The Lessons of Par Ridder

By: Anthony L. Barthel, Esq.

Par Ridder served as the publisher of the Pioneer Press in St. Paul from March 2004 until approximately April 2007. When beginning his employment with Pioneer Press, Ridder was not offered a non-compete agreement nor was required to sign one as a condition of employment. Approximately two weeks after the start of his employment at the Pioneer Press, Ridder was asked to sign a non-compete agreement. Considering his leadership position as the publisher, Ridder signed the agreement, which required him to refrain from competition with the Pioneer Press in the Twin Cities for a period of one year following his employment with the Pioneer Press. Subsequently, in April 2007, Par Ridder accepted a position as the publisher of the StarTribune in Minneapolis. Despite his non-compete agreement, Ridder believed that he had been verbally released from his duties to not compete with the Pioneer Press during conversations with management at the Pioneer Press.

In testimony, Ridder stated that after resignation from the Pioneer Press, he copied information from his Pioneer Press computer and placed it on a USB flash drive and thereafter placed the contents of the drive onto a StarTribune computer. Ridder testified that the contents placed on the StarTribune computer “would be everything he did on his computer from when he came to Pioneer Press in 2004.” Ridder also testified that he did not have approval from the Pioneer Press to take or copy any Pioneer Press files and bring them with to the StarTribune. Among the information copied and most highly coveted was a contract grid listing major advertisers of the Pioneer Press and specific custom advertising rates.

Upon learning of Ridder’s acceptance of his position with the StarTribune, the Pioneer Press commenced a lawsuit in the Second Judicial District, State of Minnesota, to enjoin Ridder’s employment with StarTribune and his use of Pioneer Press’ confidential information.

The Ruling:

After much legal maneuvering, the Court granted Pioneer Press’ motion for an injunction against Par Ridder. The injunction restrained Ridder from using or furnishing any information from the Pioneer Press to the StarTribune; Ridder was also further enjoined and restrained from one year from the date of the Order from “working for, being employed by, rendering services to, or having a substantial ownership interest in the StarTribune.”

To many, it was simply assumed that the Court recognized Ridder’s non-compete agreement with the Pioneer Press. However, the Court, in fact, did exactly the opposite. In its examination of Ridder’s non-compete agreement, the Court noted that Ridder had not been provided the non-compete agreement prior to his employment with the Pioneer Press and reiterated basic contract law principles that a contract must be supported by consideration. In Minnesota, if a covenant not to compete is signed as part of the initial employment agreement, the offer of employment is sufficient consideration to support a covenant of non-compete and no additional consideration is required. However, when a non-compete agreement is presented after the commencement of employment, the terms must be independently bargained for and an employee must receive “real advantages” in exchange for signing the agreement. The Court carefully looked at the facts of the case regarding the provision of the non-compete agreement to Ridder. The Court noted the timing and recognized that consideration other than the provision of employment or a “real advantage” would be required in order for the non-compete agreement to be valid against Ridder. The Court concluded that there was no evidence that Ridder “received or obtained payment, substantial economic and professional benefits, a promotion or advancement, greater responsibility, additional training, or job security in exchange for signing his non-compete agreement.”

Why then did the Court enjoin Ridder from competing against the business of the Pioneer Press for a period of one year as would have been required under a valid non-compete agreement? Despite the invalidity of the non-compete agreement, the Court recognized the basic duties of loyalty and a common law duty of confidentiality of employees to employers. The Court noted the “cavalier attitude towards this use and disclosure of confidential Pioneer Press information” on the part of Ridder and the Court further reasoned that Ridder was likely to misappropriate or use this confidential information to the benefit of the StarTribune if he continued working at the StarTribune. Although Ridder’s non-compete, if it were valid, would have expired in April 2008, the Court ordered Ridder to refrain from working for the StarTribune until September 18, 2008, one year from the date of the Court’s order, in order to protect to the Pioneer Press and its confidential information.

Lessons from Star Tribune and Ridder

Misappropriation of confidential information is expensive

The Court awarded the Pioneer Press its attorneys’ fees and costs and disbursements from the StarTribune. Attorneys’ fees for the Pioneer Press through the date of the Courts order date was in excess of $5,000,000.00.

Even if you are not ordered to pay attorneys’ fees and other damages, misappropriating confidential information is often not worth the effort.

The Court also ordered that all information hard drives, servers, or anything associated with the confidential information taken by Ridder be extricated from the StarTribune and returned to the Pioneer Press - an expensive, time consuming and embarrassing proposition.

Simply because a pre-existing non-compete agreement is not enforceable does not mean other safeguards should be disregarded when hiring competitors’ employees.

The StarTribune failed to provide any quality control on the information brought in by Ridder. Even though it may be the policy of the StarTribune not to accept such confidential information, given the high-profile hire by the StarTribune, it should have created more quality controls to avoid the download and use of the confidential information belonging to Pioneer Press.

Prior to the hire of a high profile employee, work out the details in private.

Much of the damage caused to the StarTribune was in the public eye. While the award of attorneys’ fees is not miniscule, the goodwill lost by the StarTribune in this hire is substantially more. The StarTribune would have been well advised to discuss the proposed hire with the Pioneer Press and limit the duties, obligations and use of information by Ridder upon his employment with the StarTribune.

Lessons from Pioneer Press:

Institute a procedure for the execution and review of employment and non-competition agreements.

Given the high profile hiring of Par Ridder as the publisher of the Pioneer Press in 2004, the Pioneer Press would have been well advised to closely adhere to the rigors of Minnesota law regarding non-competition agreements. For a period of three years, the Pioneer Press could have addressed this through contract reviews of its key employees and staff. While the review may have happened, it is apparent that action was never taken. Possession of an enforceable non-compete agreement could have prevented Ridder from accepting a position with the StarTribune and from sharing Pioneer