Does a scribble on a napkin have legal consequences? Yes, according to a jury in Anchorage, Alaska, which has ordered former Alaska Dispatch News owner Alice Rogoff to pay the founder of website Alaska Dispatch $852,752.45 for his now-shuttered site because of a promise she wrote on a napkin during negotiations.

It should be the plot of a Hollywood screwball comedy. Tony Hopfinger created a news website named Alaska Dispatch back in 2008. At the time, it was operated by three journalists (including Hopfinger and his now ex-wife) out of the couple's spare bedroom. But the site soon came to the attention of Alice Rogoff, then wife of the billionaire Carlyle Group co-founder David Rubenstein, and a wealthy woman in her own right. Rogoff had fallen in love with Alaska over several visits and wound up relocating to the state, which may tell you something about the condition of her marriage to Washington D.C. bigwig Rubenstein. ("It's complicated," was all she would say about it to the journalists she worked with.)

Rogoff thought Alaska Dispatch would be the perfect challenger to the dominant Anchorage Daily News, so she bought a 90 percent interest in the Alaska Dispatch and began pouring money into both editorial and sales. Staff swelled to 30 employees, and traffic began growing as well, eventually reaching readership about a third the size of the Anchorage Daily News. But the Daily News belonged to newspaper conglomerate The McClatchy Company. It was the company's only Alaska paper and its profit margins were shrinking, so the debt-ridden McClatchy was eager to sell. Rogoff wanted to buy and expand her empire.

Rogoff bought the Anchorage Daily News for $34 million, of which she borrowed about $13 million from a local bank. Having bagged the state's biggest newspaper, she decided to shut down Alaska Dispatch and merge the two into a new entity named Alaska Dispatch News, with Hopfinger taking on a leadership role. 

But Hopfinger wanted to be paid for the website he'd spent years building and that was now to be shut down. The two agreed to a payment of $1 million, to be paid over 10 years, plus $300,000 in stock. The only snag was that Rogoff said she could not officially enter into any financial obligations without the bank's approval before the purchase of the Anchorage Daily News closed. Hopfinger was a bit mistrustful--correctly so, it turns out--so he wanted a contract signed before the closing. Sitting in her law firm's conference room, the two of them hashed it out and Rogoff offered a very unofficial solution: She grabbed a napkin and wrote "I agree to pay Tony $100K at end of each calendar year (beginning '14) for 10 years." 

The napkin doesn't identify "Tony" by last name, but both parties agree that it signaled a commitment from Rogoff to pay Hopfinger $100,000 a year for 10 years, and she did indeed make the first payment in January 2015. But then Hopfinger's wife got a university teaching job in Chicago, and the couple moved there. Rogoff wanted him to return to Alaska--when he wouldn't she refused to pay him any more. In her mind, she told the court, the $100,000 a year was intended as an incentive to keep Hopfinger at the Alaska Dispatch News for 10 years. Therefore, once he moved away, he forfeited the rest of his money.

Hopfinger insisted that the payment was for his website, not his continued employment. In fact, he also signed a more traditional employment contract that lasted five years and included incentives, but made no mention of a yearly $100,000 payment. So he sued Rogoff for the additional $900,000.

What is promissory estoppel?

The jury found, perhaps not surprisingly, that the scribble on the napkin did not qualify as a bona fide contract. For one thing, it contains no "consideration"--that is, Rogoff didn't specify what the $100,000 a year was payment for. But jury members were also briefed on promissory estoppel, which Investopedia defines as "the legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment." Which sounds like exactly what happened here.

The jury awarded Hopfinger $852,752.45, which an accountant working for him had calculated as the immediate value of $900,000 paid over nine years. He was also awarded legal fees. The jury could have awarded punitive damages, but chose not to. 

It may not matter that much. In the meantime, Rogoff and Rubenstein divorced. Despite Hopfinger's reported suggestions that she cut costs and staff at the Alaska Dispatch News, Rogoff had chosen to go big instead, doubling down on investments in the paper and burning through lots of cash. In the summer of 2017, the Alaska Dispatch News filed for bankruptcy, by which time, Rogoff is thought to have lost an estimated $30 million or so. The remnants of the newspaper were sold to the Binkley family of Fairbanks, which has been building its own newspaper empire. They went back to publishing the newspaper as the Anchorage Daily News.

So the state's biggest paper is back to its original name. Rogoff is out of the picture, although she left a bunch of unpaid debts behind, including rent for her media operations. In October, she agreed to settle those debts at about 50 cents on the dollar with $1.5 million of Rubenstein's money, which he has agreed to pay. That settlement halted a looming fraud investigation into Rogoff's "pre-bankcruptcy behavior."

Hopfinger, in Chicago, told the press that he felt vindicated by the jury's unanimous decision. Which is good because, given Rogoff's finances, he may or may not ever see any actual money. 

Meantime, Rogoff is off on her next Arctic adventure. During her time as an Alaska media mogul, she founded the Arctic Imperative Summit, drawing the interest and participation of international "circumpolar" leaders, including Iceland's president Olafur Ragnar Grimsson. These days, she's the publisher of something called Arctic Today, a website that describes itself as, "an independent news source in partnership with media organizations from around the circumpolar North." It publishes news from a handful of Arctic region publications based in Norway, Iceland, and Nunavet, the northernmost, largest, and newest of the Canadian territories. Alaska publications are conspicuously absent.

Published on: Nov 30, 2018
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