Southeast Minnesota District Court rules in favor of Phillips – Fillmore County Journal owner ordered to pay $78,000

By Zach Jensen,

Four years ago, Jason Sethre agreed to buy six southeast Minnesota community newspapers from now-retired lifelong newsman David Phillips. Sethre subsequently closed all six of those newspapers and merged them into his present publication, the Fillmore County Journal. 

But, shortly after sealing the deal, Sethre reportedly stopped paying Phillips, claiming that because of the contents of one old computer and what was allegedly done with that computer, Phillips had violated the terms of their purchase agreement. On Feb. 13, A Minnesota District Court found in favor of Phillips and ordered Sethre to pay the $78,000 owed.

Phillips said he told his employees, at all six of his southeast Minnesota newspapers, about his sale to Sethre in March of 2020. 

“Pam Bluhm was the manager at the Chatfield News, and the day I went to tell her I’d sold, she asked if she could keep the computer. She was the president of the commercial club, and she had all her files on it,” Phillips said. “And, the computer was really old. So, I said ‘Sure, you can have it,’ and I just gave it to her.”

There was just one potential problem: The computer Phillips gave Bluhm contained a subscription list, and when Phillips told Sethre about the gifted computer, Sethre considered that a breach of their agreement.

“The main thing I was concerned about was it had no billing information and no financials in it,” Phillips said. “I never thought about her starting a paper, and at the time, she had no intention of doing that either. And, I never thought the subscription list was worth much, because Jason’s is a free paper, so I didn’t think he’d care about that.”

But, about a month after the sale, Phillips said Chatfield residents, who weren’t happy with the Fillmore County Journal, encouraged Bluhm to reopen the Chatfield News, which she did in June 2020.

Sethre’s purchase agreement, which he reportedly called a “consulting agreement”, was supposed to start in January 2021, but Phillips said that just one week before the start of the new year, Sethre told him he wasn’t going to pay because of Bluhm’s computer. According to Phillips, Sethre accused Phillips of helping Bluhm reopen the Chatfield News, which was, Sethre claimed, in violation of the non-compete clause in their purchase agreement. 

Over the next few weeks, Phillips hired an attorney and filed the lawsuit in Minnesota District Court.

“His argument was that (Bluhm) wouldn’t be in business if it wasn’t for me,” Phillips said, “which we also disagreed on, because she worked there for 40 years, so she could easily start it up again.”

Phillips said the lawsuit likely took longer because Sethre didn’t immediately respond to Phillips’ attorney and because COVID-19 had backed up the court system. He added that the court ultimately decided in his favor, because Sethre couldn’t prove that Bluhm’s reopening of the Chatfield News damaged his business, the Fillmore County Journal, in any way.

“Jason never could show what damage this caused,” Phillips said. “In court, he had all the statistics of how much advertising the Chatfield News had, but he never showed how it affected him. So, what the Chatfield News did was all theoretical, but how did it affect him? He couldn’t prove the damages to his company.”

Phillips said that aside from how long it took, he’s happy with the how the case was resolved. However, in the last month since the ruling, Phillips said he hasn’t yet received any payments from Sethre, which might mean the two could face off in court again, if Phillips’ attorney petitions the court to compel Sethre to pay his bill. 

Sethre was contacted for this article and refused to comment. 

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