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The devil’s details

HB4116

Former ADN editor Tony Hopfinger studying one of the many documents that have become the heart of his $1 million lawsuit against Alice Rogoff, the publisher who bankrupted the company/Craig Medred photo

 

In an Anchorage court room on Tuesday, the counsel for failed Alaska newspaper publisher Alice Rogoff put on a masterful display of lawyering wrapped in a demonstration of why so many Americans hate attorneys.

Step by step, David Gross walked former Alaska Dispatch News executive editor and president Tony Hopfinger through the minutiae of things he shouldn’t have done after Rogoff signed and dated a napkin promising $100,000 per year for 10 years for Hopfinger’s minority interest in Alaska Dispatch Publishing:

  • He shouldn’t have allowed Rogoff to purchase the Anchorage Daily News/ADN.com for $34 million before paying him off.
  • He shouldn’t have signed papers indicating Rogoff wouldn’t be held liable for any actions of the Alaska Dispatch News, the company created to run the newly merged  Dispatch News and the ADN.
  • He shouldn’t have later offered to give up $300,000 in stock options in an effort to get Rogoff to formalize the napkin-agreement with a lawyer-endorsed, formal, legal document.
  • He shouldn’t have compromised and offered to take 3 percent interest instead of 4 percent interest on an any unpaid funds Rogoff owed him.
  • And he shouldn’t have filed a severance claim for $95,000 with the U.S. Bankruptcy Court after Rogoff destroyed the Dispatch News.

“This is wrong,” Gross said of the latter filing.

“I was unaware of it,” Hopfinger answered. “It is wrong.”

Hopfinger said he planned to correct it. He and his attorneys had mistakenly filed for the six months left on his original $190,000-per-year contract at the Dispatch News and overlooked that he gave up $35,000 in salary to boost the pay of managing editor David Hulen to $135,000 per year.

The filing should have been for half of his then salary of $155,000, Hopfinger said.

As to the rest, Hopfinger could only answer that “I’m not a lawyer,” and “we were not negotiating the material terms of the deal.”

Gross argued the details of the deal are important. He did a good job of making the case the $1 million napkin agreement wasn’t a legitimate contract because it appeared Hopfinger and Rogoff – a one-time Washington, D.C. socialite and ex-wife of billionaire financier David Rubenstein – were still discussing some of the terms long after it was signed and dated.

How this legal maneuvering in the style of President Bill Clinton’s parsing of the word “is” will play with an Alaska jury of nine men and five women only time will tell. The case could, however, be coming to down a simple question:

What is more important? A millionaire publisher’s word, or full and complete paperwork with all “i”s dotted and all “t”s crossed?

Don’t sign anything

Hopfinger and Rogoff clearly have different views on paperwork. He regularly did business with Rogoff and her small army of lawyers at Birch, Horton, Bittner & Cherot via email. The email left a good paper trail.

It points to Rogoff attorneys clearly discussing a buyout with Hopfinger. But Rogoff herself claims not to have seen the only email addressed to her that specifically spelled out the details of negotiations on going with Hopfinger as he and Rogoff worked to complete a deal with The McClatchy Company to buy the Daily News.

That email discusses a buyout of Hopfinger’s remaining interest in the Alaska Dispatch, an online news company he started; an employment contract to put Hopfinger to work merging the Dispatch and the Daily News into the Alaska Dispatch News/ADN.com; and a possible Hopfinger involvement in ownership of the new company. 

Emails submitted as evidence in the case show Hopfinger regularly dealing with Birch, Horton lawyers representing both Rogoff personally and her various companies – Alaska Dispatch Publishing, the Alaska Dispatch News, The Moon and the Stars and more.

Rogoff is copied in on a lot of emails, but doesn’t appear to respond to many.

“I didn’t do business in writing,” she said on the stand Monday. She also testified she didn’t always pay attention to the nitty-gritty details of complicated business transactions.

Hopfinger testified he and Rogoff talked about issues regularly, however, and she knew well what was going on with his buyout. She has confessed that she did have an extremely close professional relationship with Hopfinger, who helped guide her and her companies to temporary journalistic success.

But when Hopfinger said he wanted to rearrange their relationship after the purchase of the Daily News, she claimed she ignored many of the details.

“In my mind,” she said, “it was all about money. It didn’t matter if the money was yellow or orange.”

In her mind – or “in my mind,” as she put it over and over and over across several days of testimony – the $1 million was part of a big bonus to Hopfinger as compensation for past work and as an incentive to stay in Alaska.

