Less than a month after Portland officially became a two-alternative-weekly city, those two alternative weeklies are engaged in a legal dispute.

The new publisher of the Portland Phoenix has announced his newspaper will sue the nascent Dig Portland over what he calls breaches of contract by two former Phoenix leaders now working for Dig.

In late October, at a time when the Phoenix was on the market and looked like it might be closing down, Dig Boston announced plans to open a Portland edition.

The owners of the Portland Sun then stepped in to buy and stabilize the Phoenix, but by then, some of the damage had already been done: Many of the Phoenix writers and employees had accepted jobs with the new Dig Portland.

The Phoenix reloaded with the hires of two reputable Maine journalists of their own — editor Dan MacLeod and staff writer Matt Dodge — and the competition between the alternative weeklies was on.

Now that competition is heading into the courtroom as well.

The new Phoenix ownership is accusing former Phoenix general manager John Marshall and former Phoenix associate publisher Marc Shepard of violating various contractual obligations not to compete with their former employer, use confidential Phoenix information against it or recruit Phoenix employees, among other things.

“This is America, so everybody has the right to start a business,” said Mark Guerringue, the new publisher of the Phoenix, during a short interview late this morning. “I’ve started four newspapers, so I respect anybody who wants to start a business and especially anybody who wants to start a newspaper. We’re not saying they can’t publish, but they published on the back of taking everything from the Phoenix.”

Jeff Lawrence, publisher for Dig Boston and co-publisher along with Shepard for Dig Portland, had a different take when I spoke to him early this evening. He said he expects the lawsuit to be thrown out quickly, and that his paper is contemplating a counter-suit over what he called “frivolous” claims made by the Phoenix.

“Anyone can sue anyone in this country, but in order to make that lawsuit stick, you have to have the case law and facts on your side,” Lawrence said. “And he just doesn’t.”

In full disclosure, I should probably also note that the BDN provided web hosting and in-kind development assistance to the new Phoenix owners when they took over.

In its lawsuit, filed in federal court, the Phoenix is seeking an immediate restraining order that will block Dig Portland from continuing to use the contested business information, as well as the discontinuance of Dig Portland in its current form and the award of financial damages, among other things.

The phrase “in its current form” is important, because the Phoenix alleges in its lawsuit that Dig copied its “trade dress.” While Dig Boston is an 11-inch-by-11-inch magazine-style publication, its Portland edition “adopted the precise format of the Portland Phoenix, namely a 13.25-inch-by-10.75-inch format,” the lawsuit states.

Lawrence countered on Monday that the 13.25-inch-by-10.75-inch format is one of a number of standard tabloid weekly sizes used by dozens of publications around the country, and said if Guerringue “thinks he has a trademark on that size, he’s absolutely out of his mind.”

Lawrence went on to say Dig Boston is looking at changing its size in January, at which point both Dig editions will be the same size, so the use of Phoenix-like dimensions had less to do with trying to mimic the Phoenix and more to do with a new companywide look.

The lawsuit identifies Marshall and Shepard as co-defendants.

Marshall was the Phoenix’ general manager up until he left to work for Dig, and Shepard was a top employee for the Phoenix for several years prior to 2009, when he changed cities and went to work for Dig Boston.

According to the lawsuit, when Shepard and Marshall then went to launch Dig Portland in November, they recruited three of the Phoenix’ five salespeople, both editorial staff members and 13 of its 18 contributing writers to join them at Dig.

The new Dig Portland then used “confidential business information” and trade secrets carried over from the Phoenix to get established, the lawsuit alleges, including the Phoenix’ client lists, distribution locations, and pricing and market data.

“In fact, every single one of the 35 advertisers in the first Portland Dig issue is a current [or] former client and customer of the Portland Phoenix,” the lawsuit states, in part. “Thirteen of these 35 advertisers diverted all of their business to DigPortland, and do not advertise in the Portland Phoenix.”

Hiring a competitor’s employees and contractors or wooing away its clients is part of a legal and free-market competition. What makes this a legal case, at least according to the Phoenix and its attorneys, is that Marshall and Shepard signed legally binding agreements at various points pledging not to do these things.

In the case of Shepard, the lawsuit states he signed a Non-Disclosure, Non-Solicitation, Work Product and Non-Competition Agreement as part of his previous employment with the Phoenix, some provisions of which were written to cover a time period as everlasting as “at any time during or after” his employment there.

With Marshall, the lawsuit states he also signed a Non-Disclosure, Non-Solicitation, Work Product and Non-Competition Agreement, as well as a subsequent confidentiality agreement when he was at one point allegedly a prospective buyer for the Phoenix.

“It’s just generally unethical. But what lands you in court is when you violate the contract you signed that specifically said you couldn’t do that,” Guerringue said. “It’s very, very specific language … that says they will not divert business employees or take confidential information or intellectual property.”

Lawrence countered that claims Shepard’s non-competition agreement would still be in effect years later is legally questionable, and that Marshall’s would not have been transferable to the Phoenix’ new owners once the sale went through.

He went on to say that while Dig Portland did seek to compete with the Phoenix for employees, placement and advertisers, it but did so legally.

Lawrence said Dig only offered jobs to former Phoenix writers at such time that their employment with the Phoenix was over, legally hired the same distribution company that the Phoenix had used, and simply compiled a list of Phoenix advertisers by flipping through the publication and writing them down.

“Not only did [Marshall] not bring that information to our company, we had no use for it,” he said.

Lawrence also said the lawsuit is riddled with factual errors — he said the assertion that Marshall registered Dig Portland LLC with the state is inaccurate (Lawrence said his own name is on that registration), among other things.

“We will vigorously defend ourselves and potentially look into filing a counter-lawsuit because of these frivolous claims,” Lawrence said. “We did everything above board, because that’s the way we operate and that’s the kind of company we are.”