The soap opera that has been the legal battle between former Alaska Dispatch News editor Tony Hopfinger and Alice Rogoff, the ADN owner who bankrupted the business last year, put on its final show Wednesday before the case was turned over to a jury.
There were fireworks.
They began with David Gross, the attorney for Rogoff, ranting about “the rules of the road” in his closing argument.
Unless the rules of the road are followed, he told the jury repeatedly, the $1 million promise his client made to Hopfinger isn’t worth as much as the paper napkin on which she wrote it out before signing her name and noting the date in March 2014.
“If you don’t follow the rules of the road,” Gross said, “you don’t have a contract.”
The argument was more than a little odd after more than a week of testimony illustrating that Rogoff companies paid limited, if any, attention to rules, but that wasn’t the problem.
The problem in the eyes of Anchorage Superior Court Judge Andrew Guidi was that Gross appeared to be trying to mislead the jury.
With the jury out of the room, Guidi told Gross he’d overcooked the rules and “endangered a mistrial.”
Specifically, Guidi said, Gross claimed the rules were broken when “nothing was filed with the Division of Corporations” after ownership interests changed at Alaska Dispatch Publishing (ADP), one of Rogoff’s many limited liability companies (LLCs).
“That’s not the law,” Guidi said. “I don’t want the jury misled in that way.”
“It’s simply not the applicable law in this case,” the judge said.
Gross countered that the judge had OK’d broad arguments in pre-trail motions. Given that, the attorney protested, it’s an “argument I’m totally entitled to make.”
Guidi said he was starting to rethink his summary-judgment order giving Rogoff, the defendant in the case, wide latitude to argue alternate defenses to Hopfinger’s claim that he was owed an unpaid $900,000 in the $1 million deal.
“The tenor of the argument is that if it’s not in writing, you can forget it,” Guidi said. “If it was that simple, we would not be here.”
The question in Guidi’s mind then became how to fix what Gross had done. Some observers, a few lawyers among them in a gallery packed for final arguments, later wondered whether Gross was trying to cause a mistrial.
Rogoff, the ex-wife of billionaire business mogul David Rubenstein, has deep pockets, they noted. Hopfinger’s resources are limited. If Rogoff could drag the litigation out long enough, they said, she might be able to price Hopfinger out of the game.
Guidi’s solution was to write yet another instruction to the jury. Jurors ended up getting 47 total.
When the jury came back, Guidi told them they were to ignore any suggestion that a contract had to specifically follow all the “rules of the road” to be legal.
Hopfinger attorney Jeffery Robinson followed up with a final closing in which he said Gross’s treatise on the rules is “simply not the law.”
And contrary to what Gross said, Jefferson added, it doesn’t matter whether one party or the other got a bad deal.
“The law let’s the parties determine the adequacy of their exchanged promises,” he said.
Throughout the trial, Gross has made much of Rogoff agreeing to pay Hopfinger $1 million for his remaining five percent interest in Alaska Dispatch – a news website that never made money and in its final year lost $1.8 million.
Rogoff made the Hopfinger deal while negotiating with The McClatchy Company to buy the Anchorage Daily News for $34 million. Knowledgeable news industry authorities say the newspaper might have been worth a quarter to half of that.
She then said she lost $23 million on the investment over the course of less than three years.
“This is a sophisticated business person” with an MBA from Harvard, Gross said of Rogoff. “She’s not going to pay that much money.”
He was referring to the napkin stipulating $100,000 per year payments to Hopfinger over 10 years.
“It makes no sense,” Gross said.
Rogoff’s alternative argument that is supposed to make sense is that the payments weren’t a buy-out but an incentive for Hopfinger to stay in Alaska for a decade and help her with the Dispatch News, although at one point she also said that the money was compensation for the “value” of what Hopfinger built with Dispatch.
Robinson played that tape back for the jury in closing. The 67-year-old Rogoff and the 44-year-old Hopfinger once had a very close relationship.
Rogoff was clearly hurt about Hopfinger’s decision to move from Alaska to Chicago, where his mother was dying of cancer and his new wife found a good job as a college professor.
At one point, she broke into tears talking about the split. Had Hopfinger stayed in Alaska, Rogoff said from the witness stand, the newspaper would have avoided bankruptcy.
No evidence was supported to back that claim.
The newspaper was losing millions when Hopfinger left Anchorage, and Rogoff was ignoring his suggestions to cut spending to bring it in line with advertising revenues.
With Hopfinger gone, Rogoff went so far as to write a column claiming the continuing losses of millions of dollars per year were intentional as they had been at the Alaska Dispatch News. The newspaper, she wrote, was in “investment mode.”
