$2.00/MARCH 26 - APRIL 1, 2012
Clinic in an out-of-state state of mind Growth beyond Ohio leaves hospital system wanting more By TIMOTHY MAGAW firstname.lastname@example.org
Cleveland Clinic CEO Toby Cosgrove hasn’t been shy about his quest to extend the medical giant’s footprint well beyond Northeast Ohio — and for good reason. The Clinic’s slate of out-of-state
locations experienced marked growth last year and, Dr. Cosgrove said, continue to provide a solid revenue stream for Northeast Ohio’s largest health system. The Clinic’s Lou Ruvo Center for Brain Health in Las Vegas, which the system acquired in 2009, saw a lofty 76% increase in patient visits in 2011 from levels of 2010. Likewise, the Clinic’s outpatient offices See CLINIC Page 25
GRAHAM WHITBY BOOT/ALLSTAR
The Clinic’s Lou Ruvo Center for Brain Health in Las Vegas saw a 76% increase in patient visits last year over 2010.
Even with higher taxes, drillers still will drill
InkStop trustee, investors target Skoda in lawsuits
Failed retailer’s accounting firm accused of negligence
Leases will expire unless production begins By DAN SHINGLER email@example.com
The leases that thousands of Ohio landowners have signed with oil and gas companies will drive the development of thousands of shale gas wells in the eastern half of the state during the next five years, even if the state proceeds with raising its taxes on the energy industry, according to experts on minerals rights. The catch for energy companies is that the leases require drillers to begin production on each property
INSIDE: Ohio’s plastics and specialty chemical companies aren’t worried about Shell’s decision to locate a new production facility in Pennsylvania, bypassing Ohio. Page 3 in three to five years. If a company fails to do so, it either loses the lease or must pay a cash bonus to renew it, at a cost of up to $6,500 per acre based on existing lease prices. There’s no escape clause for an energy company to say that it needs more time to develop a property
A way to help wind David Matthiesen is leading the Wind Energy Research and Commercialization Center at Case Western Reserve University, the goal of which is to produce wind power more efficiently. PAGE 3 ALSO: ■ Buehler’s takes neighborhood hardware store business north to Cleveland’s suburbs. PAGE 6
See DRILLERS Page 24
By JAY MILLER firstname.lastname@example.org
Two-and-a-half years after InkStop Inc. filed to liquidate in U.S. Bankruptcy Court, the company’s courtappointed trustee and disgruntled investors separately are turning their legal attention to the role they allege accounting firm Skoda, Minotti & Co. played in the demise of the ink and toner retailer. Three lawsuits contend that the Mayfield Village firm, which was InkStop’s accountant and auditor, was negligent and failed to audit and
INSIDE: A timeline of InkStop’s rise and fall. Page 23 report accurately InkStop’s financial condition. The largest known amount sought in the lawsuits is $15.5 million. In a lawsuit transferred to U.S. District Court in Cleveland from Bankruptcy Court last Nov. 2, bankruptcy trustee Mary Ann Rabin charges Skoda Minotti with professional negligence. Ms. Rabin said the accounting firm failed to discover and report that InkStop’s officers See INKSTOP Page 23
Meet the honorees in Crain’s first in-house and general counsel awards ■ Pages 13-21
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 13
CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
AT LEAST IT’S PROGRESS
COMING NEXT WEEK
Federal government data show that for the second year in a row, the labor market moved in the right direction, though the pace of that movement remains relatively slow. There were nearly 50.1 million hires in the United States last year, up about 3% from 48.6 million in 2010. The number of separations rose slightly, too, though it remained below the number of hires. Here is how those two pieces of data have moved during the past five years (numbers in millions):
Special report: The remaking of West 25th Crain’s analyzes how West 25th Street and the Market District have been transformed and what’s next for the area. Plus, a look at the residential component and the businesses that make up the area.
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MARCH 26 - APRIL 1, 2012
CRAIN’S CLEVELAND BUSINESS
Ohio unfazed by Pa. cracker plant location Plastic, chemical producers glad source of raw materials will be near By DAN SHINGLER email@example.com
Ohio, Pennsylvania. Tomato, tomahto. It matters little to Ohio’s plastics and specialty chemical industry that a new production plant for their raw materials will be built in Pennsylvania rather than Ohio. Neither state lines nor the Ohio
River will be enough to keep the materials from running their course into Ohio’s supply chain, said Jack Pounds, president of the Ohio Chemistry Technology Council. The chemical and plastics industries have been salivating over a new source of raw materials since talk surfaced last year about the construction of a major production plant — known as a “cracker,” because
it “cracks” apart some of the compounds in natural gas and other liquids into their components — in Ohio, Pennsylvania or West Virginia. Shell Oil Co. on March 15 announced it will build the plant, expected to cost as much as $3 billion, in Beaver County, Pa., just across the state line south of Youngstown. It has yet to announce a start date
THE WEEK IN QUOTES
By CHUCK SODER firstname.lastname@example.org
“Where’s the guy with the green eyeshades? Where’s the guy who says the numbers don’t add up?” — John Chapman of John Chapman & Associates LLC, a Cleveland law firm. Page One
“The biggest change in the legal landscape over the last decade has been the role that technology plays in business and the law.” — Henry G. Grendell, vice president and general counsel, Family Heritage Life Insurance Co. of America, and general and in-house counsel award winner. Page 16
See CRACKER Page 8
CWRU researchers, area companies use Euclid turbines to study wind energy production
— Andrew Thomas, a geologist and former oil and gas attorney who now serves as executive in residence at Cleveland State University. Page One
— Patrick J. Dugan, executive vice president, chief legal officer and board member, Medical Mutual of Ohio, and general and in-house counsel award winner. Page 16
loved to have seen it in Ohio, but in terms of the economics and the supply of raw materials to companies in Ohio, having it just across the border is not going to make any difference,” he said. “For the liquids we’re interested in — the ethanes and butanes coming out of there that will generate the feedstocks we need — it does not matter that much technically to have it in another state,” Mr. Pounds said.
THAT’S ONE TALL TEXTBOOK
“These oil companies have spent billions of dollars on bonuses for these leases. If they want to maximize that, they need to get moving. … They’ve got three years to develop a lot of acreage.”
“(In-house counsel) must have the ability to understand the company’s end goals and help the executives find the best way to reach that goal within the bounds of the law.”
for construction on the plant, which will process natural gas and related liquids that are beginning to be pumped from Ohio’s Utica Shale deposit. The site selection was a disappointment for Ohio, which had hoped to lure the plant to the Buckeye State and to staff it with Ohio workers. But it will make little difference to Ohio’s chemical industry or its approximately 42,000 employees, Mr. Pounds said. “Being Ohio-based, we’d have
RUGGERO FATICA PHOTOS
David Matthiesen leads the Wind Energy Research and Commercialization Center at Case Western Reserve University. The group is erecting a one-megawatt wind turbine in Euclid, part of which Dr. Matthiesen is standing in here.
ive years ago, David Matthiesen attended a conference in Berlin, Germany, about offshore wind power, looking for innovations that could help the industry. His main takeaway: Change the oil in a wind turbine’s gearbox, even if it doesn’t appear to need changing. He was looking for something more. “I didn’t think it was that innovative,” he said with a smile. And that’s why Dr. Matthiesen now is heading up the Wind Energy Research and Commercialization Center, an effort A crane readies for the next step in the led by Case Western Reserve installation of a University to figure out ways to one-megawatt wind make wind power cheaper and turbine in Euclid. better. The center is in the process of building what will serve as an off-campus laboratory for CWRU researchers and students, as well as companies that See WIND Page 24
State sees room for tech transfer growth at colleges By CHUCK SODER email@example.com
When it comes to converting research into new products and jobs, Ohio’s colleges are just OK. The Ohio Board of Regents is not OK with that. The Board of Regents, which oversees Ohio’s public colleges, has put together a team of university representatives, business people and economic development professionals
that aims to figure out how Ohio’s colleges can use their research budgets to create more jobs. Besides conducting its own research, the team since mid-February has been gathering input on the topic at public forums Gupta throughout the state. The team’s work will form the core of the regents’ annual report on the condition of higher educa-
tion in Ohio, which will be presented to the state Legislature this summer. The report won’t just “sit on people’s shelves,” promises Vinod Gupta, a regent who is chairman of the Technology Transfer and Commercialization Task Force. “There will be follow-up. There will be an implementation team” with specific goals, said Mr. Gupta,
who advises advanced materials companies as an entrepreneurin-residence at JumpStart Inc., a nonprofit that assists startups in Northeast Ohio. There’s no shortage of federal research dollars in Ohio, and the state has more engineering colleges than any other state, Mr. Gupta said. Yet Ohio’s efforts to turn that brain power into economic power have produced mixed results, See TRANSFER Page 25
CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
Goodyear boss: Emerging markets drive tire sales By DAVE ZIELASKO Rubber & Plastics News
ORLANDO, Fla. — The next decade will be a time of trends for the world’s tire industry — specifically, seven “mega trends,” according to Goodyear Tire & Rubber Kramer Co.’s top executive. The Akron-based tiremaker’s vision of the future is the product of much thought, said Richard Kramer, Goodyear’s chairman and CEO. The manufacturer’s view was vetted with third parties and supported with empirical data, and revealed a
year ago to the financial community. During Goodyear’s annual dealer meeting in Orlando, Mr. Kramer shared the company’s thoughts on future trends with its dealers for the first time. Mr. Kramer listed the mega trends as follows: ■ Emerging markets will continue to drive the tire industry. There will be 240 million more cars on the road during the next 10 years, and 100 million more trucks, Mr. Kramer said. Even though China’s economy is slowing a bit, he
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cautioned dealers not to be fooled by that development. “China will continue to fuel the global economy, fuel auto production, more cars on the road, and more tire consumption and, consequently, more usage of raw materials and commodities and things like natural rubber,” he said. Goodyear, he said, is making investments overseas to take advantage of these emerging markets. ■ Mature markets such as the United States will continue to grow. There are more opportunities for differentiation in mature markets today than in the past, and segments within the markets are growing at multiples of the industry’s overall growth, Mr. Kramer said. In a market of about 250 million tires, such as the United States, even a small percentage of growth is a very big market. ■ Demand has shifted to high valueadded tires, and the mid-tier tire segment continues to be important. By 2016, almost all new passenger vehicles will be fitted with high value-added tires, Mr. Kramer said. “That means that sweet spot in the market is not only getting big … but it’s moving up. It’s moving closer to the performance part of the market,” he said. ■ The green trend is here to stay. The vehicle makers want fuel-efficient, green tires and consumers increasingly are focused on energy savings, Mr. Kramer said. Goodyear is embracing the green trend. “I can tell you that as much as we are a leader in green technologies today, I am going to commit to you that we’re going to continue that leadership going forward,” he said. ■ New tire labeling regulations in Europe and the United States are inevitable. Labels rating every tire for traction, tread wear and rolling resistance means customers will come into tire stores knowing what tire and performance they want, Mr. Kramer said. Tire labeling will happen in Europe in 2013 and will be introduced in the United States at a later date. “Rest assured it will come here and you will be selling tires with labels on them at some point in the nottoo-distant future,” Mr. Kramer said. ■ The Internet will have an impact on tire purchases. “I think for us to believe that tires somehow are not going to be impacted by the Internet from a purchase perspective is something we can’t afford to do,” the executive said. “We can’t afford to be complacent.” Mr. Kramer said Goodyear wants to help its dealers use the Internet to sell and service customers in the future. ■ The tire industry moves in more evolutionary, rather than revolutionary, ways. Think about the radial tire, which was first introduced in the late 1940s, Mr. Kramer said. “We still sell radial tires today,” he said. “Better radial tires, no doubt, but we still sell radial tires.” ■ Dave Zielasko is publisher of Rubber & Plastics News, a sister publication of Crain’s Cleveland Business. Volume 33, Number 13 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136
MARCH 26 - APRIL 1, 2012
CRAIN’S CLEVELAND BUSINESS
Ferro suffers after big solar play, and analysts take note By DAN SHINGLER firstname.lastname@example.org
Just last summer, Ferro Corp. was looking forward to reaping the rewards of significant R&D efforts that helped make the company a world leader in the manufacture of special metallic pastes used in the solar energy industry. Today, it’s explaining to investors why the solar industry caused a collapse of earnings at the end of 2011 and how it’s planning for sunnier days in an industry the company still hopes will be a source of future growth. Ferro’s sales and earnings both were up for the year; the company earned $31.5 million, or 37 cents per share, on sales of $2.16 billion in 2011. But the fourth quarter wreaked havoc on what would have been even better annual results, not to mention the company’s stock price. For the quarter, Ferro lost $28.8 million, or 33 cents per share. That’s an unwanted reversal from the fourth quarter of 2010, when the company earned $1.84 million, or 2 cents a share. Before Ferro announced its earnings on Feb. 28, its stock was trading at $6.84 per share. By March 6 it had fallen to $5.22 per share, though it had improved to $6.11 per share late last week. Ferro CEO James Kirsch laid the blame squarely at the feet of the solar industry. He said slumping demand for solar products had a negative impact on earnings of 51 cents per share last year. “We came into 2011 with strong momentum from our record-setting performance during 2010, driven by both the global economic recovery and strong growth in our solar materials business,” Mr. Kirsch told analysts on a Feb. 29 conference call. “However, as global solar installations weakened in the first half of 2011, excess inventory of solar power modules grew rapidly,” he said on the call. “Our customers responded by sharply curtailing production beginning in the second quarter.” Compounding the problem as the year went on, troubles in Europe deepened, causing solar production to slow there the most and even prompting some production capacity to shift to China. Ferro had penetrated the European market more thoroughly than it had the Chinese market, Mr. Kirsch said.
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But Ferro is not giving up on solar, Mr. Kirsch said. In a business that sometimes seems like “a game of leapfrog,” he told analysts it is vital for Ferro to remain a technological leader in solar, in order to constantly offer the best new products for solar cell designs that are constantly changing. The company has cut staffing, discretionary spending and even reduced some of its R&D investment in the solar arena. “But, we are maintaining investments in new solar paste product development, which is the lifeblood of this business,” Mr. Kirsch assured analysts. Wall Street, however, seemed
less than assured. Not only did the investment community hammer Ferro’s stock price, but wonks from places such as the popular Motley Fool investor website were writing articles under banners such as, “Here’s why Ferro’s earnings are worse than they look.” Even in its hometown there was not much optimism. KeyBanc Capital Markets analyst Michael Sisson titled his March 5 report on the company, “Waiting for solar flares, 2012 outlook reduced on tepid demand.”
On the sunnier side Analysts such as Mr. Sisson are skeptical, not so much of Ferro’s
technological or management expertise, but of the solar industry’s chances of bouncing back. “We are taking a more cautious approach toward our outlook for solar paste sales, which we continue to see impacted by limited module inventory visibility, weakened endmarket demand and remaining uncertainty around government subsidies,” Mr. Sisson wrote. Mr. Kirsch, for one, believes that Ferro must follow the capacity of the solar industry, maintain its technological advantages and wait for the industry to improve. The company is still aggressively developing new products for the industry while at the same time pursuing new
relationships with new customers, he said. That’s a sound strategy, according to Mr. Sisson, who wrote that Ferro is probably acting wisely, especially in terms of courting Chinese solar manufacturers. “We believe Ferro is spending the right amount of R&D to get specified in the tier-one Chinese players,” he noted. Time will tell, of course, but Ferro doesn’t need the world to change completely so it can again make money on solar. If the solar market only returned to the activity levels it saw in 2010, that would probably be enough to stem Ferro’s losses in the sector, Mr. Kirsch told analysts. ■
CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
Food family extends its hardware reach Buehlers appear ready to open their third standalone store, compete with big boxes By STAN BULLARD email@example.com
Known for their namesake food markets, the Wooster-based Buehler family is venturing northward almost to the Lake Erie shore with its chain of — surprise — neighborhood-oriented Ace Hardware stores. Though most people see the small, local hardware store as a dying breed because of big-box home improvement giants, the Buehlers see opportunity in the category. “We see this as a chance to diversify, and we’re retailers at heart,” said Bob Buehler, vice president of marketing and merchandising of E&H Hardware. “The local hardware store fills a real niche,” Mr. Buehler said. “Someone walks in with a handful of this or that and asks, ‘Can you help me with this?’ It’s the one-onone relationship you don’t get in the big-box stores that we’re good at.”
