Crain's Cleveland Business

VOL. 40, NO. 13

APRIL 1 - 7, 2019

Source Lunch

Akron Table tennis academy will be first of its kind in Midwest. Page 20

Jason Therrien, CEO, thunder::tech Page 23

CLEVELAND BUSINESS

The List Commercial contractors by local revenue Page 19

SPORTS BUSINESS

THE SMART MONEY IS ON LEGALIZING SPORTS BETTING

Ohio could tap into a profitable industry if a recently crafted bill passes; analysts say time is now

By Kevin Kleps | kkleps@crain.com | @KevinKleps

A bill that would legalize sports wagering in Ohio now extends beyond one sentence in the state legislature.

In fact, it’s 146 pages.

Senate Bill 111 — which would legalize sports betting in Ohio’s 11 casinos and racinos and include online and mobile options — was introduced on March 14 by state senators John Eklund, a Munson Township Republican, and Sean O’Brien, a Trumbull County Democrat. The bill could represent a major step forward for the state in an industry that’s gained ground faster than Cleveland Browns running back Nick Chubb since the Supreme Court last May overturned a federal ban on sports betting outside of Nevada.

Seven states, including Pennsylvania and West Virginia, have state-regulated sports betting industries. Three other Ohio neighbors — Indiana, Kentucky and Michigan — have introduced legislation that would legalize an industry that’s estimated at anywhere from $60 billion to $150 billion a year.

Jay Masurekar, the head of gaming and travel investment banking at KeyBanc Capital Markets in Cleveland, isn’t surprised the Buckeye State is trailing some of its counterparts on the issue. But with football season kicking off in five months and the Browns’ Super Bowl odds soaring in the wake of the trade for Odell Beckham Jr., the state’s timing is particularly bad, Masurekar said.

SEE BETTING, PAGE 22

Photo illustration by CatLane/Getty Images

FOCUS: LEGAL AFFAIRS

EMPLOYMENT

Fisher Phillips partner works to retain and advance women attorneys. Page 12

By Jay Miller

Uncovering hidden talent Northeast Ohio faces a resurgence of patent trolling. Page 14 Entire contents © 2019 by Crain Communications Inc.

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Latino Construction Program preps workers to meet demand jmiller@crain.com @millerjh

A tightening labor market for construction workers, building plans on MetroHealth’s main campus on the West Side and Cleveland Mayor Frank Jackson’s push to have the diversity of the city’s population reflected in its employment are the forces behind a program to enlist more members of the area’s Hispanic community in the construction trades.

The Spanish-American Committee’s (SAC) Latino Construction Pro-

gram is a pre-apprenticeship program that already has helped about 40 Hispanic-American West Siders find apprentice jobs in the construction trades. Ramonita Vargas, executive director of SAC, said many are recent refugees from hurricane-ravaged Puerto Rico who worked in construction there but need to improve their skills to enter the trades in Cleveland.

The program is being sponsored and supported by Turner Construction Co., the construction manager for the planned $946 million, 10-story hospital at MetroHealth; the Cleveland Building & Construction

Trades Council; the KeyBank Foundation and the Higley Fund.

A groundbreaking for the hospital is scheduled for April 15, with construction completed by 2022. MetroHealth has made a commitment that the transformation will have more than 30% of the workforce led by local and minority businesses. Cliff Kazmierczak, a vice president and project executive at Turner Construction, said employment on the site will have its ups and downs during the various phases of construction, but peak employment will be 550 to 650 workers.

SEE WORKERS, PAGE 19

3/29/19 3:35 PM

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CRAIN’S CLEVELAND BUSINESS

Locus finds big solutions in microorganisms

By Rachel Abbey McCafferty

In addition to commercial agricultural acres, Locus’ fresh soil “probiotics” are also being trialed for use in greenhouses and additional categories.

(Locus Fermentation Solutions)

rmccafferty@crain.com @ramccafferty

A Solon company has found a way to make crops — and oil wells — more productive.

How? Microorganisms.

And Locus Fermentation Solutions doesn’t plan to stop with agriculture and energy. The company is doing research in a lot of areas, and it’s already filed for about 150 patents, said Andy Lefkowitz, co-founder, chairman and CEO. He sees potential in areas as varied as skin care and wastewater treatment.

“We’re on the right side of history,” Lefkowitz said. “I think a lot of companies are thinking about this. People

would like to have less chemicals in their food and the products they use.”

