But he remained engaged in a long-distance, legal battle with Rogoff and her gang of attorneys trying to collect the money she’d promised.
Her attorneys tried to get his case tossed out of court by arguing that the napkin wasn’t a valid contract. Superior Court Judge Andrew Guidi disagreed.
At a March 2014 meeting with Rogoff while negotiations with McClatchy were underway, Guidi wrote in a 21-page opinion on a Rogoff motion to dismiss the lawsuit, Hopfinger made an offer to sell his shares of Alaska Dispatch Publishing (ADP) “for $1.3 million to be paid over five years. According to Hopfinger, Rogoff immediately made an oral counter-offer of $1 million plus stock options, which he accepted. He then pressed Rogoff over the next several weeks to memorialize their agreement in writing.”
On April 18, there was another meeting between Hopfinger and Rogoff which, the judge wrote, “culminated in Rogoff writing on a paper napkin, in the presence of her lawyer and Hopfinger, that she would pay Hopfinger $100,000 per year for ten years at the end of each calendar year, starting in 2014.”
Negotiations would continue from then “until November,” the judge continued, “when Rogoff emailed Hopfinger, stating that the Northrim loan no longer barred the agreement. As a result, the parties planned a face-to-face meeting on November 30 to finalize the deal, but Rogoff failed to attend the meeting.”
A few days later, Rogoff and Hopfinger had a parking lot conversation which resulted, in her view, in his quitting his job as vice-president of the Dispatch News or, in Hopfinger’s view, his getting fired.
Whatever happened, the confrontation later became part of a new Rogoff argument for refusing to pay Hopfinger. Part of the deal for the $1 million, she argued, was that he’d stay in Anchorage for a decade to help her make the Alaska Dispatch News a success.
Guidi has since dismissed that argument in total, ruling that given there has been no evidence presented to document Rogoff’s “claimed subjective intent when contracting with Tony Hopfinger, any testimony about her subjective intentions during contract formation is irrelevant and inadmissible at trial.”
Trial briefs filed by Rogoff’s attorney indicate she now appears ready to argue that any contractual agreement she made with Hopfinger is invalid because “there was never adequate contract information,” and because of “a mistake of fact….The mistake of fact consists of Hopfinger’s mistaken belief that he was selling 10 percent of ADP when in reality he only owned a 5 percent membership interest.”
There is, however, no mention of what or how much he is selling in the only signed agreement between Hopfinger and Rogoff – the napkin. A 10 percent interest appears to have been a subject in discussions between Hopfinger and Anchorage attorney Bill Bittner, Rogoff’s longtime right-hand man in Alaskan.
Bittner’s work is also referenced in the pretrial filings by Hopfinger’s lawyers.
“…Rogoff has tested various theories of defense over the course of the litigation ranging from the standard ‘insufficient meeting of the minds’ defense to more novel theories,” wrote attorney Jeffrey Robinson. “For instance, she has tried to argue unsuccessfully that: she subjectively believed the payment was intended to be a form of ‘incentive compensation;’ that enforcement is barred by the statute of frauds, and that her attorney Bill Bittner was negotiating as ‘rogue agent’ without her consent. In light of the court’s rulings on these various theories,…Hopfinger cannot say with certainty which defense or affirmative defense Rogoff will argue to the jury.”
Robinson’s brief also lays out the pertinent questions a jury is likely to be asked to decide:
- Does the napkin constitute a binding contract?
- If not, is it a promissory agreement?
- Was Hopfinger terminated without cause and due a severance settlement (an issue separate from napkin)?
- And did Rogoff violate her fiduciary duties to fully inform Hopfinger, the minority shareholder in Alaska Dispatch, of her plans to wholly drain the company’s assets?
Hopfinger, the lawyer adds, saved copies of the emails he sent to Rogoff and Bittner’s law firm stating his understanding of the “buyout,” a belief never challenged by Rogoff or her lawyers.
There is also said to be a paper trail between Hopfinger and Bittner in which Bittner, on Rogoff’s behalf, “unambiguously referred to a buyout.”
“Rogoff and her lawyers,” Robinson adds, “must have understood the required payments to be a debt obligation rather than a gift payment or performance compensation – neither of which run afoul of a (bank) restriction on debt – in order to justify their consistent contention that loan refinancing was delaying” the completion of a formal contract.
Rogoff’s attorney, in his pretrial brief, appears most concerned about problems with his client’s image and her continuing desire to protect the details of her separation and eventual divorce from Rubenstein.
“Rogoff has been the topic of numerous news reports and blogs,” wrote David Gross. “She may also be known for her political connections to the governor and even to former President Barack Obama.”
Rogoff is concerned, he said, that jurors might have “pre-conceived opinions” because of these connectoins.
As to the marital settlement agreement (MSA) with Rubenstein, he said, there is a confidentiality agreement that prohibits Rogoff from “revealing the terms.” He also makes the first public admission that the MSA provided her “an income stream in different amounts at different times.”
Friends of Rogoff have said the payments from Rubenstein jumped up significantly shortly before her purchase of the Daily News, which is part of what sparked her decision to buy. Over the next three years, she claimed in Federal Bankruptcy Court to have lost $25 million propping up the newspaper.
Some Rogoff associates have said the bankruptcy stemmed from her final realization that she was sinking more money into the failing news business then Rubenstein was sending her.
Gross says that if the provisions of the MSA become pertinent to the case at trial Rogoff wants the judge to review the MSA privately and, if he decides there are issues the jury needs to hear, “Rogoff would request the courtroom be cleared during those portions of her testimony dealing with the MSA.”
Gross also wants to remove the issue of Rogoff’s performance as the defacto manager of the Dispatch News from Hopfinger’s attempt to pierce the “corporate veil” of her many limited liability corporations. Hopfinger agues the “Rogoff entities,” as a bankruptcy trustee called her many businesses, are merely fronts for what might be called Rogoff Inc.
Hopfinger wants to rip down the veil and hold Rogoff personally liable for any severance pay a jury might decide he is due.
“…Evidence related to what Rogoff did in relation to the newspaper should have no relevance,” in deciding that issue, Gross wrote. “The newspaper is a completely separate entity from ADP and is nothing similar to the ADP.”
Except maybe that both were in the business of producing news, and now they are in the business of making news.