E&H Hardware takes its name from Mr. Buehler’s grandparents, Ed and Helen Buehler, who started the chain that now has 13 food markets. The company also has been in the hardware business since 1965 with six hardware stores, all adjoining its food stores. “Last year we decided to expand the hardware business. We have hit the ground running,” Mr. Buehler said.
A sign points to Westlake E&H opened its first hardware store without a nearby Buehler’s food store last November in Independence and a second this February in Rocky River. Now, it appears another is on the way. The city of Westlake has received an application for a sign for an E&H Ace Hardware store at the recently closed Tuesday Morning store, 27255 Detroit. Mr. Buehler declined comment on a Westlake store.
This Ace Hardware store in Rocky River is the second opened by the Wooster-based Buehler family, best known for its grocery stores. However, he acknowledged E&H wants to add stores in the Cleveland and Akron areas where it can find openings to grow with Ace, a Chicagobased hardware cooperative that supplies 4,400 stores. “We hope to add more than a store or two each year for the next several years,” Mr. Buehler said. He said the company is looking at multiple locations, although he declined to be specific about them.
THERE WAS MOLD. THERE WAS MILDEW. THERE WAS SCUM. IT WAS DISGUSTING. THE DOCUMENTS WE NEEDED FOR OUR CASE HAD BEEN SITTING IN A DAMP WAREHOUSE BASEMENT FOR DECADES. THEY WERE FOUL AND CONTAMINATED. THEY HAD FUMES THAT MADE THEM UNSAFE. SO HOW DID WE SORT THROUGH HUNDREDS OF BOXES OF ROTTING PAPERWORK, GET THE INFORMATION WE NEEDED AND SETTLE THE CASE FOR OUR CLIENT? WE GOT RUBBER GLOVES AND MASKS. WE WORE COVERALLS AND GOGGLES. WE USED LAB HOODS AND RESPIRATORS. WE CLEANSED, DRIED, VACUUMED AND PIECED THINGS TOGETHER.
WE FIGURED WE F IGUR RE ED IT I T OUT. OU T.
Going toe-to-toe with big-box stores — both Home Depot and Lowe’s are within a mile of the Rocky River store at 19875 Detroit — is a matter of demographics, Mr. Buehler said. “We ask, ‘Where are the people who need hardware stores? Where is there a large percentage of home ownership? Who needs screens repaired and paint and doesn’t want to drive far to get them?’” Mr. Buehler said. The company also seeks to take advantage of local opportunities, he said, such as areas where power tool distributorships are available. For example, its store in Independence is the exclusive distributor of Husqvarna equipment in the suburb.
Welcome, ladies In Rocky River, the E&H Ace store supplanted the century-old Ingersoll Hardware stores to its east on Detroit Road and to its west in Westlake. Mr. Buehler said his company bought the paint mixing and color tinting machines at the Rocky River Ingersoll store from the Yoder family and even counts 10 former Ingersoll employees among its 15 in Rocky River. Ace coordinated the Yoders’ departure and E&H’s arrival there, Mr. Buehler said. “It was fun to work with them,” Mr. Buehler said of the Yoder family. “The service culture of our companies and focus on specialized customer service are very similar.” The new Ace stores don’t feature the steel bins of nails and hardwood floors of beloved hardware stores of old. “They are well-lit, well laid out, a modern version of the hardware store,” Mr. Buehler said. “Ace has done a good job developing programs where women feel comfortable coming in.” At its Ace stores by its food markets,
Mr. Buehler said, it is common for women at the grocery store to stop in to select paint samples and their husbands to come by later “to lug the paint home.”
Picking their spots Bob Vereen, a retail consultant in Indianapolis and author of the 2010 book, “Surviving in Spite of Everything: A Postwar History of the Hardware Industry,” said there is no rising tide of new, small hardware stores, though he believes their decline has ended. “Those stores that remain have learned to compete on service and price,” Mr. Vereen said, noting that big-box stores “are not as sharp on price” as they were a decade ago. Keith Jelinek, a director in the retail consulting practice of Detroitbased AlixPartners, said E&H is tapping a difficult but good opportunity. In the same way competing with Walmart for food business requires focusing on local food needs, Mr. Jelinek said, Ace and its members have become expert at identifying specifically what nearby customers need. “They don’t carry the full breath of products but are adept at determining what furnaces or irrigation systems are common in the area and stocking appropriately,” Mr. Jelinek said. “Their customer wants convenience even if they don’t get the lowest price for a pack of light bulbs.” E&H’s Mr. Buehler declined to disclose overall sales figures for the hardware company or for individual stores. “We’re a family business and a little tight-lipped,” said Mr. Buehler, who noted that five Buehler family members work in the food and hardware businesses today. He did say the Independence store has exceeded the company’s expectations. ■
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Moxie chef leads Cleveland Independents There is a new ON THE WEB Story from has resigned and president of Clevewww.CrainsCleveland.com. wish him our best. land Independents, a As for Cleveland group of more than 90 locally Independents, we are actively proowned, independent restaurants ceeding with all scheduled marketing and food establishments in the area. and programs,” Mr. Bennett says. He’s Jonathan Bennett, executive “Cleveland Independents is a strong chef at Moxie, the Restaurant, and organization comprised of dedicated vice president of Red Restaurant members who immediately stepped Group. Mr. Bennett succeeds Dragup to the plate.” onfly chef Marlin Kaplan, whom the Cleveland Independents plans to group said tendered his resignation celebrate its first Spring Cleveland earlier this week. Restaurant Week, April 2-14 “We regret the fact that Marlin (excluding Easter Sunday).
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CRAINâ€™S CLEVELAND BUSINESS
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$9$,/$%/()25/($6( 23221 Morgan Court, Strongsville
MARCH 26 - APRIL 1, 2012
For the first time in more than a decade, lights are going on regularly inside the downtown Cleveland buildings from 1001 to 1021 Euclid Ave. that have been dark since office tenants such as the former Leader Mortgage Co. left for better homes. Construction workers, about 20 daily, are scraping up asbestoscontaining tiles and insulation from pipes, said Jason Conner, a project manager for Summit Construction who serves as the ownerâ€™s representative for JHB Hotel LLC on a cleanup financed by a $3 million grant from the state of Ohio. Mr. Conner said he looks forward to Akron-based Summit overseeing a $55 million conversion of the property to a 200-room hotel once the owners land construction financing. Welcome to the gritty efforts to add life to some of the buildings in Euclid Avenueâ€™s dead zone â€” a cluster of empty buildings that may be the next stage in the streetâ€™s rejuvenation between Cleveland State University and Public Square. Hotel concepts that are new to the city, and behind-the-scenes efforts to secure financing for the projects in the aftermath of the recession, contribute to a slow, cumbersome process in turning those projects into reality. Insiders such as Joseph Marinucci, president of the Downtown Cleveland Alliance, say the hotel proposed for 1001 Euclid may carry the Le Meridien name. Le Meridien is a 100-hotel boutique brand operated by Starwood Hotels & Resorts Corp., which describes it as â€œupscale, contemporary, stimulating.â€? USA Today dubs it â€œartsy.â€? A Le Meridien spokesman said the chain has not committed to a Cleveland project. Another new name to Cleveland, San Francisco-based Kimpton Hotels, earlier this year agreed to manage a 161-room inn planned for the Schofield Building, at 2000 E. Ninth St. on the southwest corner of Euclid Avenue. There, Schofield Partners LLC plans to create a mixed-use project with 25 apartments on its top floors and ground-floor retail with
â€œItâ€™s great for everyone because it provides downtown other options for guests when large conventions come and fill the large hotels.â€? â€“ David Gilbert, president, Positively Cleveland the hotel in between. Steven Calabrese, a principal of the Schofield ownership group, said the group is continuing to pursue financing and â€œhopes to have news soonâ€? about beginning construction on the $50 million project. Kimpton CEO Michael Depatie said in a prepared statement that Clevelandâ€™s downtown business district â€œis ripe for a unique boutique hotel. â€œFor us, itâ€™s especially exciting o see the demand for the Kimpton brand and the boutique concept in general spreading to more mainstream cities in the Midwest outside the urban centers of New York, LA and San Francisco,â€? Mr. Depatie wrote.
The â€˜oohâ€™ factor Robert Mandelbaum, the Atlantabased director of research at PKF Consulting, describes the boutique properties, especially Kimpton, as â€œthe antithesis of chain hotels.â€? â€œThey have a trendy following in the hotel industry,â€? Mr. Mandelbaum said. â€œInvestors like them. Developers like them.â€? The appeal, Mr. Mandelbaum said, is the use of property-specific interior decorations in older, sometimes historic buildings in less costly city locations than mainstream brands stake out. â€œThey are not out-of-the-box, cookie-cutter designs,â€? Mr. Mandelbaum said. Such hotels enjoy premium rates in good times, but during downturns they lag when a person who normally would appreciate a goldfish in his or her room will â€œsee a room as a room,â€? he said. Brands such as Kimpton have a buzz that makes them attractive as investments to wealthy individuals, particularly from the music or entertainment industry, according to Mr. Mandelbaum. â€œSaying you own a Kimpton has more of an â€˜oohâ€™ factor than saying you own a Marriott or Hyatt-branded product,â€? he said. Adding something new to the mix may help Clevelandâ€™s hotel market grow in additional ways as the Medical Mart and Convention Center and the Horseshoe Casino Cleveland move toward becoming realities. David Gilbert, president of the Positively Cleveland tourism marketing group, said adding new brands in town helps the region because
each has its own following. The city also benefits from being in the marketing systems of a Kimpton or Le Meridien, he said. â€œItâ€™s great for everyone because it provides downtown other options for guests when large conventions come and fill the large hotels,â€? Mr. Gilbert said.
Baklava, anyone? Downtown Cleveland Allianceâ€™s Mr. Marinucci said the hundreds of hotel rooms developers hope to add with these projects may help the market because their operators will demand premium rates, which may add stability to the market. Moreover, he said, the new convention center will change the market because the city functionally has not had a competitive convention center for more than a decade. Those factors may add selling points for doing hotel projects, but developers still must contend with a cautious lending environment, particularly after three downtown hotels the last two years have gone through foreclosures or workouts with lenders. Tracey Nichols, Cleveland economic development director, takes an upbeat view of the financing difficulties. â€œWeâ€™re trying to get a lot of projects financed in a short time,â€? Ms. Nichols said. â€œThe great thing is that we are seeing developers bring in funding sources we have not seen before. We know in the end it will take a baklava financing approach.â€? The reference to the flaky Greek pastry means each project will require funds from different sources, such as the sale of state and federal historic tax credits and historic conservation easements as well as the traditional first mortgage from a bank or other lender. Heightened risk accompanies such complicated financing. If JHB Hotel LLC, which is backed by a troika of hotel development and investor concerns from Sandusky to California, does not land its financing, the terra cotta-faced building at 1001 Euclid could have its asbestos removed but not become a Le Meridien.But even there, Ms. Nichols sees a plus. â€œGetting to remove the asbestos is a win-win,â€? Ms. Nichols said. â€œThe building is ahead. We are ahead.â€? â–
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The entire nationâ€™s plastic industry has been getting excited about the project. Last November, Mr. Poundsâ€™ national counterpart, American Chemistry Council president Cal Dooley, toured the Midwest touting the benefits of shale gas for his industry. His organization predicts a 24% increase in the production of ethane, the main component of natural gas from which many other specialty chemicals are derived.
That increase would drive an estimated $16 billion in new capital investments by the U.S. chemical industry to exploit the new production, he said, with Ohio serving as a leading state in the charge. Now that vision is apparently coming true. It would have been different if the plant had been sited a great distance away, such as on the Gulf Coast, because many of the chemicals it will produce donâ€™t travel well or have long a long shelf life, Mr.
Pounds said. But a trip of a couple hours from Pennsylvania wonâ€™t be any worse than a trip of a couple hours within Ohioâ€™s borders, he said. Going forward, Mr. Pounds said he expects to see his industry grow significantly in Ohio once the cracker starts producing raw materials. He said Ohio has the companies, the work force and the expertise to leverage its proximity to such a source of raw materials like almost no other state can. â–
MARCH 26 - APRIL 1, 2012
CRAIN’S CLEVELAND BUSINESS
When going got tough, outgoing United Way boss kept going Lauded for business acumen, retiring Benz leaves behind ‘steady’ and ‘reliable’ nonprofit
total of more than $750 million.
By TIMOTHY MAGAW email@example.com
When asked to sit down with a reporter to discuss his more than 40-year career entrenched in Cleveland’s business and nonprofit sectors, K. Michael Benz made clear he wasn’t interested in the spotlight until every last dollar was raised for the United Way of Greater Cleveland’s most recent campaign. Having reached that roughly $40.1 million benchmark earlier this month, it still took the soon-to-retire Mr. Benz some prodding to get him to open up about himself rather than gush about the countless others who have helped make so rewarding his 17-year run at the helm of the region’s United Way, two stints with the Rock and Roll Hall of Fame and periods at the city’s chamber of commerce and small business advocacy group. “There are no lone rangers,” said Mr. Benz, 64, the organization’s longest-running president, who plans to step down this summer when his successor is named. “Sorry to break the news, but it’s a together deal. It’s a community boat. … If the boat starts going down, we’re all getting wet.” Still, business leaders who have worked closely with Mr. Benz over the years weren’t shy about rattling off how he’s made Cleveland a better place to live and do business. They say he’s one of those Cleveland stalwarts everyone in the region seems to know or, at least, wants to know. “Mike knows everybody, and I think that is part of what’s made him so successful,” said retired KeyCorp chairman Henry L. Meyer III, a former United Way board chair. “But he not only knows everybody, but everybody who knows him respects him. That gets a lot done.”