Locus Fermentation Solutions’ founders, Lefkowitz and chief scientific officer Sean Farmer, used to run Ganeden BioTech Inc., a probiotics ingredients-maker in Mayfield

Heights. The company was big in the food and beverage ingredient market, selling into more than 800 products globally, before it was sold in 2017.

Locus Fermentation Solutions is home to the research-and-development side of the business, said Teresa

DeJohn, director of marketing and public relations. Once the company has some effective solutions in place, it spins out industry-specific operating companies.

Locus Fermentation Solutions was founded in 2014. The oil business, Locus Bio-Energy Solutions, was commercialized in 2016; the agricultural business, Locus Agricultural Solutions, was commercialized in late 2017.

Though it doesn’t share annual revenue, there are signs that Locus has been seeing growth. It’s expanded into three buildings on Aurora Road in Solon, giving it about 38,000 square feet of office and production space. Solon serves as the company’s headquarters, but it also has offices in Texas, Florida and California.

In January 2018, the company had

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42 employees. Eighteen of them worked at Locus Fermentation Solutions, 11 worked in the oil and gas business and 13 worked in the agricultural business. In March 2019, there were 109 employees, including 36 at Locus Fermentation Solutions, 32 in the oil and gas business and 41 in the agricultural business.

DeJohn said Locus Fermentation Solutions tends to focus on industries that are currently reliant on chemicals and those with big-headline pain points, like citrus greening disease, which stunts and then kills citrus trees.

Jonathan Brown, senior vice president of production for Bethel Farms in Florida, is interested in stemming the effects of citrus greening disease.

Having worked in soil microbiology for about the past 30 years, he’s familiar with Locus’ ideas.

About two years ago, Bethel Farms started by using Locus products on young trees and, after seeing results, moved on to mature trees. In that test, the farms maintained a control group that didn’t get the Locus products.

The result? The trees treated with the Locus products started to grow again, where they had previously “shut down,” Brown said. And the trees produced more of the concentrate or juice for which the farm is paid.

One of the upcoming areas of focus for Locus will be bringing its agriculture products to market. The company has seen success in helping fortify plants with citrus greening disease, Lefkowitz said. The plants now have stronger roots, bigger trunks and more leaves. And they’re helping to sequester carbon dioxide, he said, which has widespread potential.

“We can actually go into any irrigated crop in the world and reduce greenhouse gases,” he said.

How does that work? Ken Alibek, senior vice president of research and development, explained that the larger roots, the more carbon they can hold.

“In my opinion, everything Locus is doing is absolutely essential to humanity,” Alibek said.

Take, for example, the company’s products for the oil and gas business.

People could view oil as a “dirty” business, he noted, but Locus’ environmentally friendly products can help customers increase production without drilling new wells. On the agricultural side, Locus’ products help increase a crop’s yield by 5% to 40% in the same amount of space, Alibek said.

The company will start an agricultural trial of some of its organic fertilizer products on two farms in Ohio this spring, he said. Locus will be looking to test yield in different kinds of produce, from tomatoes to peppers to potatoes.

The use of microbes in agriculture has been around for thousands of years, Brown noted. Farmers knew different kinds of manure had different effects on different crops; they just didn’t always know why. Today, technology allows people to study exactly how and why those microbes affect plants.

What sets Locus apart is how it cultivates its microbes, Brown said. It’s a targeted approach that allows them to choose and grow specific combinations of microbes.

Locus tailors the microorganisms to each customer, basing the balance it grows on that customer’s needs. On the agricultural side, that means taking factors such as geography and soil type into account. In oil and gas, Locus actually tests the paraffin to be dissolved in the wells for each customer.

3/29/19 2:55 PM

CRAIN’S CLEVELAND BUSINESS

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Cleveland Eye Clinic envisions steady growth

By Lydia Coutré lcoutre@crain.com @LydiaCoutre

The historically fragmented eyecare industry is going through a period of consolidation, and Cleveland Eye Clinic has seized the opportunity to bring new practices into its business.

As optometrists and ophthalmologists look to retire from their independent practices, many students graduating in these fields aren’t interested in solo practice, said Dr. William Wiley, medical director of Cleveland Eye Clinic. This dynamic has offered Cleveland Eye Clinic the chance to acquire several practices in recent years, growing its business from one location in downtown Cleveland to a regional network of eye care with locations in Avon, Beachwood, Bedford, Brecksville, Cleveland, Elyria and Lorain.

