Here is an update on a joint venture I wrote about earlier this month for the Daily Report. …

The ink was barely dry on this deal when the lawsuits started flying.

King & Spalding client Sprint Nextel Corp. announced on May 7 that it had formed a $14.5 billion joint venture with Clearwire Corp. to combine their wireless broadband businesses. More than two dozen King & Spalding lawyers in Atlanta and New York worked on the deal, led by Atlanta partner Michael J. Egan III. [Daily Report story, May 8, 2008].

The same day, Sprint Nextel also filed a complaint for declaratory judgement in the Delaware Court of Chancery seeking a ruling that the Clearwire joint venture did not violate any of its existing agreements with iPCS Inc., an Illinois-based wireless affiliate of Sprint. Five days later, iPCS sued Sprint Nextel in Cook County, Ill. Circuit Court, seeking a permanent injunction against Sprint Nextel to block its formation of the joint venture.

IPCS argues in the Cook County case that it signed agreements in 1999 giving it exclusive rights to market Sprint products in its territory. The Sprint-Clearwire joint venture, which will deploy a nationwide mobile WiMAX network, violates iPCS’s 1999 exclusivity agreements with Sprint, iPCS said.

Sprint Nextel argued in the Delaware case that it “has the right to operate wireless networks outside the 1.9 GHz spectrum range in” iPCS’s service area. The Sprint Nextel-Clearwire WiMAX joint venture will operate on the 2.5 GHz spectrum range, according to the complaint. To support its position, Sprint Nextel cited a 2006 Delaware Chancery Court ruling, Horizon Personal Communications v. Sprint Corp., C.A. No. 1518-N.

Four Atlanta-based King & Spalding lawyers are working as of counsel to Sprint Nextel on the Delaware litigation: partner Daniel J. King [see photo, right], senior attorney Amy Yervanian, and associates Michael J. Cates and Shelby S. Guilbert Jr. Morris, Nichols, Arsht & Tunnell in Wilmington, Del. is lead counsel to Sprint Nextel on that matter. Mayer Brown partners John M. Touhy and Michael K. Forde in Chicago are is representing iPCS. Touhy and Forde have advised iPCS on previous claims by iPCS that Sprint Nextel has breached management agreements with the company.

OK, deal lawyers, here is your chance to weigh in. Knowing that the WiMAX joint venture would likely be litigated by iPCS, would you have advised Sprint Nextel to go ahead pursue this deal with Clearwire anyway? Click on the "Add a Comment" link below and fire away.

An under-performing shopping mall in a decent location—in this case, North DeKalb Mall near Decatur—seems like it would be an easy fix, right? Just bring in a popular retailer, and the mall’s foot traffic and car traffic will rise instantly.

But it’s not that easy. Just ask Hartman, Simons, Spielman & Wood partner Theodore J. “Ted” Sandler, who’s advising his client, Hendon Properties, on how to remake North DeKalb Mall. Hendon has been negotiating with Costco Wholesale Corp. for a considerable period of time about opening a store at North DeKalb Mall. A thicket of legal and business issues have prevented the two sides so far from inking a deal, although Hendon is still trying.

One matter deals with the mall’s unusual zoning situation. The vast majority of the property, which is located in unincorporated DeKalb County, is zoned for commercial development, Sandler said. But a section is zoned neighborhood-commercial. Costco wants to be able to sell gasoline at North DeKalb Mall, and it wants at least part of its building to be located in the area zoned neighborhood-commercial. Gasoline sales are forbidden on property zoned neighborhood-commercial.

“We’re just trying to correct that zoning category,” Sandler said. “That’s the main motivating factor at this time.”

Another issue deals with how extensively Hendon will re-design the mall. One option would entail “de-malling the mall and looking at a complete reconsideration of how the property operates,” Sandler said.

The second option would come into play if Hendon is unable to reach an agreement with Macy’s Inc. about acquiring its building at the mall, where it still operates a store. If Macy’s won’t sell, Hendon will pursue a scaled-back redevelopment of North DeKalb Mall, Sandler said.