Mr. Fix-it Mr. Benz was somewhat of an unconventional pick when he took the reins at United Way in 1995 as its president, according to Richard Pogue, a senior adviser at Jones Day who
K. Michael Benz, who will step down this summer, has led the United Way of Greater Cleveland for 17 years. FILE PHOTO/ JASON MILLER
has long been active in civic affairs and chaired the search committee that hired Mr. Benz. For one, there had been an issue about whether to hire someone from within the United Way system, but the organization desperately needed someone at the time who could better engage Cleveland’s business community — something, Mr. Pogue believed, Mr. Benz could do quite well. “We needed to strengthen the ties between the United Way and the business leadership of the day, and I thought he brought that skill to the table.” Mr. Pogue said. “He had empathy for the needy, but also had the ability to understand business objectives and business methodology.” However, the organization Mr. Benz plans to leave in the coming months is one that he and others in the community say is much stronger — both financially and in spirit — than the one he inherited when he first came on board. “It’s a very stable organization now,” Mr. Pogue added. “It’s got good staff people and good morale. He’s strengthened it and made it more steady and reliable.” Mr. Benz’s job hasn’t come without its struggles, particularly over the last four years as the region, and the country as a whole, weathered an economic crisis not seen since the Great Depression. While the human service agencies clamored for more United Way
Minority biomed summit set for Cleveland Biotech assistance location for the ON THE WEB Story from group BioEnterprise www.CrainsCleveland.com. first-ever Minority Corp. and a partner Biomedical plan to stage in Cleveland what they Entrepreneurship Conference,” said describe as the nation’s first Minority Baiju R. Shah, president and CEO of Biomedical Entrepreneurship BioEnterprise and co-chair of the Conference. conference, in a statement. “The The conference is set for May entrepreneurial environment is one 21-22. Also involved in its planning that embraces and provides an is The America21 Project, a minority unparalleled support network to innovation and competitiveness biomedical innovators.” initiative. Conference planners said attendees The purpose of the conference, will be offered mentoring opportuniaccording to organizers, is to address ties with industry leaders and investors, the issue of underrepresentation entrepreneurship education, and and to increase minority competipractical advice on starting and tiveness in the biomedical sector. growing a biomedical company. Keynoting the conference will be Entrepreneurs looking for financing Dr. Frank Douglas, president of the also will be afforded the opportunity Austen BioInnovation Institute in Akron. to present before a group of seasoned “Cleveland, with its rapidly growing biomedical investors. biomedical industry and nationally To view the complete conference recognized research, clinical and agenda and to register, visit educational institutions, is the ideal www.minoritybiomedical.org.
dollars as demand for their services increased amid the economic woes of recent years, Mr. Benz said the fundraising environment was equally difficult. However, those relationships with the business community he and his organization brokered helped the organization and the agencies it
serves weather that storm. For one, the United Way has met its fundraising goals over the last three years, which Mr. Benz added was no small feat. “We call on (our donors) in the last minute and say we have this gap, and they get it,” said Mr. Benz, who has steered 18 campaigns at the United Way that have netted a
Carol Rivchun first met Mr. Benz in the early 1970s when she worked at her family’s jewelry store, Rivchun Jewelers, in the Cleveland City Club building on Euclid Avenue. At the time, he led the Council of Smaller Enterprises, and she noted he was just as dedicated to this community then as he is today. “Cleveland is a tough environment and it takes a tough guy to lead in that type of environment,” said Ms. Rivchun, now president of Youth Opportunities Unlimited, a United Way-funded agency that helps young people find jobs. “He’s one of those people that keeps a community like ours moving forward.” And while his career at the United Way is coming to a close, Mr. Benz has no intention of abandoning his role as a cheerleader for the city. After all, during his lengthy career he’s seen his native city’s highs and lows — from the economic boom of the mid-1990s to the economic turmoil of recent years. “It’s time to start talking about the good news again,” Mr. Benz said. “That may be part of what I do in the future.” ■
CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
Brian D. Tucker (firstname.lastname@example.org) EDITOR:
Mark Dodosh (email@example.com) MANAGING EDITOR:
Scott Suttell (firstname.lastname@example.org)
Energized ov. John Kasich and his team have taken a good stab at developing an energy policy for the state of Ohio. The proof that they’re on the right track is that energy producers and environmentalist both aren’t crazy about elements of the plan. That’s an indication the administration has achieved a measure of balance in laying out its energy strategy. The governor boldly has gone where the federal government has not in crafting an energy policy. It is a thoughtful proposal that is well-timed in light of the current craze among energy companies over the natural gas and oil that’s locked underground in the Marcellus and Utica shale regions in Ohio. The administration says its policy rests on 10 pillars, though it’s obvious not all pillars are created equal. Shale is listed as Pillar No. l, but even if it wasn’t, you’d know its importance because Ohio’s hottest industry gets the most ink in an outline of the energy policy. It’s understandable why. Gov. Kasich can’t ignore the opportunity to reap a boatload of tax revenue from oil-and-gas production in the state, yet he can’t set tax rates so high that they’ll discourage drilling and the jobs the energy industry stands to create in Ohio. He also must be conscious of the environmental consequences of the hydraulic fracturing, or “fracking,” process that is used to liberate oil and gas from the shale. As might be expected, the particulars of the first pillar don’t thrill everyone. Energy companies aren’t fans of raising their taxes to lower Ohioans’ personal income tax rates. We think the companies should be taxed, but believe the extra revenue should go toward the multibillion-dollar challenge the state faces in keeping up with fixing its roads and bridges. Nonetheless, we like what we see of other parts of the policy as it pertains to shale. The administration says it’s updating well construction standards and other regulations to account for new technologies related to shale development. It also recognizes that local counties often don’t have the expertise needed to inspect structures at well sites, so it wants to consolidate those reviews at the state level. Co-generation, alternative fuels, coal and renewable energy are among other pillars of the energy policy that already are drawing cheers and grumbles from interested parties, and that’s OK. Every debate needs a starting point, and by putting the outline of an energy policy on paper, Gov. Kasich has provided a framework for engaging in that conversation. The catch here is that the Republican governor and Republican-controlled Legislature shouldn’t turn the proposed energy policy into a take-it-orleave-it proposition that they shove down Democrats’ throats. The Republicans tried that tack last year with the anti-union collective bargaining bill known as Senate Bill 5. The result: Voters soundly rejected the measure last November. Contrary to the role it played in destroying SB 5, organized labor likely wouldn’t rally to overturn an energy policy that lacks Democratic input. However, we believe a policy that draws on the insights of all members of the Legislature will make for a better energy strategy than one that reflects the ideas of only one side of the aisle.
FROM THE PUBLISHER
Mayor’s schools plan on right track
could be the lifeblood of a future Clevetep by step, inch by inch, Frank land — if the schools are fixed. Jackson relentlessly is pushing Last week, the mayor worked the halls ahead in his efforts to improve his of the General Assembly and appeared city’s public schools, and both city with four state lawmakers, two of them residents and people throughout Greater Republicans, who pledged to help him Cleveland should be happy about that. shape his proposed legislation to further Why, you might ask, should I be reform his town’s schools. This is enorconcerned about Cleveland’s schools, mously important because he with all their problems, when I is the only Ohio mayor who live in my comfortable and rela- BRIAN controls his city’s school district, tively safe town of (fill in the blank TUCKER and if he can fix his school suburb) with its good school district’s problems, he forever system? changes the city he loves. It’s simple, and it’s a theory More people would want to espoused by every single urban live downtown and enjoy a researcher, scholar or economic walk to fine restaurants and development expert I’ve come entertainment. And more busiacross. If the major city in a nesses — like Amtrust Financial region fails, the region rots from Services, which is moving 1,000 the inside out. employees here — would look at relocating Mayor Jackson knows that if he can to Cleveland. make major improvements in the city’s The tax base would solidify. And new schools, he will lure back young families, home buyers who can’t afford the Detroitor avoid losing them in the first place. In Shoreway area (who would ever have case you’ve missed it, there’s a race on to dreamed of reading those words 10 years build downtown rental housing, and at ago?) will move to the next up-and-coming rates that aren’t inexpensive. In them neighborhood. And yet more entreprewill be young professional couples who
neur-driven retail establishments will be opened, and — well, you get the picture. Cleveland also could become a national model for urban transformation. Two key pieces of the mayor’s school reform plan are including high-achieving charter schools in the mix of schools that receive money from Cleveland’s school levy and an ability to remove more easily underperforming teachers from the district’s schools. That is where the teachers’ unions start to squawk. “Nothing is going to be successful until there is buy-in from everyone,” The Plain Dealer quoted state teachers union head Melissa Cropper as saying. “This is causing the people of Cleveland to choose sides instead of letting everyone come together for the kids.” One longtime school reformer told me he felt that the only time school children will matter to teachers’ unions “is when the kids start paying union dues.” A bit unfair, but there’s a kernel of truth there, and unions don’t want performancebased evaluation because it identifies the weak. Mayor Jackson knows he must do just that in order to succeed. ■
Enough with the low rates, Mr. Bernanke By MARK DODOSH
en Bernanke, you’re killing my mom and the nation’s pension funds, man. The Federal Reserve chairman and his posse on the Federal Open Market Committee probably didn’t take physics in college. They’re financial types, after all. But in going about the business of setting interest rates, Fed officials would do well to keep in mind Sir Isaac Newton’s third law of motion: For every action, there is an equal and opposite reaction. We’re into Year Four of the Fed keeping interest rates at all-time low levels, with no quick end in sight. By setting the federal funds and discount rates near zero percent, Fed officials
Mr. Dodosh is editor of Crain’s Cleveland Business. believe they’re helping stimulate the economy. With borrowing costs down, the logic goes, they’ve made it easier for consumers and businesses to refinance existing debt and take on new loans. They’ve also made it a heck of a lot cheaper for the federal government to do its own borrowing as it continues to spend, spend, spend money it doesn’t have in the name of economic stimulus. The latest figures show the U.S. Treasury has $10.7 trillion of publicly held debt currently outstanding, with nearly half that amount issued during the three-plus years of the Obama administration. On the plus side, the economy is
adding jobs. According to the Bloomberg news service, there was a net gain of 1.2 million jobs in the six-month period that ended in February. It was the best half-year performance since the period from December 2005 to May 2006, Bloomberg said. However, there’s also a largely unreported downside to the Fed’s interest rate game. It’s found in the impact the sustained low rates have had on retirement funds. You see, Ben, you’ve made it oh-so costly for employers to meet their pension obligations. That’s because the government requires employers to use a market-based rate of return to calculate the value of their pension fund liabilities. The computation isn’t easy to explain, See VIEW Page 11
MARCH 26 - APRIL 1, 2012
THE BIG ISSUE Is it appropriate for employers to ask job applicants to turn over their Facebook passwords so the companies can see what they do on social media?
I don’t think it’s appropriate. I do believe that people have an expectation and should have an expectation of privacy on their Facebook accounts.
Not the password, but access to the page is OK … because that’s a real reflection of who they are.
(People) use Facebook to communicate with friends on a personal level, so perhaps that can be deemed a personal issue rather than an employment issue.
Asking for a password would imply going into the account and doing things you wouldn’t normally do as an employer. There are alternatives.
➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.
Dental specialist consolidates on Rockside Operator of 14 practices combines its Bedford, Mayfield Heights offices By STAN BULLARD email@example.com
DentalOne Partners, the umbrella name for Dental One Inc., the operator of dental practices in 14 states, will fill a big hole in the Rockside Road office market when it consolidates its headquarters office from Mayfield Heights with billing and collection services from Bedford. DentalOne has leased 34,000 square feet at the 6200 Oaktree Building, which is located at that address in Independence, according to Terry Coyne, executive vice president at Grubb & Ellis Co. Efficiency and trimming its office space needs are the drivers for this move. David Wasiolek, senior vice president and chief administrative officer for DentalOne, said the firm will consolidate into less office space with the new location. He said it will need 12% less space than it has at its two current locations, 5875 Landerbrook Drive in Mayfield Heights and 26901 Cannon Road in Bedford. “We’ll need fewer meeting rooms and common areas,” Mr. Wasiolek said. The consolidation will combine 180 people, with slightly more employees in billings and collections
coming from Bedford than headquarters executives in accounting, legal and administration from Mayfield Heights. DentalOne landed in Independence because it was central for the company’s employees from both locations, and the Oaktree building had enough space to combine the offices together, Mr. Wasiolek said. Another factor was its ease of access to Cleveland Hopkins International Airport, which is important because of the multistate nature of DentalOne’s operations, he said. Mr. Wasiolek declined to disclose the rent DentalOne will pay for the space, as did Mr. Coyne. However, the asking rent at the
building is $18.50 to $19.50 a square foot, according to Mr. Coyne’s website. The new occupant puts the 212,000-square-foot building at 93% occupancy, Mr. Coyne said in an email. JDI Oak Tree LLC, a Chagrin Falls-based investor group, owns the structure, which also houses tenants such as Clear Channel and Lawson Products. The headquarters operation will be a welcome addition to Independence, said Ron White, the city’s director of economic and community development. “We’re excited about gaining the company,” he said. Vacancy has dogged the Rockside Road market for more than a decade. The south suburbs, which include the Rockside Road office market, had 24% vacancy at the end of 2011, little changed from the prior year, according to Grubb & Ellis Co.’s annual office survey. Best known locally under the Dental Works name, DentalOne traces one of its roots to the former Sears Dental Centers. Dental Works, which has a Midwest focus, and DentalOne, with a western and southern focus, combined forces in 2008 and now have more than 150 practices. The dental services provider also operates under the DentalCare Partners name. In the DentalOne transaction, Doug Leary, senior vice president of CBRE, represented the tenant. The building was represented by Mr. Coyne and fellow Grubb & Ellis brokers Bob Nosal and David Hollister. ■
View: Low interest rates not so great Continued from PAGE 10
but the net effect is that low interest rates are forcing companies to take tons of money from their profits — money they could have reinvested in their businesses — and plow those dollars into their pension plans so that they don’t become severely underfunded. The Milliman actuarial firm reported in January that, because of historically low interest rates, the
nation’s 100 largest pension funds saw their aggregate deficit increase in 2011 by more than $236 billion, to a record total of $464 billion. Imagine what the number would be if you were to include all pension plans. Oy. Rather than continue to misuse their profits in salvaging their pension funds, many companies have decided to freeze or terminate their plans. That’s smart.
But there is no escape for my 80-year-old mom, who’s hardly earning a dime on her retirement savings. Older folks like her would be the first to tell you that low interest rates are not their friend. They may not know Sir Isaac’s third law, but they sure are feeling its effects. How about cutting them and the nation’s pension fund managers a break, Ben, by letting interest rates rise? ■
CRAIN’S CLEVELAND BUSINESS
CRAIN’S CLEVELAND BUSINESS
to associate; Eileen Mathews to of counsel.
GOING PLACES JOB CHANGES
HWH ARCHITECTS ENGINEERS PLANNERS INC.: Craig R. Brown to department manager, Civil/Site Department; James W. Brewer to vice president.
212 CAPITAL GROUP: Brian Maher to managing associate.
WESTON HURD LLP: Morris L. Hawk to partner.
MANUFACTURING CINETIC LANDIS CORP.: John Leone to vice president, general manager, Consumables Operation.
CAPITALWORKS LLC: Mikel B. Harding to chief financial officer.
SKODA MINOTTI FINANCIAL SERVICES: Jennifer Kovell to financial services assistant.
GILBANE BUILDING CO.: Scott Orr to district operations manager.
SS&G: Sybil Feightner to senior associate.
SS&G HEALTHCARE SERVICES LLC: Margaret Zalenski to billing manager; Tobi Klein to billing specialist; Michele Kinkela to practice manager; Sue DeAngelis to medical billing specialist.
BEARING DISTRIBUTORS INC.: Steve Grzymkowski to e-business manager.
EDUCATION KENT STATE UNIVERSITY: Shin-Min Song to dean, College of Applied Engineering, Sustainability and Technology. SAINT JOSEPH ACADEMY: Kate Vinciquerra to capital campaign officer.
FINANCE FIRSTMERIT CORP.: Michael L. Cheravitch to senior vice president, director of business banking. JPMORGAN CHASE & CO.: Mark Glatley to vice president, defined
INSURANCE UNITEDHEALTHCARE: Rick Sudetic to vice president, key account management.
BRENNAN, MANNA & DIAMOND: Veronica Jiajia Xu to associate. REMINGER CO. LPA: Joseph T. Palcko to associate. TAROLLI, SUNDHEIM, COVELL & TUMMINO LLP: Kenneth Watson, Michael Steel, Liza Heinig and Rita Kline to partners; Ryan Jones
TEAM NORTHEAST OHIO: Jennifer A. Spencer to manager, business attraction.