Cleveland Eye Clinic provides general eye care along a broad spectrum of needs including cataracts, dry eye, eyelid disorders, pediatric problems, retina disorders, general vision and more, with a significant focus on cataract surgery. Its sister company, ClearChoice Custom LASIK Center in Brecksville, also has a location in Toledo called Toledo LASIK Center.

Cleveland Eye Clinic, which turns 75 this year, has grown its revenue by 15fold in the last 15 years. Also in that time, the clinic has expanded from around 10 employees to more than 200.

Historically, eye care has been a “fragmented market” in which most care was performed in single-loca-

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Dr. Shamik Bafna uses TrueVision 3D-HD technology for cataract surgery. TrueVision allows the surgeon to operate heads-up instead of being glued to the oculars of the microscope. (Contributed photo)

tion, private-practice settings by a sole practitioner, said Wiley, who also serves as medical director of ClearChoice.

“But we’ve seen that there’s been a big move toward Wiley consolidation within the market,” he added.

The challenges to being an independent provider — new regulations, Medicare reimbursement rates, electronic health records mandates, the complexity of insurance — are pushing more practices to consolidate.

“The thing that we can offer to a lot of these practices is we already have that infrastructure,” said Scott Ford,

chief talent officer and general counsel for Cleveland Eye Clinic. “So when they come to us, they don’t have to worry about credentialing themselves with a hundred health plans or dealing with Health and Human Services, or complying with anything from OSHA to EEO regulations. I mean, we have a plan and we have administrators, and the doctors who come to us can focus on doctoring and let the administrators administer the practice.”

In the late 1980s, Wiley’s father, Dr. Robert G. Wiley, and Dr. William G. Martin of Toledo purchased Cleveland Eye Clinic from its founder, Dr. David E. Rolf, who established the center in 1944. In 2002, Wiley purchased the practice from his father and soon began expanding, purchas-

ing two practices in 2005.

“At that time, I kind of realized to be one location in downtown Cleveland was sort of limiting our access to patients in the suburbs, so we decided as a business that we needed to sort of expand our geography to include suburban locations,” Wiley explained. “Not every patient wants to drive downtown for all their medical needs, so we wanted to reach out and expand locations through the purchasing of retiring physicians.”

Changes to Medicare reimbursement in the mid-2000s also helped fuel some of the clinic’s growth. The change in regulation allowed for patients to pay out of pocket to upgrade procedures.

Wiley said Cleveland Eye Clinic has been able to keep up with the latest technology and innovation thanks in part to a research center established in 2011.

“What makes Cleveland Eye Clinic or a private practice unique in some of the clinical research that’s going on is in private practice we’re often a little bit more nimble and we have less red tape in regards to boards choosing whether or not we should do this research or that research or invest in this technology or that,” he said. “And a lot of the new technology companies are going to private practice to run their clinical trials because they can do those things often more efficiently.”

So far, all of the acquisitions have been self-funded through internal growth. In other markets, however, Wiley noted that private equity is playing a major role, capitalizing on

the trend of consolidation.

Though the Cleveland Eye Clinic hasn’t yet tapped into private equity options, Wiley said he could see that happening in the future, especially if the clinic decides to expand beyond its Northeast Ohio and Toledo markets.

“At the current growth rate,” he said, “we can continue with selffunding, but if we wanted to accelerate the growth rate, at that point, we would look to likely take advantage of the hot private equity market that’s looking for these types of investments. There might be a perfect partnership at that point to further expand outside the market.”

Wiley said he’s also considering adding a surgical hub on the East or West side that would complement the work done at the clinic’s main surgical headquarters in Brecksville.

Ford said the clinic is approached about monthly by practices interested in possibly joining Cleveland Eye Clinic. When considering which practices to acquire or potentially affiliate with, leadership examines a number of factors, including geography, demographics and culture.

“What we do feel strongly about is staying independent so that we can decide what’s best for our patients. I mean, that is critical,” Ford said. “Everybody in this organization certainly — everybody in leadership — is entrepreneurial, and I think that many of our doctors and administrators could work elsewhere — some in big corporate systems or big nonprofit-based systems — but they like the ability to be more nimble and to be a little more entrepreneurial.”

3/29/19 1:37 PM

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Employees buy prominent Cleveland architecture firm

By Stan Bullard sbullard@crain.com @CrainRltywriter

The namesake founder and owner will be retired, but the Richard L. Bowen + Associates architecture and engineering firm will keep the name as employees conclude their purchase through an employee stock ownership plan.

“There’s a brand there. Why would we want to change it?” said Allan Renzi, the prominent firm’s new president.