“It was not in my mind for his shares (of ADP),” she said. “It was for what he built.”

“He thought it was for his shares in ADP,” she said. “I thought it was for the value he built.”

“I admit to being somewhat confused,” she said, and then later added, “I don’t think I had to say it (the deal). I thought it was clear.”

Why wasn’t the agreement formally spelled out?

“My personality type is that I don’t confront people,” Rogoff said.

Her testimony went on like this for days. She was clear, “in my mind,” about what the deal was and it wasn’t the deal Hopfinger thought. But then she wasn’t clear.

He was selling “the value he built,” but he wasn’t selling the company he built.

At least the issue of why she stopped paying Hopfinger sounded simpler. He abandoned her. Rogoff testified the man she had identified as her professional “life partner” left Alaska.

As a result, the $100,000 per year payments stopped $900,000 short of the promised $1 million.

Some members of the jury sometimes looked a little bewildered.

Divorce or business deal?

“Just to be clear,” Hopfinger testified on the stand Tuesday, he never heard even a hint of a requirement he spend a decade in Alaska after signing the napkin agreement or when signing a later employment contract.

“It was a $1 million deal for whatever shares I had left in the company,” he said, and Rogoff knew it. Hopfinger admitted to finally losing his temper with her over the issue.

It came after a meeting at the Alaska Railroad to scout a location for a new ADN printing plant in Dec. 2015. Rogoff was, at the time, upset at executives at GCI, Inc. – the Anchorage telecom and cable company to which she’d sold the old headquarters of the Daily News to cover about $15 million of the $34 million purchase price of the ADN.

The ADN printing press remained in the building. GCI gave Rogoff a good deal for a year on the rent to keep the presses temporarily in its building, but the lease contained an escalator clause to encourage Rogoff to make arrangements to print the ADN elsewhere. Hopfinger testified his recollection was that the rent was going up by $60,000 a month, and Rogoff was not happy.

She thought she was being bullied by GCI, Hopfinger said. He had some sympathy for the company and brought up his own difficulties collecting from Rogoff. From there, things went from bad to worse, both Rogoff and Hopfinger agree.

“I said, ‘F— it,” Hopfinger testified Tuesday.” I can always quit and let a judge decide it.”

He admitted to being upset. Rogoff, he said, had a 200-page agreement with GCI, “and she’s talking about not paying them.” He was left feeling his napkin-contract might not be as good a promise as he once thought.

Rogoff has claimed Hopfinger said the F-word and then quit.

Whatever the case, the record reflects he was back at the ADN the next day to meet with directors and go over the budget. He then returned to Chicago, where his wife was living, as earlier scheduled, he said; he was aware of Rogoff’s unhappiness, but thought they’d reconcile.

That didn’t happen.

In mid-January,  he said, he got a call from the ADN’s then-chief financial officer telling him, “hey, nice working with you.”

Long best-friends forever (BFF), Hopfinger and Rogoff were BFFs no more. Hopfinger said he never heard from Rogoff after his dismissal. They have avoided each other in court in Anchorage.

Hopfinger said he was “pretty demoralized” after the split from a company where he had once pulled 16 to 20 hour days. Eventually he sued.

“Why are you in this courtroom,” his lawyer asked.

“Because Alice didn’t pay me,” Hopfinger said. “This should never have had to happen this way.”

Two sides to every story

The jury got a bathroom break and returned to the Superior Court chambers to watch Gross begin firing questions at Hopfinger.

Gross quoted from news coverage of Hopfinger’s early years at Dispatch that reported the “most exciting moment of your career…a dream come true.”

“Yes,” Hopfinger said.

Lengthy questions that buttressed Rogoff’s case followed from Gross. Hopfinger answered most with a simple yes or no, but there were several terse exchanges.

Gross rattled off the Dispatch’s financial losses.

“I think she got to write off the losses” on her income tax, Hopfinger said.

“That’s not my question,” Gross shot back.

“You wanted to be paid six months for work you didn’t actually do,” Gross said.

“If that’s how you define severance (pay),” Hopfinger answered.

Gross lectured on the various ways businesses are valued. Hopfinger agreed with the valuation methods.

Gross detailed the financial losses at Dispatch. Hopfinger agreed the company lost money, but added that “a lot goes into a (internet) start up.”