SERVICE CENTRIC CONSULTING: Sarah Baker to business analyst. DAVID SOMMERS & ASSOCIATES: Jacquelyn Sojka to interior designer.
POLYONE CORP.: Robert M. Patterson to executive vice president and chief operating officer; Richard J. Diemer to senior vice president and chief financial officer.
EXPERIENT: Tina Sampson to senior vice president, corporate market development.
THE PATTIE GROUP: Amanda Ross to contract administrator; John Miller to project director; Brian Knauer to project manager; Brent Smith to garden and property manager; Mike Maxwell to irrigation foreman.
LANDAU PUBLIC RELATIONS: Jennifer Hickin to account executive. THUNDER::TECH: Kelly McGuire to account coordinator; Heather Driggs and J.P. Krainz to account managers; Erika Port to search marketing specialist; Melanie Eyerman to manager, social media services.
MARCH 26 - APRIL 1, 2012
CUYAHOGA VALLEY SCENIC RAILROAD: Larry Blanchard to trainmaster; Dennis Varian to director of operations. MEDWISH: Josh Kravitz to executive director. SOCIETY OF ST. VINCENT DE PAUL DIOCESE CLEVELAND: John Litten to executive director.
FREEDONIA CUSTOM RESEARCH: Ravi Dodeja to business development manager.
TECHNOLOGY INFOGROW CORP.: John Boros to vice president, sales. TOA TECHNOLOGIES: Kaitlin McCready to manager, public relations.
BOARDS CENTER FOR COMMUNITY SOLUTIONS: Stephen J. Squeri (Jones Day) to chair; Dr. E. Harry Walker to vice chair.
AWARDS PR WEEK: Cari Steiner (Fahlgren Mortine) received the Young Public Relations Professional of the Year Award.
Send information for Going Places to firstname.lastname@example.org.
Legislators join effort for uniform municipal taxes In business, every connection matters.
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By JAY MILLER email@example.com
A move to streamline municipal income tax filings for Ohio businesses took another step forward last week. A group of legislators said they would join with a group of business organizations that have allied recently as the Municipal Income Tax Uniformity Coalition to promote the simplification of tax filings for businesses. The goal of the coalition is to create a uniform municipal income tax code that all Ohio municipalities assessing a tax would follow. At a press conference in Columbus last Wednesday, March 21, Rep. Cheryl Grossman, the House Republican majority whip, announced that the House Ways and Means Committee will hold hearings to discuss ways to reform the tax collection process. No specific dates for hearings have been set. At present, each city is free to create its own tax forms and even define for itself what income is subject to municipal tax. The cities also are paid those taxes directly by employers. Lt. Gov. Mary Taylor told Crain’s in late January that the Kasich administration would like to make the
ON THE WEB
Story from www.CrainsCleveland.com.
collection of municipal taxes more uniform and even bring their collection under state control. However, cities in Ohio are wary of turning over control of tax collections to the state. The Ohio Municipal League is concerned, based on the way the state distributes sales taxes, that cities won’t get their tax money as quickly as they do when they collect it themselves. The group issued a white paper on the subject March 2. A statement posted on the Ohio Municipal League’s website said the association of cities “remains committed to seeking appropriate solutions to achieving additional uniform practices in the application of voter approved municipal income taxes.” The municipal league estimates about 540 Ohio communities collect income taxes. Among business organizations that are part of the coalition to streamline municipal tax collections are the Ohio Chamber of Commerce and the Ohio Manufacturers’ Association. ■
his year, Crain’s Cleveland Business is honoring those working in the region’s general and in-house counsel positions. The awards are being presented to outstanding general counsels who have helped lead their companies and organizations at the executive level. Winners and finalists were determined by an independent panel of legal experts. Consideration was given to leadership; business strategy achievement; protection of company interests; governance/ compliance; notable legal achievements; and community/volunteer efforts. Winners and finalists will be recognized during a program April 18 at LaCentre Conference and Banquet Facility in Westlake, which will follow a half-day education summit. The education portion — for which continuing legal education credits are available — will run from 1 p.m. to 5 p.m. and the awards event will be 5 p.m. to 7:30 p.m. During the education portion of the day, a general session will kick off the event for all attendees and then three track sessions will run simultaneously and repeat once.
MEET THIS YEAR’S ROSTER WINNERS LISA GASBARRE BLACK General counsel Catholic Charities Health and Human Services PAGE 14
LUKE W. CLELAND Assistant general counsel University Hospitals PAGE 15
PATRICK J. DUGAN Executive vice president, chief legal officer and board member Medical Mutual of Ohio PAGE 16
HENRY G. GRENDELL Vice president and general counsel Family Heritage Life Insurance Company of America PAGE 16
MARK M. MCGUIRE Executive vice president and general
counsel Eaton Corp. PAGE 18
JOSEPH W. BAUER
Executive vice president and general counsel FirstEnergy Corp. PAGE 18
Principal Bauer Advising LLC Retired general counsel Lubrizol Corp. PAGE 17
LESLIE D. DUNN
PAUL HARRIS General counsel and secretary KeyCorp PAGE 19
Retired senior VP of business development, general counsel and secretary Cole National Corp. PAGE 17
CATHERINE M. KILBANE Senior vice president, general counsel and secretary American Greetings Corp. PAGE 20
GERI PRESTI Senior vice president, general counsel and corporate secretary Forest City Enterprises Inc. PAGE 20
Retired general counsel J.M. Smucker Co. PAGE 21
BETSY RADER President Association for Corporate Counsel, Northeast Ohio chapter Associate counsel Cleveland Clinic PAGE 21
* — Profile information was gleaned from nomination forms
■ General Session, Data Privacy and Risk — Moderator is Ted Kobus, national head of data privacy at Baker Hostetler. Panelists are Lynn Sessions, counsel, Baker Hostetler; Jason Straight, vice president of legal technologies business development, Kroll Ontrack; Peter Albert, chief privacy officer, Progressive Insurance; and Maria Del Monaco, attorney, Bureau of Consumer Protection, FTC. Discussion topics will include IT vulnerabilities, breach policies and procedures; data collection, mobile security and online behavioral policies; data security, privacy and best practices; FTC rules, safeguards, disposal compliance and red flags; and HIPAA rules and standards. ■ Track 1, Health Care Reform: Considerations and requirements for employers in 2013 — Moderator is Chris Swift, partner, health care and tax, Baker Hostetler. Panelists are Patricia Decensi, vice president and assistant general counsel, Medical Mutual; Harlin Adelman, vice president and deputy general counsel, University Hospitals; Sue McBride, principal, health care advisory, KPMG; and Charles Adamczyk, senior benefits consultant, CBiz. Discussion topics will include plan design compliance, financial and HR impact; near-term effects, Ohio Exchange status, employer impact and See COUNSEL Page 14
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LEGAL LINGO Q In what ways, if any, have you seen the legal landscape change over the past decade?
NONPROFIT WINNER LISA GASBARRE BLACK General counsel Catholic Charities Health and Human Services
isa Gasbarre Black is a sounding board of sorts for the nonprofit Catholic Charities Health and Human Services, which operates in eight northern Ohio counties providing services to children, families, older adults and those with disabilities, as well as emergency assistance. Catholic Charities develops its strategic plans “within the organization’s corporate governance structure,” according to a nomination form for Ms. Black, but she in turn provides legal analysis and oversight of those strategic goals. The organization’s accreditation, for instance, requires her review of guidelines.
A Clients possess greater savvy in terms of knowledge of the law due in large part to increased access to electronic legal resources. In turn, lawyers have had to embrace client knowledge, forcing smaller law firms and solo practitioners to become adept with technology, and placing demands on large firms to focus on efficiencies. Q Describe some of the most challenging aspects of your position. A Working with professionals from other disciplines, both internally and externally, who sometimes perceive lawyers as obstacles, rather than facilitators, to achieve the common goal. Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A Listening and respecting the knowledge of the professionals who comprise the organization are key to achieving resolution to legal matters. In-house lawyers work on a daily basis as colleagues with the individuals to whom they provide legal advice, and it is crucial to
She also is the go-to person for corporate compliance and ethics mandates. Catholic Charities also has employed Ms. Black’s legal expertise for in-house training seminars on litigation, release of records and specialized areas of the law. She
exist in an atmosphere of mutual respect in order to be trusted as both a colleague and as a resource for legal information, advice and counsel. Q What are some of the recurring issues you face? A Catholic Charities is organized as a nonprofit corporation to deliver health and human services in eight counties of Northeast Ohio that comprise the Catholic Diocese of Cleveland. Our mission is rooted in the Gospel message to serve those most in need. The need for services continues to rise as the good people of our region are faced with greater economic challenges, and requiring more services in an era of dwindling resources. We rely on the goodness of our benefactors, who embrace that same Gospel message, and extend a helping hand to allow our professionals to serve the needs of so many. Q Finally, on a more lighthearted note: If you weren’t in your current profession, what would be you be doing? A It’s a toss-up between having my own show on the Food Network or being a pundit on Fox News!
also seeks outside input from trade associations and national organizations on programming trends. Over the past 18 months, Ms. Black advised nonprofits within Catholic Charities’ geographic area on mergers that offered efficiencies in service delivery, and she has
trained colleagues on better response to funding sources’ requests for gift terms and conditions. Plus, she developed along with senior staff members new policies for corporate compliance, risk management and electronic discovery; developed an internal immigration legal services program for refugees and immigrants within the diocese; and brought the Cleveland Homeless Legal Assistance program into Catholic Charities’ emergency services programming. Ms. Black earned her bachelor’s degree from John Carroll University and graduated from ClevelandMarshall College of Law. She currently serves on the Cleveland Metropolitan Bar Association’s Justice for All committee and assists the bar’s Cleveland Homeless Legal Assistance program. For the last two years, she has participated in the Pro Bono Summit and National Pro Bono Week, jointly sponsored by the bar and the Legal Aid Society of Cleveland. Previously, she volunteered with the Legal Aid Society’s Save the Dream program. Ms. Black also is a member of the Northeast Ohio chapter of the Association of Corporate Counsel, the Ohio State Bar Association and the Justinian Forum, a group of attorneys and judges of Italian heritage.
Counsel continued from PAGE 13
re-insurance fees; reporting requirements and ACO initiatives; new operating and payment models, a national perspective; and individual mandate, potential impact of reversal. ■ Track 2, Executive Compensation: Decisions, disclosures and best practices — Moderator is Mark Dodosh, editor, Crain’s Cleveland Business. Panelists are David Coffey, assistant general counsel, Progressive Insurance; Lisa Kunkle, vice president, general counsel and secretary, PolyOne; and Rene King, principal, executive compensation practice, Mercer. Discussion topics will include “Say on Pay” rules, SEC regulations and shareholder buy-in; proxy advisory firms and their power, pay for performance evaluation; shareholder activists, gain favor and avoid negativity; and transparency, communication with constituencies. ■ Track 3, Risk Management: Liability and insurance for officers and directors — Moderator is Brian Tucker, publisher and editorial director, Crain’s Cleveland Business. Panelists are Andrew Gunn, practice leader, vice president of specialty risk, Oswald; James Niehaus, counsel, Frantz Ward; Shelly Hillyer, senior attorney compliance and risk management, Cliffs Natural Resources; and Shannon Jerse, deputy general counsel, St. Vincent Charity Medical Center. Discussion topics will include compliance training and its value to risk management; liability of officers and directors in M&A activities; regulatory activism, the need to identify vulnerabilities in insurance coverage; rising threat of corporate account takeovers; assessing the complexities of health care records; and threat potential in the Federal Corrupt Practices Act. ■ Keynote speaker will be K. Michael Benz, president and CEO of the United Way of Greater Cleveland. He will speak on “Executive Leadership: A CEO Perspective.” Registration can be made online at www.crainscleveland.com/ counsel or by contacting Jessica D. Snyder at 216-771-5388 or jdsnyder @crain.com.
Congratulations Lisa! As we celebrate our 100th Anniversary, we are honored to include you in our proud history and promising future. Catholic Charities – Dioceses of Cleveland
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LEGAL LINGO RISING STAR, WINNER LUKE W. CLELAND Assistant general counsel University Hospitals
hile Luke W. Cleland is only seven years out of law school, his list of accomplishments as a lawyer at one of the region’s largest health care systems reads like that of an industry veteran. Indeed, his work has resulted in specific savings, revenues and recoveries for the system totaling more than $5 million. As University Hospitals’ assistant general counsel, Mr. Cleland’s fingerprints, for one, have been all over the sprawling health system’s $1.2 billion expansion initiative over the last several years. Mr. Cleland served as the lead counsel to the health system’s leadership on the opening of the Seidman Cancer Center, the health system’s $260 million cancer hospital on Euclid Avenue. In that role, according to the nomination, he “demonstrated an extraordinary grasp of the unique legal and regulatory issues involved in the creation of a cancer hospital.” He also helped negotiate the health system’s joint venture with Centerre Healthcare for a planned 40-bed, $17 million inpatient rehabilitation hospital in Beachwood. In fact, he performed so well during negotiations with Centerre, the opposing counsel was surprised to learn Mr. Cleland had been practicing law for less than 10 years. “He had assumed Luke was a senior attorney, given Luke’s dexterity and mastery of the issues and his professionalism throughout negotiations,” the nomination said. Mr. Cleland, who prior to joining University Hospitals worked at Akron General Health System, is also known by his colleagues as an employee who strives to do the “right thing.” “As hard as it may be to confront problems, Luke has shown an impressive ability to walk the correct path, no matter how difficult or sensitive the stage, one that is often on the leading edge of industry issues,” the nomination said. Mr. Cleland, a graduate of the Cleveland-Marshall College of Law, also has taken an interest in helping young law students develop their legal chops. Since joining University Hospitals, Mr. Cleland helped develop and oversees an externship program for Cleveland-Marshall students. He also serves as a guest lecturer at Walsh University, where he instructs graduate students on health care law. Mr. Cleland also serves as a member of the executive council of the health care law section of the Cleveland Metropolitan Bar Association. Beyond the legal world, Mr. Cleland is an active member of Arc of Stark County, an organization dedicated to helping people with developmental disabilities.
Q In what ways, if any, have you seen the legal landscape change over the past decade? A Health care is an increasingly regulated industry requiring sophisticated and experienced legal counsel. The volume of administrative law and regulation at all levels of government requires deeper dives to find appropriate solutions. Downstream vendors and other entities are also facing increased scrutiny when they do business with the health care industry. Coupled with the pressures in today’s economy, the challenges are greater to be efficient and maintain quality. Q Describe some of the most challenging aspects of your position. A The most practical challenge is
how to maintain high quality legal services in an era of change and decreasing resources. Under (UH general counsel) Janet Miller and (deputy general counsel and VP of corporate legal services) Harlin Adelman’s direction, we are constantly examining new and different ways to evolve to be more efficient, cost less, and provide a higher quality legal product. This involves collaboration with colleagues outside of our department and vendors outside of the organization to find ways to change the traditional model of in-house counsel services. The model of health care is facing a tremendous era of change, as is the model of legal services in the health care industry. ...
Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A We in-house lawyers are not only zealous advocates in fierce negotiations with outsiders in furtherance of an organization’s given mission; we are counselors and consultants to our organizations through our colleagues throughout the company. As my wife, an accomplished counselor (and psychology professor) often reminds me, counseling requires exceptional listening skills. Exceptional listening requires both great humility to learn and the patience not to jump to conclusions. These qualities help to tease out facts or motivations that may not be readily apparent, and this
knowledge is often crucial to providing appropriate legal analysis. Being able to listen well goes a long way toward building trust and ensuring that the appropriate action is taken after giving counsel. Q If you weren’t in your current profession, what would be you be doing? A Assuming I didn’t win the lottery? I’d love to teach and coach football. I have educators and coaches in my family, and I feel the opportunity to make a difference at such a formative part of a person’s life is such a noble profession. Everyone has a teacher or coach to thank for help along the way. The good ones just seem too rare.