Sandler said he’s not aware of any nearby neighborhood association having hired legal counsel to negotiate with Hendon.

Other legal issues are less challenging, such as variance issues dealing with setback requirements within the mall’s property.

Also, some nearby wetlands are not an issue in Hendon’s current plans. An earlier version of the mall’s redevelopment called for a larger footprint which would have encroached on the wetlands. But since then, the plans have been scaled back, Sandler said.

Hendon CEO Charlie Hendon wants to be sensitive to the needs of the surrounding residential neighborhoods, Sandler said.

“Charlie is very understanding of the neighborhoods’ concerns,” Sandler said. “Whatever we do here, the neighborhood will have a voice in how this goes forward.”

Skål! A cluster of Hunton & Williams lawyers from Atlanta and Miami bagged an assignment to advise a maker of Danish pastries on its purchase of a Florida bakery.

The buyer, and Hunton’s client, was the North American unit of Lantmännen Unibake, which is headquartered in Horsens, Denmark. Lantmännen acquired Euro-Bake of St. Petersburg, Fla. for undisclosed terms. All of Lantmännen’s products, including those sold in the U.S., are currently baked in Europe. With the Euro-Bake acquisition, Lantmännen will operate its first bakery on U.S. soil.

Lantmännen makes Schulstad-brand Danish pastries and Pastridor-brand croissants, while Euro-Bake is known for its European-style sandwich breads, baguettes and pretzels.

Working on the deal from Atlanta was partner Catherine D. Little and associates David R. Yates, Molly Haining Scott, Jeremy S. Lemmon and Joshua Z. Mishoe. Yates and partner Fernando C. Alonso in Miami led the Hunton team. Foley & Lardner advised Euro-Bake.

It’s a busy time for hospitality-industry development in Atlanta.

From the city’s downtown business district, to the law firm Center of the Universe in Midtown, to glitzy Buckhead, construction cranes seem to be bumping into each other all over town as they race to complete hotel projects.

Some is about making the old look new. The downtown Marriott Marquis [see picture, left], which opened in 1985, is getting a $138 million facelift. The Sheraton Colony Square’s transformation to the W Atlanta-Midtown was completed in March.

Others are hotel-condominium combinations, like Rosewood’s Mansion on Peachtree, and Twelve Hotel & Residences Centennial Park.

A storied name in luxury hotels, St. Regis, is building its first Atlanta outpost across the street from the Buckhead Whole Foods. Starwood can’t seem to place enough of its W brand in Atlanta—a Buckhead location will open in October, and another hotel overlooking the Downtown Connector from Ivan Allen Jr. Boulevard is slated for December.

The pipeline doesn’t seem to have been exhausted yet, either. The high-end hoteliers reported to be eyeballing Atlanta, many of whom are targeting Midtown, include Loews, Mandarin Oriental Hotel Group, Palomar and Ritz-Carlton. The Streets of Buckhead development may contain a Baccarat Hotels property. InterContinental Hotels Group, which includes the Crowne Plaza and Hotel Indigo brands, wants to open 20 new properties in Atlanta in three years.

We spoke with G. Brian Butler, a hospitality and real estate development partner at Morris, Manning & Martin, about why Atlanta is the queen bee of the hotel industry. Here is an edited transcript of our discussion.

What’s driving the boom times in Atlanta hotel development?

            What’s driving this is the industry’s recovery after the 2001 terrorist attacks. The market suffered for a couple of years, and people weren’t traveling, but it’s been coming back with an absolute bang. Demand had started to outstrip supply, so there are a lot of projects here and nationwide. Construction starts and rooms-in-the-pipeline numbers are at all-time highs.

Is the current economic environment more conducive to renovating existing hotels or building new hotels?

            It had been more towards renovating. The great run-up in construction costs has really made it hard to build new projects. It seems to me that they may be turning around a bit, and there is more new construction going on.  But building new products from the ground up seems to be cost-prohibitive, unless it’s a joint condominium-hotel project.