Gross wanted to know why Hopfinger didn’t demand half of the $5,000 Rogoff paid Dispatch co-founder and Hopfinger’s wife for her Dispatch shares when the two divorced in 2012. Hopfinger said he didn’t think about it. Hopfinger and Coyne each held a 5 percent ownership in Alaska Dispatch after Rogoff bought 90 percent in 2009.

Rogoff said that “in her mind” it was a 10 marital share shared by the couple.

Gross asked why Hopfinger didn’t do anything to stop the Dispatch from losing $2.5 million from 2009 to 2012. What would Hopfinger and Coyne have done if Rogoff had stopped funding then, he wanted to know; how would Hopfinger and Coyne have paid back the $2.5 million so they could take over the company?

Hopfinger lawyer Jeffery Robinson objected to the request for speculation. Hopfinger volunteered some of the losses were “self-inflicted wounds.” Noting that revenues were increasing along with losses, Hopfinger said, there are a lot of ways to view the numbers.

The questioning went on in that way until Gross got to a July 8, 2014 email from Hopfinger to Jennifer Alexander, an attorney at Birch Horton, to which was attached a copy of an even earlier e-mail exchange between Hopfinger and Kathy Black, another Birch-Horton attorney. Black set out the specifics of the three-part legal discussion.

Gross made an attempt to suggest that Hopfinger had fabricated the Black email. Hopfinger admitted he couldn’t find the original. Gross quickly noted that Rogoff couldn’t find it either or Birch Horton.

Hopfinger barely got time to express his surprise at that before his lawyer objected and Superior Court Judge Andrew Guidi summoned the attorneys to the bench. A discussion followed. Gross at one point put his hand on the shoulder of Robinson.

When the lawyers left the bench, Guidi instructed the jury that the email was to be treated as “an authentic document,” and Gross dropped discussion of it. Much more back and forth followed.

Hopfinger said he told Rogoff not to buy the Daily News, but after she bought it he agreed to help her run it. He testified he thought Rogoff bought it in hopes of making money.  As ADN president, he admitted to signing a lot of documents related to the purchase.

Hopfinger also admitted to spending a lot of time in Chicago as his mother was dying from cancer. “I feel awful for you,” Gross claimed.

Gross wanted to know if Hopfinger had any emails complaining of the way Rogoff ran the company as its defacto business manager. Hopfinger said no. If she was so bad a manager, Gross wanted to know, why didn’t Hopfinger try to remove her for “reckless disregard” of corporate finances.

Hopfinger said he didn’t know that was an option.

Gross wanted to know why Hopfinger was still engaged with Bill Bittner, a Birch Horton principal and Rogoff’s good friend, in negotiating formal contract details on May 20, 2015 if he and Rogoff had supposedly agreed to terms more than a month earlier when the napkin was signed.

“It wasn’t my decision,” Hopfinger said, noting that Rogoff’s attorneys were trying to find a way around a Northrim Bank requirement Rogoff obtain bank approval for any commitments over $50,000. Northrim had loaned Rogoff $13 million to assist in the ADN purchase.

Gross seriously did not like the reference to his client and colleagues trying to end run a bank order.

“Move to strike,” he snapped.

Guidi refused the request and adjourned court for the day. It isn’t due to resume until Monday with Hopfinger again on the stand.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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5 replies »

  1. The napkin simply said Alice would pay Tony $100K/year for ten years. Her attorney was present. Nothing was stipulated regarding Tony doing anything to earn the money. The implication being that Alice was paying him for something he had already done or for something he had relinquished, i.e. his stock in the company. Based solely on Craig’s reporting and my belief the jurors will be sympathetic to Tony I’m confident Tony will prevail.

    Like

    • Juries are very difficult to predict. But Rogoff’s deep pockets and her husband’s generous settlement does make her a pretty good target. If it is a 12 person jury it will take 9 of 12 jurors to agree on a verdict. I would guess it will be all or nothing.

      Liked by 1 person

  2. It has always been said:
    “The Devil is in the Details”…
    When Alice said:
    “I didn’t do business in writing,”
    This reminds me of Rumsfeld and the whole “waterboarding” fiscal.
    I guess it was shown that he never offically “signed” off on these procedures although, it was proven:
    “Memos to and from Rumsfeld…will show that while the water boarding technique was on a list of requested aggressive tactics, Rumsfeld did not “approve” it, officials say.”
    I believe Tony will ultimately learn the hardest lesson in AK of all….
    That some figures are just “too big to fail” and that his personal relationship with A.R. clouded his business deal and allowed her to swallow the Internet start up with no leagal support on his side at that critical moment.

    Like

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