Missoulian parent company Lee Enterprises has settled its lawsuit against former Publisher Jim McGowan and four other high-level advertising employees it accused of conspiring to steal sensitive company information to start a rival marketing agency.
Missoula County District Court Judge Karen Townsend approved the settlement May 16. Terms were not disclosed, and the party's attorneys did not return calls for comment.
The settlement brings resolution to the first of two recent lawsuits between former Missoulian employees and the newspaper. In the second suit, Sherry Devlin alleges she was wrongfully discharged and discriminated against when she was demoted from her editor position last spring.
Lee accused McGowan of stealing the "blueprints" for the Missoulian's marketing business and using the information to win clients over to his own advertising agencies, Windfall, Inc and Mettle, LLC. It brought nine counts in District Court, including violation of the state's Uniform Trade Secrets Act.
Lee hired a forensic computer analyst to scrutinize the work computers of McGowan and four other employees who left the company in early 2015. The investigation found that, the day after McGowan was demoted from publisher to sales director, someone inserted a USB drive into his computer, deleted several hundred files from the hard drive and ran a program called "eraser.exe" to prevent forensic analysis.
In court documents and hearings, the former employees denied that any of the client data they were alleged to have seized constituted a trade secret and pointed out they hadn't signed any noncompetitive agreements with Lee.
Court documents show current Publisher Mark Heintzelman quickly came to believe "rogue sales practices" were taking place under McGowan, prompting him to seek a financial audit upon arrival at the Missoulian. Separate documents in the Devlin case elaborated on the paper's financial condition at the time Heintzelman was installed. He told a Montana Human Rights Bureau investigator the paper was hundreds of thousands of dollars short of its financial goals, with "inappropriate" accounting practices.
Lee pointed to a series of lost advertising accounts as evidence that it was damaged by McGowan's actions. The company was unsuccessful last summer in its pursuit for an injunction against Windfall and Mettle. The parties appear to have begun settlement negotiations after Townsend denied McGowan's motion to dismiss the case in February.