Where do you see the development going in the next 6 months to a year?

            What you’re seeing mostly is a focus on upscale projects in the city. But I’m also starting to see that, with the economic slowdown that’s here, or that’s coming, some of the focus is shifting back to the value [hotel] segment, as families and businesses cut back on spending.More...

Braves pitcher John Smoltz has said he wants to take a shot at playing professional golf once his baseball days are finished. Now Smoltz has another reason to work on his putting.

Smoltz and some business partners recently acquired Southwest Putting Green Technologies Inc. of Scottsdale, Ariz. for undisclosed terms. The company designs and installs synthetic putting greens used for wealthy individuals who want a putting green in their backyard. Southwest Greens, which has a licensing deal with Jack Nicklaus’ golf-design company, also installs turf for commercial clients.

Lawson & Moseley partner William R. Moseley Jr., who was counsel to Smoltz and the investor group, said the investors all knew each other and saw an opportunity to buy a golf company.

“They have what the owners believe is the best artificial turf in the country,” Moseley said.

Moseley’s partner William H. Lawson worked with him on the transaction, as did associate Heather M. Davis. The three attorneys left Davis Pickren & Seydel about a year ago to form their corporate-law boutique.

Smoltz and his partners re-named the company Southwest Greens Holdings Inc. The group wants to expand the company’s sales outside of its core business, Moseley said. Their product can also be used as the turf in athletic fields, on playgrounds and at driving ranges, Lawson said.

Southwest Greens purchases all of its turf from one vendor, Challenger Industries of Dalton.

Lawson & Moseley continues to perform work for Southwest Greens on franchise law and intellectual property law, Moseley said.

“Their trademarks are already protected in Mexico, Australia, Panama, Canada and other locations,” Moseley said. “What we’re in the process of doing now is protecting their marks in areas where they want to do business. They want to break into the Middle East, Saudi Arabia and Dubai.”

The other members of the investor group are former Braves and Pirates pitcher Zane Smith and former Hitachi executive Richard Davis III, who’s serving as CEO of Southwest Greens.

As for Smoltz's golf game, as of May 2 he had a U.S. Golf Association handicap of +2.

Hewlett-Packard’s proposed buyout of Electronic Data Systems is prompting many companies to question whether now’s the time to dump HP or EDS as their technology-outsourcing vendor, says Sutherland partner Scott M. Hobby.

Whether many companies actually pull the trigger is another question, Hobby said.

HP on May 13 said it had agreed to acquire EDS for $13.9 billion, making the company the second-largest provider of computer services to corporations and governments. After the merger announcement, Pillsbury Winthrop Shaw Pittman partner Robert E. Zahler published a client alert that said that HP and EDS customers should review the change-of-control provisions in their contracts with HP and EDS to assess whether now is the time to dramatically restructure the contracts or terminate them.

Hobby, an outsourcing partner at Sutherland (formerly Sutherland Asbill & Brennan), said that while it's true companies should review the contracts, it’s extremely expensive for a company to switch technology providers.

“It’s really a big undertaking to leave your service provider, so a lot of this is more apparent than real,” Hobby said. “You’d have to be really unhappy with HP or EDS to pull this trigger.”

That won’t prevent some HP and EDS customers from, at the very least, trying to wring new concessions from their vendors. HP and EDS executives are in the midst of road shows to pitch to clients why the newly merged company will be able to provide better service than before, Hobby said. In these meetings, companies will take the opportunity to raise complaints.

“There is going to be a lot of saber-rattling when HP or EDS come calling,” Hobby said.More...

Nelson Mullins Riley & Scarborough partner Charles R. “Rusty” Pickering is advising the Home Builders Association of Georgia on a proxy battle for control of Builders Insurance Group.

Builders Insurance Group was founded by homebuilders in 1992 to provide workers’ compensation insurance to homebuilding companies. Since then it has grown to become the largest mutual captive insurance company in Georgia, said state Insurance Commisioner John W. Oxendine.