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Featured attorneys (left-right): IRA KAPLAN, STEVE AUVIL, MARTHA SWETERLITSCH, JAMES FRIEDMAN, DOUGLAS HAAS, BRYAN JAKETIC, YANPING WANG, MARK AVSEC and ALLAN GOLDNER. © 2011 Benesch Friedlander Coplan & Aronoff LLP
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MARCH 26 - APRIL 1, 2012
LEGAL LINGO PRIVATE COMPANY WINNER PATRICK J. DUGAN Executive vice president, chief legal officer and board member Medical Mutual of Ohio
f the Affordable Care Act represents a “sea change for health insurers,” Patrick J. Dugan is among those navigating the uncertain waters for Medical Mutual of Ohio. “Pat’s leadership has helped the company respond well to a rapidly changing regulatory environment, and he has been integral in positioning Medical Mutual to not only survive health care reform, but thrive,” the nomination said. “When providing advice, he is able to wear both his lawyer hat and his executive hat and switch seamlessly between the two.”
Q In what ways, if any, have you seen the legal landscape change over the past decade? A The legal landscape, with respect to outside counsel, has changed because purchasers of legal services are demanding more value. This has resulted in new types of lawyer/client relationships, especially with respect to unique fee arrangements. Medical Mutual has instituted a legal RFP process that it uses to evaluate the best counsel for particular practice areas in terms of value, expertise and cultural fit with our organization.
position. A Having moved to an in-house position, I have experienced both the role of outside counsel and chief legal officer. The challenge of the CLO role is to be both a counselor and a business partner. In some ways, as outside counsel, you can give advice and then walk away. As CLO, you have to deal more directly with the consequences of your client taking your advice or choosing to ignore it.
Q Describe some of the most challenging aspects of your
Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A One of the most important quali-
Mr. Dugan’s experience with Medical Mutual began in 1997 as primary outside legal counsel to the company’s board of directors. He was named chief legal officer in 2009, and 12 months later, he was faced with ushering the company through the new health insurance landscape created by the Affordable Care Act. In response, Mr. Dugan created a health care reform task force, offering a forum in which all areas of the company are represented in seeking solutions to compliance is-
sues, customer concerns and regulator requests. Group customers were worked with closely to make sure they were ready for any immediate coverage changes. “Pat has made health care reform a challenge to embrace, and even an opportunity to grow, not a regulatory nightmare to be feared,” the nomination said. Mr. Dugan also is in charge of strategic planning. The strategic planning team headed by Mr. Dugan is an interdisciplinary team of executives who meet biweekly to
ties for in-house counsel to possess is empathy. One must have the ability to understand the company’s end goals and help the executives find the best way to reach that goal within the bounds of the law. The other important quality is the ability to multi-task. Unlike a law firm where a lawyer may focus on one particular project or area of the law at a time, the in-house lawyer must switch rapidly from threatened litigation to the latest acquisition and on to a labor law matter, all in a day. Q What are some of the recurring issues you face? A In today’s economy there is
discuss product strategies, technology investments and strategic alliances through growth and acquisition. He also provides guidance in the area of Six Sigma, a set of principles he helped bring to Medical Mutual’s legal department. Mr. Dugan has served on the boards of the West Side Ecumenical Ministry and the Center for Families and Children, and last year he helped guide the two agencies through a merger. “Pat kept the two organizations focused on their unique strengths,
constant pressure to do more with less. I want my staff to have quality work/life balance and yet the workload continues to increase. In the world of health insurance there is a constantly changing regulatory environment at both the state and federal level. We need to stay vigilant to make sure our clients in the organization have the most up-to-date information. Q If you weren’t in your current profession, what would be you be doing? A In my dreams I would be a touring pro in the PGA. In reality, I would probably be a teaching pro at a golf course.
and helped them think through and articulate how they could preserve and build upon these strengths to reach their full potential,” said Sharon Sobol Jordon, president and CEO of the Center for Families and Children, in the nomination. “Most of all, Pat helped the two CEOs build much-needed trust and goodwill between them so they could become champions for the deal and the tremendous work ahead once the merger was accomplished,” she said.
LEGAL LINGO PRIVATE COMPANY WINNER What do you look for in a law firm?
HENRY G. GRENDELL Vice president and general counsel Family Heritage Life Insurance Company of America
O Focused wisdom.
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ne of Henry G. Grendell’s roles at Family Heritage Life Insurance Co. of America is serving as chief risk officer. His abilities in that capacity were put to the test in the past year as the company undertook what it called “an extremely complex and very large capital restructuring” — and Mr. Grendell was more than up to the challenge. Mr. Grendell was responsible for all legal aspects of the transaction, which, according to his nomination, “resulted in the capital restructuring of (Family Heritage) and its holding company to facilitate estate planning objectives of the primary shareholder.” The nomination stated that Mr. Grendell focused on the details of the transaction “while still maintaining a view of the big picture.” He worked with two outside accounting firms and two law firms to get a handle on all possible implications of the way the deal was structured. Mr. Grendell also handles compliance and human resources functions at Family Heritage. “While he always represents the views for compliance and risk management, he also understands the business elements being discussed and helps the organization achieve the desired results,” the nomination said.
Q In what ways, if any, have you seen the legal landscape change over the past decade? A The biggest change in the legal landscape over the last decade has been the role that technology plays in business and the law. From electronic discovery in litigation to electronic contracting and cybersecurity issues in business, a lawyer needs to have a strong grasp on the new technologies and the legal issues that arise from them. Q Describe some of the most challenging aspects of your position. A The most challenging aspect of my position is being a true legal generalist. ... Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A The most important quality is good judgment. Many of the questions that come to the in-house attorney are mixed legal and business questions that arise with incomplete information and require immediate (or at least very quick) answers. Q What are some of the recurring issues you face? A Some recurring issues are regulatory, since Family Heritage operates in a highly-regulated industry; corporate, in dealing with our board and parent company; and contractual, such as reviewing vendor contracts or negotiating contracts with business partners. Q If you weren’t in your current profession, what would be you be doing? A If I wasn’t a general counsel, I would probably be a high school history teacher. Both my parents were teachers and I love to read and learn about history and travel to historical sites (although I do not have as much time as I would like to do so).
CRAINâ€™S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
MEET THE JUDGES JOSEPH W. BAUER
LESLIE D. DUNN
Principal, Bauer Advising LLC; retired general counsel, Lubrizol Corp.
Retired senior VP of business development, general counsel and secretary, Cole National Corp.
oseph W. Bauer was general counsel of Lubrizol Corp., a producer of lubricant additives and specialty chemicals, for 20 years before forming Bauer Advising LLC. As a legal officer he was responsible for the content and purchasing of all commercial insurance and related services. Now he advises large companies and law firms on commercial insurance terms and alternative legal fee arrangements and hosts educational programs on these subjects. He is an emeritus member of the Conference Boardâ€™s Council of Chief Legal Officers and a trustee of Providence House. Early in his career he practiced with the Jones Day law firm.
ince 2007, Leslie D. Dunn has served as an independent director on the board of the Federal Home Loan Bank of Cincinnati and is chairwoman of its governance committee and a member of its audit committee. Her experience includes service on the advisory board of Brown Flynn Communications, a privately owned communications firm, and more than 15 years, prior to its recent sale, as a director of Telarc International Corp., a privately-held classical and jazz recording company. From 1997 through 2004, she was senior vice president of business development, general counsel and secretary of Cole National Corp. Ms. Dunn also was a partner in the business practice group of Jones Day and a partner in the corporate practice at Squire Sanders.
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Lisa Gasbarre Black â€“ Catholic Charities Health and Human Services Luke Cleland â€“ United Hospitals Health System Patrick DuganÂą0HGLFDO0XWXDORI2KLR Henry GrendellÂą)DPLO\+HULWDJH/LIH,QVXUDQFH Mark McGuire â€“ Eaton Corporation Leila Vespoli â€“ FirstEnergy Corporation
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MARCH 26 - APRIL 1, 2012
LEGAL LINGO PUBLIC COMPANY WINNER MARK M. MCGUIRE Executive vice president and general counsel Eaton Corp.
eing the general counsel for a giant corporation such as Eaton Corp. requires not just the skills of a great lawyer, but the strategic thinking and judgment of a sound executive. Little wonder Eaton depends upon Mark McGuire to fill these roles. For one thing, it’s not like a job at a parochial law firm or corporation with a narrow focus. Eaton cuts a wide swath with its business, both in terms of the industries and the geographies in which it operates. To stay on top of it all, Mr. McGuire manages a team of 50 lawyers in 14 nations, including China, Russia,
Q In what ways, if any, have you seen the legal landscape change over the past decade? A I’ve been working “in-house” for the past decade, so from a corporate perspective, we’ve seen an increased focus on legal compliance both in the U.S. and globally. We’ve lived through Sarbanes-Oxley and now Dodd-Frank, as well as an increased focus by regulators and enforcement agencies on compliance. There have been notable prosecutions related to Foreign Corrupt Practices, environmental catastrophes and we are now seeing fallout from insider trading scandals. It’s never been more important to ensure that your company (or client) is “doing business right,” as we say at Eaton. Q Describe some of the most challenging aspects of your position. A We have approximately 60 attorneys and an equal number of professional and support staff working around the world, from Shanghai to
Mexico, India and Brazil. And that’s not even counting the outside lawyers and firms the company uses. Mr. McGuire not only manages Eaton’s legal and regulatory issues,
Dubai. Keeping on top of important legal matters in all regions of the world can be very challenging, but we have an amazingly talented, diverse and dedicated team who work tirelessly to keep us informed and well advised. Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A The ability to partner with business teams and understand their goals and objectives is critical to the success of an in-house counsel. Excellent legal expertise exists both in law firms and in corporate law departments, but in-house counsel particularly need to be aligned with the business in such a way that we not only offer legal advice but combine it with a practical approach to help achieve our clients’ business objectives. Q What are some of the recurring issues you face?
but also directly oversees the company’s public relations and communications efforts, while at the same time advising its board of directors on audit and corporate
A You need a terrific team to succeed! The recruitment, development and retention of our top talent is critical to our success. Building a team also includes selecting outside counsel who share our vision and values and who are committed to our success. In addition, as a department we need to be flexible enough to grow with the business, yet balance our internal and external resources (outside counsel) in such a way that we can provide just the right level of service to our clients. Q If you weren’t in your current profession, what would be you be doing? A I’ve been practicing law for so long, I’ve forgotten how to do anything else! However, in the spirit of continuous learning, I wouldn’t mind taking up something entirely new. ... I like trying all the great new restaurants in Cleveland and have always wanted to learn to be a chef, but I’m afraid I would literally consume all the profits.
governance issues. The job requires a lot of proactive work, not just responding to fires, because of the diverse nature of Eaton’s business. “Mr. McGuire has developed and delivered a whole host of compliance-oriented training programs related to insider trading, anti-trust, anti-bribery, Foreign Corrupt Practices Act and export control,” according to the nomination. On top of all that, Eaton is an acquisitive company — and corporate acquisitions require a great deal of legal work, especially when they involve companies in different nations. “In the past 18 months, Mr. McGuire has directed the legal support for 18 acquisitions, of which nine were based outside of the United States,” the nomination said. “These acquisitions, totaling $485 million in (annual) sales, have required legal expertise in jurisdictions such as South Africa, Turkey, India, Colombia, France and Germany.” On top of all that, Mr. McGuire still finds time for more work, not associated directly with his job. He currently is on the board of trustees and executive committee for the Cleveland Play House and has chaired his company’s United Way campaign. Once a year, he sponsors an award to recognize outside firms used by Eaton that have demonstrated a commitment to diversity in their ranks — a cause long favored by Mr. McGuire.
PUBLIC COMPANY WINNER LEILA VESPOLI Executive vice president and general counsel FirstEnergy Corp.
eila Vespoli has been intimately involved in shaping the future of the $12 billion energy company and has been FirstEnergy’s point person in the continuing evolution of electric power policy in Ohio. Ms. Vespoli provided legal counsel and leadership in FirstEnergy’s recent efforts to divest several nonstrategic assets, including the Fremont Energy Center, the Richland and Stryker plants and a partial interest in the Signal Peak Coal Mine in Montana. The sale of these noncore assets strengthened the company’s balance sheet by reducing its debt by more than $2.4 billion. She also played a key role in the 2011 merger with Allegheny Energy Inc., a deal that gave FirstEnergy the largest customer base of any U.S. electric company. Its 10 utilities now serve 6 million customers in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland. She led teams of legal professionals and others to win regulatory approvals in several states and managed the complex employment and environmental issues arising from the merger. Ms. Vespoli also has made a legislative impact, recently helping to pass a bill that enables electric distribution utilities to use special securitization bonds to exchange high-interest debt for low-interest debt, reducing interest charges, which could lead to lower monthly electric bills for customers. A graduate of Case Western Reserve University Law School, Ms. Vespoli joined the Ohio Edison Co., a predecessor of FirstEnergy, as an associate attorney right out of law school in 1984. She was made associate general counsel in 1997, vice president and general counsel in 2000 and reached her current position in 2008. In addition to other community service, she serves as chairwoman of the FirstEnergy Foundation.
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CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
Q In what ways, if any, have you seen the legal landscape change over the past decade? A Without question, the increase in regulation. Public companies are highly regulated and energy companies like ours — with regulated utilities and a competitive generation business — are doubly so. Much of the regulatory oversight in our industry involves utility efforts to achieve mandated goals for energy efficiency, renewable power and other social priorities and, for our generating fleet, environmental mandates. At FirstEnergy, we’re working to maintain the operating flexibility needed to achieve these and other goals at the least cost to customers and the greatest benefit to our shareholders. Q Describe some of the most challenging aspects of your position. Q For those of us who deal with legal and regulatory issues involving the electric utility industry, one of the greatest challenges involves finding common ground among many diverse constituencies — including businesses, consumer advocates, environmental groups, other utilities, regulators and lawmakers. First and foremost, this process demands patience. It also involves getting to know people on the other side of the table, understanding their concerns, and finding ways to work out our differences. Knowing the law is important, but it’s also essential to know people. The art of compromise is a delicate process, and it starts
with gaining a better understanding of the needs and priorities of all stakeholders. Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? Serving as an attorney for any company shouldn’t involve just looking at the law and determining what you can’t do. It’s important for in-house counsel to fully understand the company’s objectives and come up with solutions that help achieve them. That means wearing your business hat as well as your legal hat. ... Q What are some of the recurring issues you face? Details count. On more than one occasion, I’ve seen major negotiations fall apart around the smallest of them. I’ve always been a strong believer in a focus on the details. Very few issues are as they first appear on the surface. The most complex issues demand a thorough analysis of all conceivable outcomes and how they impact your company’s bottom line. ... Q If you weren’t in your current profession, what would be you be doing? A I love oil painting, mostly landscapes. I don’t think I could make a living at it, but if I weren’t spending so much time at work, I’d probably be spending a lot more time with a paintbrush in my hand!
