Since its filing in October 2011, we have viewed the lawsuit against us by Block Communications Inc. (parent company of The Blade) as a bullying attempt to silence a competitor. But a recent ruling by Lucas County Judge Gary Cook has given the case implications that are potentially damaging to private businesses in Lucas County and Ohio.
The background for the suit is a separation agreement Toledo Free Press President and Publisher Tom Pounds allegedly signed when he left The Blade nearly 10 years ago, which reportedly provided that he would not disparage The Blade (I have never seen it).
The Blade claims that Pounds has used Toledo Free Press content directed by me to breach his agreement, using me as a proxy to accomplish the dirty deeds. According to the suit, I am an “instrument and agent” of Pounds and I am personally liable for mythical “damages” under the agreement Pounds allegedly signed, long before he met me or Toledo Free Press was founded.
As nonsensical as that attack on my First Amendment rights is, it has languished for two years through filings, hearings, depositions and the grindingly slow wheels of law in Lucas County.
My singular right to speak freely and criticize is a cornerstone of American freedom. As disgraceful as it is that a publication proclaiming itself to be one of America’s great newspapers would use the court system to try to muzzle a critic, The Blade is now on a quest that could have exponentially more far-reaching and dangerous consequences.
We believe that one of The Blade’s main goals in using the justice system to achieve what it failed to do in the marketplace is to discover the names of our private investors. We also believe The Blade’s owners view the men and women who helped launch Toledo Free Press as opponents at best and enemies at worst. The Blade has used its reporters to lacerate us and our business. We have seen nonprofits threatened for working with us. We have seen advertisers punished for doing business with us (and in many cases, we believe actionably rewarded for not doing business with us — those names will be made public soon). We have seen The Blade manipulate relationships with some Toledo institutions to pressure business leaders and elected officials. We have every reason to believe that if The Blade were to learn the names of our private investors, those men and women (and their businesses) would be potential targets for The Blade owners’ wrath.
The Blade claims it needs the investors’ names to query them about decade-old conversations with Pounds, but as far back as our first weeks in business in 2005, Blade reporters called us asking about the financial involvement of Tom Noe of “Coingate” infamy and specific elected officials. The Blade sought those names in correspondence sent to us well before its October 2011 suit was filed.
It is part of our legal agreements with investors that their names be held in confidence; that is common practice with LLCs.
This is not Soviet Russia; Americans have a right to invest private funds in private companies without fear of exposure to liabilities for which they are not at fault. The ability to protect one’s interests is a cornerstone of American investment and capitalism.
Toledo Free Press has refused to comply with The Blade’s fishing expedition demands that we supply them with a list of our investors.
Handing over the knife
But on Sept. 6, the judge ruled that Toledo Free Press must provide its investors’ names to The Blade, even though the judge indicated that there is no case law directly on point in Ohio that supports his decision. In addition, we were ordered to hand over business plans and financial documents that may contain investors’ names as well as other corporate secrets.
The judge would compel us to give The Blade a road map to our inner workings and an expedient way to crush our business. As the judge himself put it at a recent hearing, we are supposed to take a knife out of a drawer, clean it, hand it to The Blade and then voluntarily stretch out our necks for them. Given his accurate and insightful metaphor, it was surprising that the judge ruled The Blade’s “need for information outweighs potential harm to Toledo Free Press,” a decision based on optimistic speculation rather than reality.
In the judge’s 49-page ruling, which he described as “particularly well-suited for appellate review and guidance,” he wrote, “Neither the parties nor the court has found any case law expressly addressing whether or under what circumstances the identities and/or ownership interests of a limited liability company or similar business entity constitute a trade secret.”
Bad for Ohio
Does the judge’s ruling mean he believes the alleged nondisparagement agreement Pounds has with The Blade can be extended, without consent or sanction, not only to me but to each individual who has invested in our company? Toledo Free Press is a small, private business; we are not a public institution. There is no public interest in the unveiling of our members’ names — this is not a freedom of information request; it is an effort to determine who was willing to step up and fund an alternative to the old-school, elitist Blade.
Imagine the implications for businesses seeking investment in Lucas County and Ohio if this becomes the standard. How could anyone establishing a controversial, competitive or risky business attract the capital from a person who is not promised identity and liability protection? If the finances and business plans of members of LLCs in Lucas County and Ohio are not protected by the law as they have been up to this very moment, why would any new businesses risk investing here?
As a duty to our business and others who expect they can make investments in business without them becoming public, we are filing an appeal and seek to overturn the judge’s decision. Our appeal takes on much greater resonance now that LLC standards for the entire state — not just the future of Toledo Free Press — are potentially at risk.
There are basic foundations of American rights of privacy under assault and the implications could debilitate the flow of investment dollars in Lucas County as well as all of Ohio.
Michael S. Miller is editor in chief of Toledo Free Press and Toledo Free Press Star. Email him at email@example.com.