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N’Touch in court over stolen contacts

by Ethan Jacobs

Bay Windows

Sunday February 10, 2008

The battle between In Newsweekly and its former associate publisher, Bill Berggren, moved into the courtroom Feb. 5, as In Newsweekly's parent company, HX in Boston, filed a lawsuit against Berggren, alleging that he stole In Newsweekly's advertiser database and used it for his own benefit. The suit also alleges that Berggren solicited advertising for his new publication, N'Touch New England, while still employed by In Newsweekly and that he lured away In Newsweekly's ad sales department to work for him.

Berggren was fired last month after HX in Boston CEO Matthew Bank learned that he planned to start his own gay magazine. Berggren took his database of advertising contacts with him, prompting Bank to threaten legal action (see "Former In Newsweekly staffer launches new mag," Jan. 29, 2008). Bank made good on his promise, filing suit against Berggren and two former In Newsweekly advertising account executives, Matthew White and Beau de Mello, who left to join Berggren at N'Touch and also allegedly took their contact databases.

Judge Stephen Neel heard arguments from both sides at the Suffolk County Courthouse and ordered Berggren to return all written and electronic files and documents that he took with him when he left In Newsweekly within 48 hours. The order also mandated that Berggren return all copies he made of those documents and files. Neither White, de Mello, nor their attorneys appeared in court for the hearing, but Neel's order also required White and de Mello to return to In Newsweekly any information they took with them when they left.

The judge has yet to rule on In Newsweekly's request for a preliminary injunction against Berggren, White and de Mello to prevent them from contacting or making contracts with any of the advertising clients in the files they took with them. Jeffrey Pyle, the attorney representing the paper and HX in Boston, argued that allowing Berggren and his associates to use information from In Newsweekly's advertising database would give them an unfair advantage in the marketplace. He told the judge that the information taken by Berggren and his associates included the list of all of the paper's advertisers, the names, direct dial phone numbers and e-mail addresses for many of the paper's contacts at those advertisers, notes on customers' advertising needs and the rates they have paid for ads, and information about prospective advertising clients. He said at least two contracted-for advertisements have not run in the paper since Berggren's termination because Berggren took information about those ads with him.

"That information is essential, valuable, proprietary information [of In Newsweekly]," said Pyle.

He said Berggren's efforts have hurt the paper's ad sales. The first two issues In Newsweekly released last month, Pyle said, were the smallest the paper has produced since 1991. The complaint claims that, "HX has been injured, irreparably and otherwise, and is threatened with additional and ongoing injuries as a result of defendants' misappropriation."

Pyle also alleged that Berggren tried to sell ads for his new publication while still working at In Newsweekly. Bay Windows has previously reported on e-mails showing that Berggren had discussed N'Touch with advertisers while still at In Newsweekly, but those e-mails gave no indication that Berggren sold ads to those customers. Pyle said Berggren broke the law by soliciting the paper's customers to advertise in his new magazine.

"The case law is very clear that an employee is not allowed to solicit customers away from their employer," said Pyle.

According to the complaint Bank terminated Berggren on Jan. 2 after learning of e-mails Berggren had sent to In Newsweekly advertisers promoting his new magazine. It states that when Berggren was fired he refused to turn over the paper's advertising records.

"Bank asked Berggren to make sure all of In Newsweekly's advertising records were in the office and complete. Berggren responded that there were no records that belong to the newspaper, that in fact all the records that existed were the result of his work, and belonged to him. Shortly thereafter, Berggren walked out the door, stating that In Newsweekly would not be in business very much longer," read the complaint.

N'Touch is scheduled to debut later this month.

Mark McGrath, the attorney for Berggren, said his client was willing to return the copies of the advertising contact files, but he opposed the call for an injunction and argued that anyone going through an issue of In Newsweekly could create a similar contact list using publicly available information.

"I don't see anything here that is proprietary," said McGrath.

Pyle responded that the files contained more than just contact information for advertisers, and he said the information about In Newsweekly's future advertising prospects in particular would provide an unfair advantage to Berggren if he and his staff contacted those prospective clients to lure them to N'Touch.

McGrath said advertisers have been contacting Berggren directly to advertise in his new magazine, and he said those advertisers were unsatisfied with the direction of In Newsweekly. He said once Berggren turns over the files he took with him the two publications should compete without any further restrictions.

"He's willing to turn over anything and everything in his possession, and let's have at it," said McGrath.

Neel told the parties he would rule shortly on the motion for the preliminary injunction. Pyle declined to speculate on the likelihood that Neel would rule in his clients' favor, but McGrath said he expected the motion would be denied.

"I'm confident that the court will determine that this is not a matter of proprietary information or trade secrets," said McGrath.

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