FINALIST PAUL HARRIS General counsel and secretary KeyCorp
aul Harris did a lot to help KeyCorp get through a tough time in the company’s history. Key was one of many banks that borrowed money from the federal government after the economy collapsed in late 2008. Mr. Harris played a big role not only in guiding Key through the process of receiving $2.5 billion from the Troubled Asset Relief Program, but he also helped the bank raise the capital it needed to pay off that debt in 2011, according to Tom McKee, chairman of Cleveland law firm Calfee, Halter & Griswold LLP, who nominated Mr. Harris and has worked on projects with him for about a decade. During that period, Mr. Harris also helped Key settle a shareholder lawsuit alleging that the bank overpaid its management. Following the settlement, he helped Key revise its compensation practices. As general counsel and secretary for Key, Mr. Harris supports the
Q In what ways, if any, have you seen the legal landscape change over the past decade? A A continued strong trend toward specialization and, from a corporate standpoint, keen focus on retaining lawyers who have deep experience in the matters on which they are engaged. In addition, as many law firms continue to rely on the billable hour, a heightened focus on strong lawyers who can meet legal needs in the lowest-cost manner possible. This has increased opportunities for lawyers in smaller and medium-sized markets. Q Describe some of the most challenging aspects of your position. A Staying abreast of the rapid pace of regulatory change in the financial services industry and discerning what matters most among a daily barrage of information. Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? board of directors and participates in its strategic planning, according to the nomination. He then works with senior officers to implement those strategies. Not only does Mr. Harris oversee Key’s legal functions, but he also oversees its government relations effort, which involves promoting Key’s interests when lawmakers are deciding issues that could
A Strong communication skills and business acumen. Corporate lawyers need to establish that they can deliver value in ways that outside counsel are often less able to do because they are not as close to the business; absent that value add, legal needs can be addressed through variable (sourced) costs. Q What are some of the recurring issues you face? A Managing talented in-house lawyers is both a rewarding and time-consuming process. Given the complex regulatory environment and changing business environment, I spend significant time making sure that our lawyers, who are organized in sections, collaborate across sections and stay abreast of changes in our corporate strategies. Q If you weren’t in your current profession, what would be you be doing? A Ideally, I would be a retired professional baseball player spending my time traveling with my spouse and catching up on neglected reading. impact the bank. Mr. Harris took his position at Key in 2003 and previously served as partner-in-charge at Thompson Hine LLP’s Cleveland office. Mr. McKee described Mr. Harris as a patient person who knows how to communicate and build a consensus. “I have found him to be an incredibly thoughtful individual,” Mr. McKee said.
vision Great leadership requires the vision to see what’s possible and the dedication to make it a reality. Congratulations to our own Leila Vespoli for receiving Crain’s General and In-House Counsel Award. Leila’s extraordinary talents and expertise make her a tremendous asset to our company and community.
CRAIN’S CLEVELAND BUSINESS
FINALIST GERI PRESTI Senior vice president, general counsel and corporate secretary Forest City Enterprises Inc.
eri Presti regularly works directly with the CEO and CFO of Forest City and heads of its business units, but her titles also provide some insight into her multiple roles at the Cleveland-based megadevelopment firm. As corporate secretary, she oversees the legal aspects of operating a publicly traded company, such as overseeing filings with the Securities & Exchange Commission for the company, its executives and directors. Oversight of legal aspects of securities matters at Forest City meant she was involved in more than $500 million of securities matters in the last 18 months, including its issuing $350 million in convertible senior notes. Ms. Presti is also involved in the legal side of major financial trans-
actions of the billion-dollar development concern — more than $500 million in the last 18 months alone — and agreements for some of its major projects. Due to the nature of real estate development, at Forest City in-house counsel works directly with members of the business team in negotiating transactions for new projects as well as overseeing the legal documents to make them a reality. Moreover, she plays the traditional general counsel role of supervising the company’s in-house Cleveland staff of 20 and three other offices around the nation and determines what work goes to outside counsel, often from heavyweight firms such as Baker & Hostetler LLP. She also played a role in the company’s commitment to support human resources diversity programs, even serving as a mentor to women early in their careers with the company, and crafting its ethics program. Among other activities, Ms. Presti chairs the board of the Cleveland Music School Settlement. It is an organization she knows from the inside out because she worked there as a music therapist before a law degree and master of social science administration from Case Western Reserve University launched her legal and business career.
MARCH 26 - APRIL 1, 2012
FINALIST CATHERINE M. KILBANE Senior vice president, general counsel and secretary American Greetings Corp.
atherine M. Kilbane has created a unique setup for her legal department at American Greetings. Ms. Kilbane, who has been senior vice president and general counsel since October 2003, has cross-matrixed the legal department by business unit and by functional speciality. Lawyers are embedded in business units, where they advise through the life cycle of an initiative. This structure affords the business unit its own “mini-general counsel” who can identify issues
and bring them back to the appropriate functional specialist for another look. Each lawyer in the department is embedded in one or two business units and also has his or her own functional area of expertise. For example, the retail sales force’s embedded lawyer’s specialty is corporate law. When the unit has a contract dispute, the embedded lawyer will engage a litigation functional specialist to handle the dispute. Consequently, when another business unit needs corporate counsel, the lawyer assigned to the retail sales force will step in as a functional specialist. In addition to creating this
LEGAL LINGO Q In what ways, if any, have you seen the legal landscape change over the past decade? A The good news is that the last decade has brought broader career path choices for lawyers. The bad news is that a legal career path now has much more uncertainty. I benefited from very good training opportunities when I was a new lawyer, and in today’s legal environment it’s more challenging to provide those types of training opportunities. Q Describe some of the most challenging aspects of your position. A The ever-shifting regulatory landscape makes it difficult to provide proactive counseling. I’ve found that my internal clients want to be empowered with the knowledge of what the law requires. Providing that kind of real-time training on a global basis requires a creative approach.
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structure, Ms. Kilbane has led the American Greetings legal team through product acquisitions, credit facilities renewal and the closing of a large debt offering in 2011. Among her department’s other accomplishments: ■ It has developed a proactive approach to intellectual property protection that allows American Greetings to leverage its creativity to create a sustainable competitive advantage through patents, trademarks and copyrights. ■ It has developed and implemented a comprehensive product safety process to ensure that all its products comply with Consumer Product Safety Commission requirements.
Q What qualities are especially important for someone to have who is working in a general or in-house counsel position? Why? A You need a level of comfort making decisions on a real-time basis — business demands often can’t wait for exhaustive legal research. The ability to craft practical solutions that draw on resources from a variety of sources is key. And a sense of humor certainly helps. Q What are some of the recurring issues you face? A As a company driven by its creative culture, at American Greetings, intellectual property issues are often at the top of our list. Q Finally, on a more lighthearted note: If you weren’t in your current profession, what would be you be doing? A I’d make greeting cards!
CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
MEET THE JUDGES ANN HARLAN
Retired general counsel J.M. Smucker Co.
President Association of Corporate Counsel, Northeast Ohio chapter
nn Harlan is the retired vice president and general counsel for The J.M. Smucker Co. Ms. Harlan joined the company in 1999 as its assistant general counsel and assistant secretary. Prior to joining Smucker, Ms. Harlan was a partner with the law firm Calfee, Halter & Griswold LLP, where her practice focused on mergers and acquisitions. Ms. Harlan also serves on the boards of The Gorman-Rupp Co., where she is on the compensation committee and co-chairs the nominating and governance committee, and Eatem Foods Corp., a privately held manufacturer of food ingredients. She is a member of the board of trustees of University Hospitals Health System, where she is on the compensation committee and the nominating and governance committee. She is on the visiting committee of both Case Western Reserve University and the Case Western Reserve University School of Law.
Associate counsel Cleveland Clinic
etsy Rader is president of the Northeast Ohio chapter of the Association of Corporate Counsel. She has worked as in-house counsel for several companies over the past 18 years, after beginning her career as a litigator with the law firm of Squire Sanders & Dempsey. She is associate counsel with the Cleveland Clinic, where her responsibilities include chairing the contracts practice group as well as the employment practice group. Ms. Rader received her bachelor’s degree in classics from Ohio State University and her J.D. from Yale Law School. She serves as the development chair on the board of the Cleveland Legal Aid Society, and volunteers at its brief advice and referral clinics.
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CRAINâ€™S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
COMMERCIAL REAL ESTATE BROKERAGES RANKED BY NUMBER OF LOCAL AGENTS/BROKERS
Name Address Rank Phone/Website
Number Number of of local Square feet sold agents/brokers FTEs or leased 2011
Dollar value of sales transactions 2011
Dollar value of lease transactions 2011
Number of sales and lease transactions 2011 Top 2011 broker
Top local executive Title
CBRE Inc. 200 Public Square, Suite 2560, Cleveland 44114 (216) 687-1800/www.cbre.com/cleveland
Chandler Converse Jr.
David Browning managing director
Grubb & Ellis Co. 1350 Euclid Ave., Suite 300, Cleveland 44115 (216) 861-3040/www.grubb-ellis.com
Robert C. Nosal executive vice president, managing director
Ostendorf-Morris Co. 1100 Superior Ave. E, Suite 800, Cleveland 44114 (216) 861-7200/www.ostendorf-morris.com
Jack W. Drescher
G.F. Coyle III managing partner
Jones Lang LaSalle Americas Inc. 127 Public Square, Suite 2410, Cleveland 44114 (216) 861-7171/www.us.joneslanglasalle.com
Robert J. Roe managing director
Kowit & Passov Real Estate Group 6001 - D Landerhaven Drive, Mayfield Heights 44124 (216) 514-5100/www.kowitpassov.com
Brad Kowit Steve Passov partners
NAI Daus 23240 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-3310/www.naidaus.com
Robert Brehmer managing partner
Cresco Real Estate 3 Summit Park Drive, Suite 200, Independence 44131 (216) 520-1200/www.crescorealestate.com
Joseph Barna, Robert Garber, Matthew Beesley, co-managing principals
Marcus & Millichap Real Estate Investment Services 5005 Rockside Road, Suite 1100, Independence 44131 (216) 264-2000/www.marcusmillichap.com
Michael S. Barron Daniel J. Burkons
Michael L. Glass vice president, regional manager
Chartwell Group LLC 1301 E. Ninth St., Suite 2210, Cleveland 44114 (216) 360-0009/www.chartwellgroup.com
Mark S. Abood
William P. Nice David C. Wagner principals, managing directors
Allegro Realty Advisors Ltd. 1938 Euclid Ave., Suite 200, Cleveland 44115 (216) 965-0630/www.allegrorealty.com
Michael L. Cantor managing director, principal
Crescendo Commercial Realty LLC 18100 Jefferson Park Road, Suite 103, Middleburg Heights 44130 (440) 243-5687/www.cc-realty.com
Ted L. Barr partner
Goodman Real Estate Services Group LLC 25333 Cedar Road, Suite 305, Lyndhurst 44124 (216) 381-8200/www.goodmanrealestate.com
Randall J. Goodman
Randall J. Goodman principal, broker
NAI Cummins Real Estate 787 White Pond Drive, Suite A, Akron 44320 (330) 535-2661/www.naicummins.com
Tom Fox, president; Bob Raskow, vice president, business manager
RJ Wohl Co. 24960 Center Ridge Road, Suite 300, Westlake 44145 (440) 835-0300/www.rjwohl.com
Jack M. Sanfilippo
Jack M. Sanfilippo executive vice president
Arnold J. Eisenberg Inc. 24500 Chagrin Blvd., Suite 120, Beachwood 44122 (216) 831-6773/www.arnoldjeisenberg.com
David I. Stein
David I. Stein vice president
Gerspacher Real Estate Group Inc. 5164 Normandy Park Drive, Suite 285, Medina 44256 (330) 722-5002/www.theggrp.com
Troy L. Gerspacher
Troy L. Gerspacher president, broker
Kelly & Visconsi Associates LLC 28601 Chagrin Blvd., Suite 250, Cleveland 44122 (216) 831-0300/www.kelly-visconsi.com
Anthony T. Visconsi partner
JRES - Jacobs Real Estate Services LLC 25425 Center Ridge Road, Westlake 44145 (440) 808-7492/www.jresgroup.com
Douglas L. Miller executive vice president
Dalad Realty 6055 Rockside Woods Blvd., Suite 100, Independence 44131 (216) 447-0070/www.daladgroup.com
Jason Laver Ryan Burrows Lloyd Mazur
Neil Viny president
Emmco Corp. 3681 S. Green Road, Suite 201, Beachwood 44122 (216) 292-3700/www.emmcocorp.com
Jeffrey E. Soclof president
The Gatto Group 29010 Chardon Road, Cleveland 44092 (216) 621-1800/www.gattogroup.com
Steve Joseph vice president
Global Real Estate Advisors Inc. 8585 East Ave., Cleveland 44060 (440) 255-5552/www.globalcommercialre.com
Tim Sawicki senior vice president
The King Group 25550 Chagrin Blvd., Suite 300, Beachwood 44122 (216) 831-9330/www.thekinggroup.com
Donald M. King president
Pinnacle Real Estate Services 4807 Rockside Road, Suite 270, Independence 44131 (216) 328-1555/www.pinnaclecleveland.com
Donald M. Rudy president, owner
Reisenfeld & Co. 3659 Green Road, Suite 217, Beachwood 44122 (216) 765-8080/www.reisenfeld.com
Drew Sulzer president
Davison & Co. 526 Superior Ave., Suite 240, Cleveland 44114 (216) 861-0600/www.davisonandcompany.com
Dyann Davison president, broker
Najm Real Estate Inc. 3030 Euclid Ave., Suite 406, Cleveland 44115 (216) 881-6256/najmrealestate.com
Chuck Najm president
Weber Wood Medinger 25800 Science Park Drive, Suite 150, Beachwood 44122 (216) 464-7100/www.wwmrealestate.com
Alan W. Wood
Gerald B. Medinger president
BGL Realty 1111 Superior Ave., Suite 900, Cleveland 44114 (216) 241-2800/www.bglco.com
Gary R. Cooper
Gary R. Cooper president
Mohr Partners Inc. 812 Huron Road East, Suite 315, Cleveland 44115 (216) 812-4862/www.mohrpartners.com
Dennis R. Burnside managing partner
Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Individual lists and The Book of Lists are available to purchase at www.crainscleveland.com.
RESEARCHED BY Deborah W. Hillyer
MARCH 26 - APRIL 1, 2012
CRAIN’S CLEVELAND BUSINESS
InkStop: Suits allege accounting firm missed deception continued from PAGE 1
had misstated InkStop’s financial statements. Her lawsuit also alleges that for two years prior to the bankruptcy filing, InkStop’s financial condition was “tenuous at best” and that the accounting firm failed to note in its audit opinions that “InkStop was clearly a failing business.” The trustee in a bankruptcy liquidation is administrator of what is called the bankruptcy estate and is charged with doing what he or she can to repay money owed to creditors and, if possible, lost by its stockholders. The job includes selling assets and collecting debts. Bankruptcy law also allows a trustee to void some payments made in the period before the bankruptcy filing — 90 days or as much as a year before the filing, depending upon who received the payment — and to demand repayment of whatever was paid. Ms. Rabin’s lawsuit does not specify damages beyond asking for the return of $1.1 million in fees paid to Skoda Minotti for accounting and auditing services. Skoda Minotti attorney Brent Silverman of Reminger Co. LPA declined to comment on the pending litigation.
