#1 Story for 2009: Lawsuit Roils Industry Waters

First Published in the October 2009 Edition

By Nicole Montesano

The parting of winemaker Tony Rynders from Dayton’s Domaine Serene Vineyards & Winery is an acrimonious one that could send ripples through the entire industry.

As a result, the legal battle is being closely watched by winery owners and winemakers throughout Oregon, if not the nation.

Depending on who is telling the tale, Rynders either sought standard advice from colleagues or collaborated with co-conspirators in a betrayal.

Rynders says his actions stemmed from a straightforward and ordinary attempt to move on with his career. Domaine Serene argues he engaged in treacherous disloyalty to a company he had served for 10 years.

The winery is asking a federal judge to award it more than $75,000 in damages and prohibit Rynders from using the winery’s proprietary winemaking process or disclosing it to anyone else. It also wants the judge to permit a computer expert to examine Rynders’ computer and destroy any files or data from the company, at Rynders’ expense.

Rynders has countered by filing a motion for dismissal, scheduled for a hearing at 10 a.m. Sept. 30 in Courtroom 9A of U.S. District Court in Portland.

In the lawsuit, the winery complains Rynders was dishonest, violated company policy that he make wine exclusively for Domaine Serene, used Domaine Serene equipment in his outside winemaking venture, shared inside company information with a competitor, delayed telling the company owners about his plans to leave and finally presented the company with an ultimatum demanding a dramatic pay raise as his price of staying on.

“Domaine Serene refused to give in to what amounted to an extortion attempt and terminated Rynders’ employment for cause,” the lawsuit states. “As a result of Rynders’ actions, Domaine Serene has been forced to bring this lawsuit, among other reasons, to protect its trade secrets and to address Rynders’ disloyalty.”

Domaine Serene’s suit makes a number of allegations against Rynders, but the heart of the issue appears to be concern over the process it uses to produce its Coeur Blanc line of white wines from red Pinot Noir grapes. It says the winery fears Rynders might use his knowledge of its trade secrets to make competing wine.

According to Rynders, there are no trade secrets at issue. He accuses the winery’s owners, Ken and Grace Evenstad, of acting out of spite.

“I believe that they objected to my decision to ‘move on’ and move forward in my career,’” he wrote in his court statement. “They begrudged me the opportunity to advance my career and my attempt, after 10 years with their winery, to build equity and benefit from my hard-earned reputation as a premier Oregon winemaker.”

Rynders argues that the process for making white wine from red Pinot Noir grapes “is neither proprietary nor secret and is readily available to anyone on the Internet.”

Although the courts have yet to rule on any of the merits of the case, it has already followed a tortuous route.

Rynders served as winemaker at Domaine Serene from Aug. 17, 1998, to May 12, 2008, when the company fired him.

A week earlier, he had presented a proposal to the Evenstads to convert his position from full-time winemaker to an independent contract winemaker, pending the winery’s hiring of a replacement. He offered to serve as a consultant for “as long as needed” to ease the transition.

He said he wanted to become an independent consultant and winemaker, and saw his proposal as the first step toward this goal. But the discussion did not go well.

Rynders said in federal court documents that he had previously proposed several different scenarios to the Evenstads that would enable him to remain with the company while also furthering his own goals. He said the suggestions included promoting his then-assistant, Drew Voit, to the position of winemaker and changing his own position to that of “director of winemaking,” but the Evenstads rejected all of them.

On April 2, 2008, Voit resigned from Domaine Serene. The winery’s court complaint says he told the Evenstads he “saw no room for advancement at the winery and had accepted a position as winemaker at another winery.”

Rynders followed up with the contract suggestion in early May.

He said it led to talks on May 5 and May 7 that “caused Mr. Evenstad to become extremely upset.” Nonetheless, he said in documents filed with the court, the parties agreed to another discussion on May 12.

On that date, both parties agree, he was fired and escorted off the premises.

The Evenstads followed up a few months later with the filing of a lawsuit against Rynders in a Minnesota state court, accusing him of dishonesty and disloyalty.

Although the winery is located in Dayton—and both Rynders and the Evenstads live and work in Oregon—it is incorporated in Minnesota. According to a ruling from a federal judge in Minnesota, the suit was filed in that state because an employee incentive agreement between Rynders and the Evenstads stipulated any legal disputes related to it be filed in Minnesota.

Eventually, the parties agreed the suit would be dismissed in Minnesota and re-filed in Oregon. The Evenstads dismissed their Minnesota claim in June and initiated their Oregon action in July in U.S. District Court in Portland.

This time they added a new claim: Rynders had violated the federal Computer Fraud & Abuse Act by sending six e-mails from his company e-mail address to his home e-mail address shortly before he was fired.

The Evenstads maintain the e-mails included “multiple attachments that contain business plans, customer lists, winemaking records, templates and other confidential and proprietary information belonging to Domaine Serene.”

According to Rynders, they consisted of “little more than forms, a listing of restaurants in the Portland area reproduced by other Domaine Serene employees from newspaper or magazine articles and advertisements, and other, similar, non-proprietary or protected information” that was available on a shared computer drive accessible to most company employees.

The Evenstads also contend that, long before the discussion that led to Rynders’ termination, he was secretly making wine in a venture with a competitor. They say this action violated a company policy stating no Domaine Serene employee may make wine in any other capacity.

Further, they argue, before talking with them about his plans, Rynders spoke with other winemakers. “Thus, Domaine Serene’s competitor knew of Rynders’ plans while Domaine Serene did not,” the lawsuit states.

Rynders’ motion to dismiss contends that the Evenstads have not laid out any actual harm the company suffered because none occurred. Furthermore, it argues, Rynders did not have a contract with the company.

“There was no contractual confidentiality agreement or non-competition agreement in place,” according to documents Rynders filed with the court.

Rynders argues he told the Evenstads of his desire to eventually make wine for himself at his first job interview in 1998. He said he began considering a variety of different options in 2004, in the course of which he talked with others in the field.

Nicole Montesano is a reporter for the News-Register.