The transfer of the last 60% of the Cleveland firm’s ownership is scheduled to close on Monday, April 1.

The ESOP has been long in the works as staffers started it in 2007, when employees were allocated their first share of the firm. Bowen founded the company in 1959 and retired March 20.

Selling to all the firm’s employees with more than five years of service goes against the trend in the industry, which is typically an acquisition by a larger firm or a handful of principals buying a firm over time.

“We’re happy, to be honest, we did not go that route,” Renzi said, adding he was thankful Bowen pursued the ESOP. Renzi, who was president last year of the Cleveland chapter of the American Institute of Architects trade group, has been with Bowen for 25 years and served most recently as vice president of operations at Bowen to prepare for the transition. The firm has five staffers who are named principals — essentially its executive board — and who select the president.

“We have a very good and strong core of people who have been working here more than 20 years,” Renzi said.

Bowen

Renzi

The firm provides both architecture and engineering services because many clients like having them paired together, he added.

Through a separate subsidiary, Richard L. Bowen Management LLC, the company also provides general contracting and construction management services. David Bowen, Richard Bowen’s son and a longtime staff member, has become president of the construction concern.

Renzi said the focus of the new owners is to continue the work the firm has provided in the past but also to build a “creative, inspiring environment that employees really want” and continue efforts to build a diverse, inclusive staff.

As part of that process, Bowen will seek a new office, perhaps closer to downtown than its current Shaker Square office, that will allow it to create an open environment to foster creativity, Renzi said. The firm hopes to be in its new office by the end of the year.

That move will be coordinated with putting the firm’s home at Shaker Square, which Bowen owns through an affiliated company, up for sale. The 26,000-square-foot building at 13000 Shaker Blvd. is for sale with CBRE Group, with an asking price of $1.125 million, according to the online commercial real estate listing site LoopNet.

“We worked together on this,” Renzi said. “We did not force our way out and were not forced to go.”

The firm intends to continue to pursue the mix of public and private work it has built over the years. It performs work for the state, cities, counties and institutions of higher education, as well as corporate interiors, shopping center and apartment designs, and designs for retailers.

Among its best-known projects are serving as one of the architects for the School of Architecture building at Kent State University and for the Cuyahoga County Justice Center. It recently completed a new kennel for the city of Cleveland in the Detroit-Shoreway neighborhood and the Hard Rock Rocksino Northfield Park in Northfield. Its portfolio also includes a long list of police stations, city halls and facilities for public transit systems.

The firm takes a client-centric approach to design.

“Our focus,” Renzi said, “is first and foremost on listening and understanding the user group’s needs. We always tell them that, regardless of the budget, it should not prevent good design. We are quite proud of our projects because of the success they have had.”

Bowen has a total staff 55, including 13 registered architects and 13 registered engineers. The firm ranked as the region’s 11th-largest architecture firm by registered architects in the 2019 list of architecture firms by Crain’s Cleveland Business.

Richard Bowen, who founded the firm after graduating from Western Reserve University, now Case Western Reserve University, did not return a phone message by Crain’s deadline last Thursday, March 28.

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CRAIN’S CLEVELAND BUSINESS

Legal aid wages another fight to fend off big budget cuts

By Jeremy Nobile

Michelle Wrona Fox (right), an attorney with Community Legal Aid in Youngstown, meets with a client during office hours at Taft Elementary School. The program is part of an initiative called the Neighborhood Law Project, a partnership between Legal Aid and the Taft Promise Neighborhood, focused on lifting families out of poverty. (Contributed photo)

which amounted to $410 is composed of gifts from million in 2018 — to 132 infoundations and individual donors. dependent, nonprofit legal jnoible@crain.com While the loss of federal aid programs. @JeremyNobile funding wouldn’t outright Northeast Ohio has two cripple either group, it Another year of federal budget main legal aid groups, The would result in them servproposals means another year of tar- Legal Aid Society of Clevegeting the Legal Services Corp. for land, which focuses on ing fewer people in need. defunding as local legal aid groups Cuyahoga County, and The request for help is alremain continuously stretched thin.

Community Legal Aid, McGarrity ways greater than what each President Donald Trump’s budget which serves eight counties agency can meet, with for the 2020 fiscal year aims to shut in and around the Akron/Canton about every other person who comes down the LSC for the third year in a area. seeking legal aid typically turned row, designating $18.2 million in Eliminating the LSC would cut down because of resource limitations. costs to do so.