Investors sue, too In addition, two lawsuits filed by a total of 11 InkStop investors charge Skoda Minotti with professional negligence, omitting a going concern opinion in its audits, and violating Ohio securities law. One lawsuit seeks $15.5 million in compensatory damages from Skoda Minotti. The complaint for the other lawsuit was not available for inspection last week. Both suits were filed by John Chapman & Associates LLC, a Cleveland law firm specializing in investment fraud and broker misconduct. Among the Chapman firm’s clients in the cases are J. Sheldon Artz, a Moreland Hills plastic surgeon; Ara Bagdasarian, vice president of TravelCenters of America Inc.; Bruce Blake, president of R.H. Blake Inc., a Warrensville Heights marketing firm; James DiLella, president of Conneaut Leather Inc. of Conneaut; James Hummer, founder and former CEO of Whole Health Management Inc.; and Michael Southard, national sales manager for Kichler Lighting of Independence. While he wouldn’t speak about the cases he has filed against Skoda Minotti, attorney John Chapman was willing to talk about the similar lawsuit filed by the bankruptcy
trustee. Mr. Chapman said Ms. Rabin’s suit argues that because of the allegedly incomplete financial statements, InkStop’s officers could continue “deceiving and misleading (potential investors), and therefore Skoda Minotti has responsibility to the estate in bankruptcy for some of the very substantial debt” still owed by InkStop. More broadly, Mr. Chapman said potential investors feel burned when they believe they were deceived by clean audits by independent accounting firms. “Where’s the guy with the green eyeshades?” he asked. “Where’s the guy who says the numbers don’t add up?”
Awash in red ink The suits filed against Skoda Minotti are only the latest in a series of legal actions to follow the bankruptcy of InkStop, a company that rose and fell quickly. When Cleveland-based OfficeMax Inc. was sold to Boise Cascade Corp. in 2003 and its headquarters staff moved to Chicago, OfficeMax operations vice president Dirk Kettlewell chose to stay in Cleveland and to open a niche retailer that specialized in consumable computer printer ink cartridges. According to a story that appeared in Crain’s in April 2009, Mr. Kettlewell bootstrapped the startup with a six-figure home equity loan in 2005. The story appeared less than seven months before InkStop filed for Chapter 7 bankruptcy liquidation. The first InkStop store opened in Independence in January 2006; a year later, the retailer had 29 stores in eight states, according to court documents. By January 2009, it had grown to 161 stores in 14 states. In the Crain’s story, Mr. Kettlewell said that he had financed the growth not with debt but by raising $80 million from 150 investors, including many prominent Northeast Ohioans. Mr. Kettlewell envisioned a chain of 2,500 to 3,000 stores, he said at the time, which would require even more investment to build the infrastructure for a larger company, including a sophisticated computer system and sizable inventories for the stores. Mr. Kettlewell continued to be successful in raising money even though the company was showing investors financial statements that showed significant year-to-year losses. In financial statements attached to an August 2009 private stock offering,
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THE RISE AND FALL OF INKSTOP Tracking the big plans and rapid fall of InkStop, the latest development in which is lawsuits filed against Mayfield Villagebased accounting company Skoda Minotti:
InkStop files for Chapter 7 liquidation in U.S. Bankruptcy Court.
Former OfficeMax exec Dirk Kettlewell opens InkStop, which specializes in consumable printer ink cartridges.
Oct. 2, 2009 InkStop stores close suddenly.
Nov. 5, 2009
FILE PHOTO/RUGGERO FATICA
March 10, 2010 InkStop and employees settle a lawsuit over owed wages for $660,000.
First InkStop store, in Independence, opens.
InkStop’s roster jumps to 161 stores in 14 states.
InkStop grows to 29 stores in eight states.
Mr. Kettlewell told Crain’s his goal for the chain was 2,500 to 3,000
Bankruptcy trustee Mary Ann Rabin files complaint alleging breach of fiduciary duties by officers and directors of the company. That complaint later was settled for $4.5 million.
The first major litigation began in August 2010, when Ms. Rabin filed a complaint in Bankruptcy Court against a group of InkStop officers and directors. She claimed the officials breached their fiduciary duties by multiplying the company’s debt, hiding Inkstop’s financial condition and misstating InkStop’s financial performance. That litigation was settled in April 2011 when Twin City Fire Insurance Co., which issued a directors and officers liability policy to InkStop, agreed to pay the trustee $4.5 million to cover that claim. Among the directors and officers who agreed to the settlement were Mr. Kettlewell; his wife Dawn, who was an officer and director of InkStop; B. Charles Ames, chairman of InkStop’s board; Michael Clegg, former president of the Colliers Ostendorf Morris real estate brokerage; James Hummer;
Norbert Lewandowski, a retired accounting firm owner; James Mastrian, a former OfficeMax, Revco D.S. Inc. and Rite Aid executive; Michael Shaughnessy, a co-founder of ColorMatrix Corp. of Berea; and Norman “Boomer” Esiason, a former professional quarterback and television sports broadcaster. But lawsuits continued to pile up in Cuyahoga County Common Pleas Court. Since 2010, at least 19 lawsuits have been filed against InkStop officers and directors by outside investors. All the suits center around allegations that the suing investors were induced to put money into InkStop because of various misrepresentations by the defendants. Most of these cases have been consolidated into a single action in the courtroom of visiting judge Michael Corrigan. ■
InkStop reported a loss of $30.3 million on net sales of $35.2 million for the fiscal year that ended Jan. 31, 2009. A year earlier, the company reported a net loss of $16.9 million on sales of $26.1 million. The InkStop stores closed abruptly on Oct. 2, 2009, and on Nov. 5, 2009, the Chapter 7 liquidation petition was filed. The bankruptcy filing listed nearly $48 million in debts and $30 million in assets.
Legal actions pile up Even before the bankruptcy filing, InkStop employees filed suit for wages owed. That case was settled in March 2010 when a group of officers and directors agreed to contribute to a $660,000 fund that would pay a substantial portion of the wages owed. Then the bankruptcy trustee and the investors weighed in.
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CRAIN’S CLEVELAND BUSINESS
MARCH 26 - APRIL 1, 2012
Drillers: Companies may drill only most profitable wells continued from PAGE 1
because of a change in Ohio’s tax code. And a change appears likely, as a 10-point energy policy Gov. John Kasich unveiled two weeks ago calls for raising the state’s tax on oil and gas producers in order to pay for a reduction in personal income tax rates. The governor, and others, say Ohio taxes the oil and gas business less than other states and should adjust its rates upward. The energy industry has complained that any increase in taxes would raise the risk that drilling would slow in Ohio. But industry observers are not convinced. “For better or worse, the companies have created a contractual obligation to drill,” said Andrew Thomas, a geologist and former oil and gas attorney in New Orleans who now serves as executive in residence at Cleveland State University. Dr. Thomas was one of the lead authors of a Feb. 28 study done on behalf of the Ohio Shale Coalition by researchers at CSU’s Levin College of Urban Affairs, Marietta College and Ohio State University. The study outlined the status and likely future development of Ohio’s shale gas industry, including the economic benefits it will provide to the state. Dr. Thomas predicts that Ohio will see a total of about 2,000 wells drilled between now and the end of 2014. By then, well development should be on pace to create
1,000 more new wells per year. “I think, after that, it will sustain that level of activity for 20 years,” said Dr. Thomas, who based his prediction on estimates of how much gas and oil lies trapped in Ohio’s deep Utica shale deposits, about 8,000 feet below ground.
too valuable to be left alone, say both drillers and industry observers such as Dr. Thomas. But the lease clauses are going to add significantly to the urgency drillers feel to produce, Dr. Thomas said, because if they don’t, it will cost them plenty.
Doling out big dollars
‘A difficult dilemma’
Since each well costs as much as $6 million to drill, Dr. Thomas and his fellow researchers are predicting an annual investment in Ohio by energy companies of as much as $6 billion a year by 2014. That figure is just for the drilling work itself and does not include investments in pipelines, processing facilities, water treatment installations and many other tangential aspects of what is becoming Ohio’s most famous industry. It’s a big number, but it isn’t as big as those the drillers themselves have thrown around. Last August, Chesapeake Energy Corp. CEO Aubrey McLendon, whose company has spent about $2.2 billon on shale gas leases in Ohio, predicted his company and others like it will invest an estimated $20 billion a year in Ohio’s shale gas and oil industry for the next decade. The ultimate driver of all this activity is the money to be made by extracting valuable natural gas and oil once believed to be trapped underground forever. The natural resources drillers seek are simply
Brad Hillyer, a lawyer in Uhrichsville at the law firm Connolly, Hillyer, Lindsay & Ong, estimates he’s worked on 2,500 shale gas leases in the last three years. Some leases require drillers to start production three years after the lease is signed, but five years is pretty much the industry standard in most Ohio leases, Mr. Hillyer said. The leases also have automatic renewal clauses, Mr. Hillyer said, which means an energy company can keep a lease but must pay for it all over again once it expires. Attorney Matt Warnock, who works on oil and gas leases for the law firm Bricker & Eckler in Columbus, said lease renewal payments can be as little as 60% of the initial bonus paid to secure a lease, or can be more than original amount. “We try to get as much as we can, so we usually push for the 115%,” Mr. Warnock said of his work on behalf of landowners. As a result of those potential costs, lawyers say, even if the state raises the taxes it collects on the production of Ohio’s gas and oil, the energy companies still will need
to drill if they want to keep their leases and avoid paying for them all over again. “It does put them in a difficult dilemma,” said David Hudson, a minerals rights attorney in the Toledo office of the Reminger Co. law firm. He now spends much of his time in the eastern half of the state’s shale gas territory. “These oil companies have spent billions of dollars on bonuses for these leases,” Dr. Thomas said. “If they want to maximize that, they need to get moving. … They’ve got three years to develop a lot of acreage.”
Too big a bite? Energy companies have not addressed publicly whether they’ll pay bonuses all over again to keep their rights in place if the state increases taxes on their production. The Ohio Oil and Gas Association did not respond to requests for comment by phone and email to discuss the matter. Mr. Hudson predicted that drillers might respond to the situation by performing a sort of hydrocarbon triage, where they select what they think will be the most profitable drilling sites for exploration while leaving others to sit so their leases either can be renewed or abandoned later. They even might try to hold acreage by putting tiny, shallow wells in place, which would yield just a fraction of what a deep horizontal
fracking well would produce. However, it isn’t known how the courts would view such a “tricky” act, Mr. Hudson said. Mr. Hillyer, the attorney in Uhrichsville, said he supports an increase in Ohio’s oil and gas tax — known as the severance tax — because he believes it won’t slow down development and could provide needed funds for Ohio’s small towns. Many of those towns have seen deep cuts in the money they receive from the state, he said, and now they are worried about added infrastructure expenses due to oil and gas activity. “They want (the governor) to increase the severance tax, but not reduce the income tax” and instead restore some of their lost state support, Mr. Hillyer said. Regardless of what happens with taxes or how much drillers hurry, they probably won’t be able to meet the requirements of all their leases, said Cleveland State’s Dr. Thomas. There simply won’t be enough time for them to drill wells on each of the thousands of properties they hold before the leases for those lands are more than five years old. Others agree. “They may have bitten off more than they can chew,” Mr. Hudson said. Added Mr. Hillyer: “There probably aren’t enough drilling rigs on the planet to drill all the wells they need to drill.” ■
Wind: ‘Learning lab’ could help combat credit tax expiration products and services to support the project.
continued from PAGE 3
make products for the wind industry. The group this month erected a 225-kilowatt wind turbine in Euclid, behind Stamco Industries Inc. and William Sopko & Sons Co. That turbine — which is about the same size as the one at the Great Lakes Science Center on Cleveland’s lakeshore — will be dwarfed by a onemegawatt unit they’re building now. Both the 225-kilowatt turbine and a smaller 100-kilowatt machine that CWRU erected on campus in November 2010 already are spinning, generating both electricity and data. For instance, the midsize turbine is equipped with sensors in its base and on its tower that can detect even the slightest movements. The data they generate will help CWRU researchers figure out how the tower moves as wind speeds change, which could help the industry figure out how well wind towers stand up to the constant blowing.
Brian Sopko, a project manager at William Sopko & Sons in Euclid, is overseeing the installation of wind turbines on his family’s property in conjunction with the Wind Energy Research and Commercialization Center. RUGGERO FATICA
It’s a beautiful thing Students at CWRU will help run the university’s research projects. The wind energy center also will help students from Lorain County Community College learn how to operate and maintain wind turbines, said Dr. Matthiesen, an associate professor in the department of materials science and engineering. “This is a beautiful education tool,” he said. Private companies are using the turbines for their own research. Once the big turbine is finished, Cleveland Electric Labs of Twinsburg will screw “Brainy Bolts” into its base. The company will test how the
bolts — which were designed to measure the strain put on bridges and other structures — work on wind turbines, Dr. Matthiesen said. Turbine manufacturer Northern Power Systems of Barre, Vt., is using the small turbine that the company built on CWRU’s campus to test braking materials that control the turbine’s nacelle as it turns.
Learn, and earn Sherwin-Williams Co. has covered the big turbine’s blades with a clear coating designed to prevent ice from forming on them. The Cleveland paintmaker has been selling
the coating for about three years, but the wind energy center will help the company gather more data on how the product works, said Mike Conway, director of corporate communications and investor relations for Sherwin-Williams. “It’ll be a great environmental learning laboratory for us and for Case,” Mr. Conway said. Other collaborators include Sopko & Sons; specialty chemicals maker Lubrizol Corp. of Wickliffe; motion and control systems provider Parker Hannifin Corp. of Mayfield Heights; industrial automation products maker Rockwell Automa-
tion Inc., which has operations in Mayfield Heights, Twinsburg and Warrensville Heights; wind power services firm Azure Energy LLC of Cleveland; and Cleveland-based Swiger Coil, which makes traction motors and electric coils. The group erected the turbines with the help of a $3 million grant the wind energy center received in 2009 from the Ohio Third Frontier, an economic development initiative designed to stimulate Ohio’s economy through investments in technology. Group members put up $150,000 cash and are expected to contribute nearly $3 million in
The wind industry’s sails haven’t been so full as of late. Some turbine makers and suppliers fear the federal government will let a tax credit for wind turbine owners expire at the end of 2012. Plus, excitement has been building around an anticipated boom in natural gas drilling, which is cheaper now that oil and gas companies have improved hydraulic fracturing techniques used to pull fossil fuels from shale rock formations. William Sopko has noticed. He wanted to house the turbines on his family’s property because he thinks turbine makers one day could buy the metal parts made by Sopko & Sons and Stamco. Mr. Sopko, whose son, Brian, is overseeing the turbine installations, said the project already has helped him connect with larger companies that supply the industry, noting that Stamco bid on one project. Mr. Sopko said he hopes to start winning business in the wind industry, but for now he’s more focused on capitalizing on the excitement around shale gas. He said Congress needs to renew the wind tax credit for a long period of time if the industry is to grow. “It’s indecision, and with indecision nobody’s going to make capital investments,” Mr. Sopko said. Dr. Matthiesen said he knows the price of wind power needs to come down if it is to compete without subsidies. That, he said, is why the wind energy center exists. “To me, it’s the beginning of the conversation. You’ve just defined the problem,” he said. ■
MARCH 26 - APRIL 1, 2012
CRAIN’S CLEVELAND BUSINESS
Transfer: Schools need commercialization experience continued from PAGE 3
according to a draft document that gives background on why the regents created the task force. For instance, Ohio placed just 29th in the Milken Institute’s 2010 State Technology and Science Index, which ranks states’ abilities to create new technologies and to use them to produce new companies and jobs. A set of metrics used by the Association of University Technology Managers of Deerfield, Ill., to measure the success of colleges’ technology transfer efforts also puts Ohio in the middle of the pack when compared to other states. By those measures, the top per-
former in Ohio is Case Western Reserve University, which spun off five companies, licensed 38 technologies and brought in $14.3 million in licensing income in the fiscal year that ended June 30, 2010. Ohio State University spun off eight companies and licensed 35 technologies but brought in just $1.9 million in licensing income in fiscal 2010, the latest year for which data is available. The numbers provided by other universities in Ohio — which often have smaller research budgets — are much lower.
