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Pioneer Press alleges corporate espionage by former publisher




Pioneer Press alleges corporate espionage by former publisher
Pioneer Press alleges corporate espionage by former publisher



http://news.postbulletin.com/newsmanager/templates/localnews_story.asp?a=290750 

By Joshua Freed
Associated Press 
4/15/2007

MINNEAPOLIS -- His password was "Mocha." But other data on Par Ridder's 
laptop computer would have been even tastier to his new bosses.

Last month, Ridder left the publisher's job at the St. Paul Pioneer 
Press -- the newspaper his great-grandfather bought in 1927 -- to become 
publisher of the Star Tribune in Minneapolis. The defection to the 
larger, more stable rival across the Mississippi River was a shock, 
given their intense competition for readers and advertisers.

Now the Pioneer Press claims in a lawsuit that Ridder handed over 
spreadsheet after spreadsheet of sensitive data to the Star Tribune -- 
budgets, monthly profits, employee wage data, and perhaps most 
important, how much advertisers were paying. It claims that Ridder stole 
a file folder with his own non-compete agreement and that of other 
Pioneer Press executives, and the Star Tribune failed to return copies 
of the data he took.

The advertiser information alone would allow the Star Tribune to launch 
"an extraordinarily damaging" pricing campaign aimed at stealing 
advertisers, the lawsuit said.

When Ridder announced his resignation, Dean Singleton -- chief executive 
of MediaNews Group Inc., which runs the Pioneer Press -- said he wasn't 
worried about trade secrets. Singleton felt much differently last week.

"I didn't know at that time the magnitude of the heist," Singleton said 
Friday. "I thought at the time that Par would make a gracious exit, and 
would be honorable, and I didn't know he had stolen everything we had."

The lawsuit filed in state court names Ridder, the Star Tribune, its 
parent company and two other executives Ridder recruited from the 
Pioneer Press and alleges fraud by Ridder and violation of state trade 
secret laws. Besides unspecified compensation, it seeks to have Ridder 
removed as publisher of the Star Tribune for a year because of a 
non-compete agreement.

The Star Tribune issued a statement by Chairman Chris Harte saying: 
"There are facts in dispute relative to the recent move of Par Ridder 
from the St. Paul Pioneer Press to the Star Tribune. We will address 
these matters point by point in our legal response to the complaint and 
look forward to a full resolution."

Ridder issued a statement saying he was "absolutely confident we will 
prevail."

Ridder's job change came at a tumultuous time for the Twin Cities 
dailies.

At the Pioneer Press, Ridder had presided over months of uncertainty, 
layoffs and buyouts as the Knight Ridder newspaper company was broken 
up, eventually bringing the paper under MediaNews control. Meanwhile, 
the Star Tribune had been sold by McClatchy Co. in December to a 
surprise buyer: Avista Capital Partners, a privately held investment 
firm.

On Friday, March 2, Ridder told Singleton he was leaving to become 
publisher of the Star Tribune. The lawsuit claims Ridder promised not to 
recruit Pioneer Press executives or use company data.

>From that point on, Ridder did exactly that, the lawsuit alleges.

On the following Monday, the same day Ridder was introducing himself to 
Star Tribune workers, the Pioneer Press dispatched a staffer to pick up 
Ridder's old laptop. When he arrived in Ridder's office, he found a Star 
Tribune worker copying items from the computer and was asked to wait in 
the lobby for nearly an hour before the computer was handed over, the 
lawsuit said.

The Pioneer Press said an examination of Ridder's laptop showed that 
almost all of the data had been copied to an external storage device 
that day. According to the lawsuit, the laptop exam also showed:

--Ridder began drafting a speech to his new employer Sept. 19, months 
before he actually left. The draft was encrypted and given the password 
"Mocha," according to the lawsuit. In the months following, Ridder 
continued to play a major part in forming the Pioneer Press's 
competitive strategy.

--On March 7, his third day in his new job, Ridder e-mailed Pioneer 
Press documents to Star Tribune executives, including one e-mail with 16 
spreadsheets that included "detailed information on almost all the key 
segments of Pioneer Press' customer lists and advertising base," 
according to the lawsuit. The data would allow the Star Tribune to 
figure out the price the Pioneer Press is charging thousands of 
advertisers, most of whom have negotiated secret custom rates, the 
lawsuit said.

--The same day, Ridder e-mailed detailed circulation information and 
budgets to the Star Tribune's chief financial officer. One minute later, 
Ridder e-mailed the CFO another batch of data, including monthly 
operating profits dating to 1998.

--In the weeks after Ridder left, his laptop ended up in the hands of 
Kevin Desmond, then the Pioneer Press' vice president of operations, who 
was in charge of the company's computers. The lawsuit claims Ridder 
asked Desmond to delete personal information from the computer, and then 
he began recruiting him. Desmond interviewed with Ridder and joined the 
Star Tribune on March 30 as senior vice president of operations.

Singleton, who is vice chairman of The Associated Press and is expected 
to become chairman of the news cooperative in May, said the Star Tribune 
disclosed the contents of Ridder's March e-mails during settlement talks 
between the two sides. He said those talks broke down Thursday morning, 
and the lawsuit was filed later that day.

Corporate espionage is nothing new, and there are lots of gray areas. 
Copying data wholesale from laptops isn't one of them, said Dennis 
Farley, president of The Intelligence Group, which investigates 
corporate computer-related espionage.

"It's a big no-no," he said.

"We see these types of cases all the time," he said. "For somebody to be 
that brazen and to leave with his whole laptop, and a competitor to feel 
that it's within the bounds of fair play to acquire all that information 
about their competitor really surprises me."

Such cases can catch the attention of criminal prosecutors. Earlier this 
year, a former secretary at The Coca-Cola Co. was convicted of 
conspiracy after federal prosecutors said she stole confidential 
documents and samples of products that hadn't been launched and gave 
them to two men as part of a scheme to sell the items to PepsiCo Inc. 
for at least $1.5 million.

Copyright 2007 Post-Bulletin Company, LLC All Rights Reserved


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