The losses at the Dispatch had been intended to help build the website and put pressure on the California-based McClatchy to consider a sale of the Daily News. Decades earlier, McClatchy had used a similar strategy to oust The Anchorage Times as the state’s dominant news source.
Over several days on the stand, Rogoff herself identified Hopfinger as a good investment. Along with ex-wife Amanda Coyne, he helped grow the Alaska Dispatch from nothing into a respected news source that made McClatchy take notice and finally agree to sell Rogoff its 49th state news operation.
An earlier Rogoff approach to the company went nowhere.
Gross, however, painted this picture somewhat differently.
“It was not ADP that led to the purchase of the paper,” he said. “It was money.
“Let’s not kid ourselves,” he said, “that purchase happened because of money.”
Rogoff didn’t need Hopfinger’s cooperation for the purchase, Gross argued. All she had to do was stop funding ADP, and “that company would have gone under in a matter of days.”
Then, he said, she could have gone on to announce that “I’m going to go over and buy the newspaper on my own.”
Robinson pointed out Gross was contradicting the testimony of his own client, who said she needed Hopfinger to make the paper work. It was her claimed reason for the ten, $100,000 payments over 10 years instead of a lump sum $1 million purchase.
The staggered payments, she testified under oath, were intended to keep Hopfinger in Alaska but she never told anyone that until Hopfinger sued her for the $900,000 she had failed to pay.
Rogoff said the incentive plan existed “in my mind” as did many other things. “In my mind” was one of her favorite phrases while on the witness stand.
One of the jury instructions made it clear that what exists in anyone’s mind cannot be considered in a contract case. What exists in one parties mind is unknown to the other party until it is expressed. That makes it impossible to cut a deal because one party has no idea of what is being dealt.
“You can completely disregard it,” said Robinson, who questioned whether the idea ever existed until Hopfinger sued for the money Rogoff had agreed to pay.
“She invented after the fact” a loyalty pledge, the attorney said. This was not something new for Rogoff, though the issue did not come up at trial. She had earlier fired another Dispatch News employee for violating an “implied loyalty clause.”
That case was settled out of court and kept quiet. Hopfinger, according to sources in the Alaska legal community, tried to settle out of court with Rogoff shortly after filing his lawsuit, but mediation went nowhere.
During testimony early in the trial, Rogoff made it clear that she was angry at Hopfinger for deserting her in Alaska.
“Is that what this is all about?” Robinson asked.
Rogoff never answered.
The jury is now deliberating whether she should pay up for her breakup. Hopfinger has asked for a jury award of $853,000 to $986,000 for the unpaid payments. The numbers are based on some very complicated math on what the missed payments are worth in today’s dollars and what the future payments are worth.
But Rogoff could be hit with punitive damages if the jury decides she acted with “reckless indifference” in encouraging Hopfinger, a minority shareholder in ADP, to help her buy the Anchorage Daily News/ADN.com and drain ADP assets into a new company – the Alaska Dispatch News/ADN.com.
No evidence was presented at trial to indicate Rogoff offered even a hint of wanting 10-years, mandatory service in Alaska from Hopfinger in the lead up to the ADN purchase. Robinson argued that if Rogoff manipulated Hopfinger into the ADN deal with a phony claim to buy out his ADP shares, that could amount to reckless indifference.
All the evidence was that Hopfinger’s full-on cooperation in merging the Dispatch into the ADN and then serving as the president and executive editor of the new entity stemmed from Rogoff’s plan to buy out his interest in the company he and Coyne started.
Their relationship appears to have lasted until Hopfinger sold his Anchorage home, without telling Rogoff, and thus made it clear he was indeed leaving. Up until that point, she testified that in her mind she always hoped he’d be coming back.
Rogoff wouldn’t even look at Hopfinger during the trial, but old Rogoff friend and former ADN vice-president Margy Johnson, Alaska’s favorite mermaid promoter, showed up on Wednesday to buck up her old boss.
How can someone who went to an Ivy League Business School be so damned stupid?
Great coverage on this trial, Craig. Thank you.
AR will not have any money left, to do anything, except leave AK. On a sad note:
Print news is not sustainable anymore in Alaska. Truth note, “though those are the facts”, direct quote from Tobin of the VOT.
McClatchy Company received a nice payday from sale of ADN, though not currently fiscally solvent.
The print magazines are having subscription issues, also. Times they are changing.
The downward price of oil is good for lower 48 consumers, though bad news for AK government. See what our gov elect will do about that. What can he do?