Time to move the needle One area in which Ohio does par-
Clinic: Health care ripe for more acquisitions continued from PAGE 1
in West Palm Beach, Fla., recorded a 30% jump in visits, and Cleveland Clinic Canada in Toronto posted a 35% hike. And if the Clinic plans to get bigger — which it does — its current and future out-of-state locations will be a central part of its growth strategy given the slow population growth in Northeast Ohio, Dr. Cosgrove said. “We’re now looked at as a national and an international brand,” Dr. Cosgrove told Crain’s. “That creates all kinds of opportunities for us. We would be negligent in our duties as an organization and to Northeast Ohio if we didn’t take advantage of this.” The Clinic’s out-of-state growth already is putting pressure on the health system’s outlying operations. Dr. Cosgrove said demand far exceeds what the Clinic can handle at its campus in Weston, Fla., where it operates a multispecialty hospital. Clinic officials are developing plans to double the hospital’s size in Weston, but haven’t disclosed a price tag. The Clinic in late 2010 added 9,750 square feet to its West Palm Beach offices, more than doubling its space, due to heightened demand. Also, the 61,000-square-foot Ruvo Center in Las Vegas already is nearing capacity, said Dr. Michael Modic, chairman of the Clinic’s Neurological Institute. While there are no immediate plans to expand the Ruvo Center, which has 39,400 square feet of clinical space, Dr. Modic said it could handle only a few thousand more visits on top of the roughly 8,000 patient visits a year it now accommodates. “If we had a bigger building, we would continue to grow,” Dr. Modic said. “We’re now really hitting the ends of the capacity of the facility out there.”
Dr. Cosgrove: Expect more Because of its ventures in Ohio and elsewhere, Dr. Cosgrove said he has fielded calls from health systems and hospitals across the country looking to merge with or be acquired by the Clinic. “We weren’t in the mode to look at these sorts of these things until
people approached us,” Dr. Cosgrove said. The Clinic acquired eight community hospitals in Northeast Ohio in the 1990s and 2000s and last November bought North Coast Cancer Care in Sandusky. However, it hasn’t focused to this point on acquiring other large health care institutions, particularly outside Northeast Ohio. To extend its name beyond its home market, the Clinic previously preferred to affiliate with health systems in other parts of the country to help manage certain clinical programs for a consulting fee. Its Taussig Cancer Institute, for instance, recently inked an affiliation deal with Cadence Health outside Chicago, and the system’s renowned Miller Family Heart & Vascular Institute has affiliated with eight health systems outside Ohio. While the Clinic still will pursue such arrangements, which contributed about $10 million in revenue to the system in 2011, Dr. Cosgrove said it plans to give serious consideration to acquisitions and mergers beyond the markets it now serves. “We’ve certainly seen community hospitals come together into regional systems, and now regional systems are talking to other regional systems around the country,” Dr. Cosgrove said. “If this is what’s going on, we need to be more thoughtful.”
Following banking’s lead Thomas Campanella, director of Baldwin-Wallace College’s health care MBA program and a longtime industry observer, said the Clinic’s strategy to focus strongly on acquisitions makes sense, especially given the financial pressures facing the industry. For smaller institutions to survive in the face of declining government reimbursements, Mr. Campanella said, many will need to merge with larger systems such as the Clinic in order to take advantage of the operational efficiencies associated with being part of a larger organization. “It’s almost like the banking mentality,” Mr. Campanella said. “At one time banks were just local. Before you knew it, people were buying banks in different parts of the state, and then buying them in different parts of the country.” ■
ticularly well is industry-sponsored research, said Mark Coticchia, who formerly led CWRU’s technology transfer office and now is helping the regents’ task force put together its report. Although the report isn’t finished, Mr. Coticchia said he believes tech transfer offices at Ohio colleges need more money for staff and patenting expenses. Many of them also need new leaders, he said, though he declined to identify the institutions. Too many schools put academics in charge of tech transfer, when nowadays there are plenty of people on the market with tech transfer experience, said Mr. Coticchia, who works as a consultant helping research institutions in the Midwest commercialize their ideas. “You don’t have to home-grow it,” he said. “You go out there and you bring in the talent you need.” The task force’s academia subcommittee is studying ways to help colleges improve their tech transfer offices and the entrepreneurial culture on their campuses. Other subcommittees go in other directions: One focuses on figuring out how to increase the availability of capital
for new technologies, another on industry-university collaborations, and yet another on seeing that universities prepare students to fill the new jobs and create even more. “The idea is to put together something that can move the needle,” Mr. Coticchia said. The broader focus is necessary because some of Ohio’s small and midsize cities don’t have the pool of entrepreneurs, venture capital groups and talent that can be found near tech transfer powerhouses such as the Massachusetts Institute of Technology, near Boston, or Columbia University in New York City, said task force member Philip Brennan, CEO of Echogen Power Systems Inc. Echogen, which employs about 40 people in Akron, knows what it’s like to be in the middle of public efforts to turn research into commercial products. The system Echogen is developing to transform waste heat into electricity was inspired by technology developed by NASA’s Jet Propulsion Laboratory in Pasadena, Calif. The company has received financing from both JumpStart and the Ohio Third Frontier economic develop-
ment program. “It (tech transfer) is really not all from within,” Mr. Brennan said. “It has a push-and-pull element to it.”
Worth the effort To get the most out of college tech transfer programs, states and regions must create broader commercialization networks, said Todd Sherer, who is president of the Association of University Technology Managers and director of the technology transfer office at Emory University in Atlanta. Dr. Sherer said even colleges that win their share of federal research dollars can have a hard time turning new technologies into local jobs if they can’t find entrepreneurs qualified to run startups, money for translational research and leadership with experience doing deals. The rewards of tech transfer, however, are worth the effort, Dr. Sherer said. He noted that 90% of HIV patients taking anti-viral medication in the United States and Europe are on drugs developed and commercialized through his office. “We’re just little ol’ Emory in the state of Georgia,” he said. ■
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THEWEEK MARCH 19 - 25 The big story: Williams Partners L.P. agreed to acquire the Caiman Eastern Midstream subsidiary of Caiman Energy for about $2.5 billion. The planned acquisition will provide Williams Partners with what it called “a significant footprint and growth potential in the natural gas liquids-rich portion of the Marcellus Shale.” Caiman Eastern Midstream is an independent gathering and processing business located in northern West Virginia, southwestern Pennsylvania and eastern Ohio. Sweet music to Tri-C’s ears: Tommy LiPuma, a Cleveland native and music industry veteran, donated $3 million to Cuyahoga Community College — the largest private gift in the school’s history. With the gift, the Tri-C Foundation — the fundraising arm of the college — will establish an endowment for equipment, music programs and scholarships. Mr. LiPuma, who has worked with musicians such as Barbra Streisand and Paul McCartney, also plans to mentor students and foster collaborations between Tri-C and others in the music industry. Shuffle complete: Cleveland Clinic officials appointed Dr. Mark Froimson, a 14-year veteran of the health system, as president of Euclid Hospital. Dr. Froimson, who starts in his new role May 1, most recently served as vice chairman of the Clinic’s Orthopaedic and Rheumatologic Institute. He replaces Rich Lea, the hospital’s interim president since January, when Joanne Zeroske left her role as Euclid’s chief executive to Froimson take over as president at Marymount Hospital in Garfield Heights. Mr. Lea will return to his former role as Euclid Hospital’s vice president of operations.
Get ready to shop: Making it official, First Interstate Properties said it inked an agreement for a Walmart Supercenter at its proposed Oakwood Commons shopping center in South Euclid. The center would cost $25 million to develop and is expected to open in the summer of 2013. Oakwood Commons would go on 63 acres of the former Oakwood Country Club property. Answering the bell: Bellwether Real Estate Capital LLC of Cleveland plans to merge with a unit of Columbia, Md.-based Enterprise Community Investment Inc., which was founded by the late James Rouse, a famed mall and housing developer. Enterprise’s multifamily mortgage finance business and the Cleveland mortgage firm will become Bellwether Enterprise Real Estate Capital LLC, which the two companies estimate could produce more than $1.5 billion in mortgages this year.
Paint them pleased: Sherwin-Williams Co. entered into a multiyear supply partnership with Riverstone Residential Group, one of the country’s largest third-party managers of apartment properties. The agreement lists SherwinWilliams as Riverstone’s exclusive marketing partner for paint and one of Riverstone’s preferred marketing partners for flooring through 2014. Back to school: Longtime WKYC-TV, Channel 3 correspondent Eric Mansfield is leaving the station after 18 years for a job at Kent State University. Mr. Mansfield, who starts in his new role June 1, will earn $110,000 a year as Kent State’s executive director of university media relations. He’ll lead the university’s media relations team and will teach and mentor students within Kent State’s School of Journalism and Mass Communication.
REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS
A burning question will be answered
Catch this wind turbine, and a ball game, too
■ The empty storefronts lining the Hanna Building and annex at Playhouse Square in downtown Cleveland got a facelift this
month — not with sparkly advertising or new shops, but a series of striking photos of Cleveland landmarks. “We wanted to give a gift to this neighbor■ Have you seen the new wind turbine at hood,” said Cindy Schulz, director of public Progressive Field — the one that looks like a affairs and strategy at the Cleveland giant corkscrew with a couple of fans on the Foundation, one of the groups financing the side? Wonder where in the world you’d find project. “We are not doing this for commercial a company able to make such an odd and reasons. We wanted to give people someunique item? thing beautiful to look at and talk about.” Shame on you if you thought anyone Ms. Schulz said the campaign to spice up would need to go outside Northeast Ohio to the empty storefronts, which has been dubbed find such expertise. “Re: Cleveland,” is aimed at reminding The contraption is known as a wind Clevelanders about the city’s assets. For accelerator. The big plastic enclosure panels instance, one empty storefront dons a shot were designed and produced by Astro of Lake Erie and carries the tagline “resource Manufacturing and Design in Eastlake, the city,” while another shot of the West Side which worked for two years with engineers Market says “refresh the city.” from Cleveland State University to perfect The project, which showcases the photos them. of local photographer Jennie Jones, also is If the turbine works, as engineers believe financed by PlayhouseSquare Real Estate it will, it will force air to move even faster Services and Pepper Hill Graphics. The than the prevailing winds, according to campaign was develAstro spokesman Rich oped by Nesnadny + Peterson, who hopes Schwartz, a design firm his company is getting with offices in Cleveland. in on a breakthrough Ms. Schulz said the technology. campaign was started In the meantime, by people in the neighthough, the turbine will borhood, but she now provide at least some believes it could expand power to Progressive to other parts of the city. Field. It also probably “We decided not to will provide publicity throw advertising in PHOTO PROVIDED BY THE CLEVELAND FOUNDATION for Astro. these windows,” she The device will stand said. “Let’s not just dress them up. Let’s put more than 40 feet high, and the panels made a public art exhibit on the street.” — Timothy by Astro will be backlit at night to draw Magaw attention. — Dan Shingler
BEST OF THE BLOGS
■ Now we’re gonna find out if they used to make ’em like we think they used to make ’em. General Electric Co. is going to put the juice to a 100-year-old light bulb GE made in the days when Thomas Edison was alive and trying to sell people on the idea of an electric car. We’ll all get to see whether the bulb lights up like GE hopes it will during a time capsule opening ceremony today, March 26. Early workers at GE’s Nela Park knew this day was coming. They’re the ones who buried a few light bulbs, along with other memoraPHOTO PROVIDED bilia, back when Nela Park BY THE SCHENECTADY MUSEUM was converted from vineyard to the nation’s first industrial park in 1913. GE is digging up the time capsule as part of a year-long countdown to Nela Park’s 100th birthday on April 18, 2013. Nela Park, in East Cleveland, still serves as world headquarters for GE Lighting. — Dan Shingler
It sure beats blank space
Excerpts from recent blog entries on CrainsCleveland.com.
Line blogger, Greg Sargent, in a piece that said the Brown/Mandel race is shaping up as pivotal to Democratic hopes of holding the Senate. Sen. Brown leads in polls and he has experience on his side, but Mr. Sargent notes that outside conservative groups “have spent nearly $5 million on ads” attacking the ■ Quicken Loans Arena is among the Democrat from Avon. businesses nationwide that has figured out Why the focus on Sen. Brown? “One is something about the modern age — in that despite recent polls showing Brown many cases, customers would rather interact with a sizable lead over (Mr. Mandel) … this with technology than people. could be a close contest,” he writes. For a generation of shoppers raised on Also, he writes that Sen. Brown “is an outGoogle and e-commerce, the spoken working class progresanswer to ‘Can I help you?’ is sive who has crafted a populist increasingly a firm ‘no,’ even message that resonates among at retailers such as Nordstrom the blue collar white swing votthat have built their reputations ers the GOP is fighting for.” around customer service,” The Plus, “the fielding of a tough New York Times reported. Dem challenger in MassachuBut instead of getting defensetts, (has) increased pressure sive, “some stores and brands on the GOP to win in Ohio if are embracing the change by Republicans are to take back creating new personal touches LeBron James the Senate.” that feature gadgets rather than a doting sales staff,” the newspaper said. For instance, LeBron James’ shoe store in Miami has 50 iPads to describe its merchan■ The Wall Street Journal profiled Chris dise. Macy’s is testing cosmetic stations Jansing, anchor of the 10 a.m. MSNBC news where tablets offer reviews and tips. Quicken program “Jansing & Co.” and a native of Loans Arena gives suite visitors an iPad so Fairport Harbor in Lake County. they can order food and drinks directly from Ms. Jansing, 55, is “one of the hardestit, while Aloft Hotels, a Starwood division, working women in television journalism” has installed tablets instead of concierge and a rising star at MSNBC, the newspaper stations. said. Ms. Jansing grew up in Fairport Harbor as the youngest of 12 children. She told The Journal that she remembers sitting at the dining room table as a child when she heard a woman who visited regu■ The U.S. Senate race between incumbent larly refer to her mother as “Mom.” Sherrod Brown and state Treasurer Josh “I said, ‘Why are you calling her mom?’ Mandel “appears to be the target of more She said, ‘Because I’m your sister.’ She’d spending by GOP-aligned outside groups moved out of the house when I was a baby,” than … any Senate race in the country.” Ms. Jansing said. “I learned early on you So wrote The Washington Post’s Plum need to ask a lot of questions.”
The Q and LeBron still have something in common
The Palace Theatre at PlayhouseSquare, a recent project of Frank Novak & Sons Inc.
THE COMPANY: Frank Novak & Sons Inc., Bedford Heights THE OCCASION: 100th anniversary A business that started a century ago as a painter of residences and small commercial structures has evolved into a major contractor doing projects for, among others, MK Ferguson, Turner Construction and Albert M. Higley Co. Frank Novak Sr. launched the business in 1912 from a home office on East 135th Street in Cleveland. A pivotal point in the company’s history came in 1959, when then-president Frank Novak Jr. brought on Allen Pinchot as estimator/project manager. In the early 1960s, Mr. Pinchot changed the direction of the company to focus on commercial construction, and the company outgrew its second location, on Harvard Avenue in Cleveland, and moved to its current home in Bedford Heights. The Pinchot family has run the company since Frank Novak Jr.’s death in 1989. The company today employs 80 to 100 people in the summer. It operates three divisions: Flooring Specialties, focusing on health care, institutional and commercial operations; Acoustic Wallcraft, specializing in acoustical wall surfaces; and Molded Extruded Specialties, which makes extruded and molded products of either metal or polymer.
She’s reaching an even bigger audience than her family
The road to Senate control likely runs through Ohio
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Published on Mar 23, 2012