Home Builders Association members, who comprise a large percentage of Builders Insurance Group’s policy holders, allege that the company’s directors overpay themselves, a result of the company’s growth and success.

Builders Insurance Group has paid “excessive salaries, fees and indirect compensation to its directors, reported at more than $1.9 million in 2006 and 2007 alone,” the Home Builders Association said in a statement.

“This is out of line with market compensation for similarly sized companies and … far exceeded directors’ compensation at large public companies like United Parcel Service and Delta Air Lines,” the association said.

The Home Builders Association is launching this battle because "Builders [Insurance Group] has been endorsed by an alternative association, the Contractors Benefit Association (CBA), with much lower dues," the company said in a statement.

"This is a self-serving effort by HBAG to grow and maintain its membership rolls at a cost of increased expenses to the policyholders of Builders Insurance," the company said.More...

Powell Goldstein might want to consider opening an office on the West Coast.

Two PoGo partners – William B. Shearer Jr. and G. William Speer – are counsel to an Arizona company, Global Water Resources Inc., on its plans to hold an initial public offering this year. Shearer has another major client on the West Coast; he’s the outside general counsel for the Los Angeles Angels of Anaheim baseball team.

There is an indirect link between Shearer’s work for Global Water and his work for Angels’ team owner Arturo “Arte” Moreno. Billboard company Outdoor Systems (now known as CBS Outdoor) is a longtime PoGo client. Global Water Chairman William S. Levine is the former chairman of Outdoor Systems. Moreno is the former owner of Outdoor Systems. Moreno, who sold the billboard company to Infinity Broadcasting in 2000, is not involved with Global Water.

Global Water, headquartered in Phoenix, manages water and wastewater utilities in metropolitan Phoenix. Before it can hold its IPO, the company must obtain approval from the Arizona Corporation Commission, according to a regulatory filing. The company plans to raise $50 million through the IPO. Shearer and Speer declined to comment on Global Water’s IPO registration statement, citing the company’s quiet period.

A longtime relationship between Seyfarth Shaw and a Florida software company may be coming to an end. Seyfarth partners Joseph V. “Jay” Myers III and Louann Bronstein in Atlanta are advising Vurv Technology Inc. on its sale agreement with Taleo Corp. of Silicon Valley.

Both Vurv, of Jacksonville, Fla., and Taleo, of Dublin, Calif., make software that allows companies to recruit new employees and manage an existing workforce. Vurv counts among its customers Aetna, L.L. Bean and Porsche. Taleo agreed to buy privately held Vurv for $128.8 million in cash and stock. The deal is contingent on approval from federal and California state regulators, and it’s expected to close next month.

Seyfarth has done legal work for Vurv for more than a decade, Myers said. He added that it hasn't yet been determined whether Seyfarth will continue to do legal work for Vurv once it becomes part of Taleo.

For the work on the Vurv-Taleo deal, Seyfarth brought in attorneys from its Boston, New York and Chicago offices, in addition to Atlanta. From Atlanta, partner Kathryn B. Solley and associate Frances-Ann Moran worked on the deal with Myers and Bronstein. Wilson Sonsini Goodrich & Rosati advised Taleo.

Two venture capital funds, QuestMark Partners of Baltimore and Tudor Ventures Group of Boston, invested $33.4 million in Vurv, and hold two seats on Vurv's board. Company founder Derek Mercer owns about 23 percent of Vurv.

Spectrum Brands Inc., known better as the maker of Rayovac batteries and Remington shavers, will part with its global pet business for $692.5 million in cash, the company announced Wednesday.

The buyer, Miramar, Fla.-based Salton Inc., also will assume responsibility for the payments on $222.5 million of Spectrum's subordinated debt securities, less an amount equal to unpaid interest since the dates of the last interest payments.

A Salton news release said the company expects to finance the transaction with an equity investment provided by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.

More...