25% of the Cleveland group’s $11 milThe situations legal aid groups The LSC is the country’s largest lion projected budget and about 26% commonly address include reducing single funder of legal aid, distributing of Akron’s $7.8 million projected debt, bankruptcies, preventing foremore than 93% of its funding — budget. The bulk of funding for each closures and evictions, removing barriers to education and securing access to things like health insurance or even personal safety as it relates to cases of abuse and assault. People who go to legal aid for help are in dire economic circumstances and could never afford legal costs on their own.

“Our federal, state and local governments have established rights for this country’s citizens,” said Colleen Cotter, executive director of the Legal Aid Society of Cleveland, which impacted 16,945 people through 7,297 cases last year. “But those rights are not self-actualizing. Without meaningful access to the justice system to enforce those FIFTH THIRD rights, they can be meaningless. Legal aid provides that access and brings our PAYMENTS AND democracy to life.”

Past efforts to defund the LSC have COMMERCE SOLUTIONS not only been unsuccessful, but they’ve actually helped legal aid groups raise more money. In the wake of efforts to kill the LSC last year, Congress ended up approving a budget of $410 million, a $25 million year-over-year increase that was the LSC’s largest since fiscal year 2010.

The threat of budget cuts may have also aided individual groups in securing additional donor support. A recent campaign by The Legal Aid Society of Cleveland, in fact, helped fund the group’s first expansion since it settled into downtown’s Warehouse District in the late 1970s, where it had been renting out space to a bar for extra cash.

The LSC reports that Congress recently expanded annual funding for the group to $415 million before Trump’s budget marked the agency for dissolution. Its full 2020 budget Bridgit Chayt request is $593 million.

SVP, Director of Commercial Payments and “I believe that the bipartisan supTreasury Management at Fifth Third Bank port LSC has enjoyed in Congress for almost 45 years will continue long into the future,” said LSC president Bridgit and the Treasury Management experts Jim Sandman in a statement. “We are at Fifth Third Commercial Bank combine grateful that Congress recognizes LSC’s vital importance in ensuring innovative technology and investments to help equal access to justice and has incraft effective ways to manage the complexity creased our funding in each of the of your company’s capital. last two fiscal years.”

Although private donations and This is banking a Fifth Third better. federal funding have both grown some in past years, that doesn’t abate concerns about a stiff budget cut, 53.com/Experience which would ultimately translate to less justice served for people in need.

“LSC support is vitally important for Community Legal Aid, and for legal aid across the country,” said Steven McGarrity, executive director of Community Legal Aid, which helped 3,114 people through 1,306 cases.

“The funding we receive helps cover the direct cost of representing low-income families who otherwise wouldn’t be able to afford an attorney. But we also leverage their grant Fifth Third Bank, Member FDIC for donors and community funders who see the importance of supporting this work at the local level.”

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3/29/19 3:03 PM

LegaL Notice

To merchants who have accepted Visa and Mastercard at any time from January 1, 2004 to January 25, 2019: Notice of a class action settlement of approximately $5.54-6.24 Billion.

Si desea leer este aviso en español, llámenos o visite nuestro sitio web, www.PaymentCardSettlement.com.

Notice of a class action settlement authorized by the U.S. District Court, Eastern District of New York.

This notice is authorized by the Court to inform you about an agreement to settle a class action lawsuit that may affect you. The lawsuit claims that Visa and Mastercard, separately, and together with certain banks, violated antitrust laws and caused merchants to pay excessive fees for accepting Visa and Mastercard credit and debit cards, including by: • Agreeing to set, apply, and enforce rules about merchant fees (called default interchange fees); • Limiting what merchants could do to encourage their customers to use other forms of payment; and • Continuing that conduct after Visa and Mastercard changed their corporate structures.

The defendants say they have done nothing wrong. They say that their business practices are legal and the result of competition, and have benefitted merchants and consumers.

The Court has not decided who is right because the parties agreed to a settlement. The Court has given preliminary approval to this settlement.

The SeTTlemenT Under the settlement, Visa, Mastercard, and the bank defendants have agreed to provide approximately $6.24 billion in class settlement funds. Those funds are subject to a deduction to account for certain merchants that exclude themselves from the Rule 23(b)(3) Settlement Class, but in no event will the deduction be greater than $700 million.

The net class settlement fund will be used to pay valid claims of merchants that accepted Visa or Mastercard credit or debit cards at any time between January 1, 2004 and January 25, 2019.

This settlement creates the following Rule 23(b)(3) Settlement Class: All persons, businesses, and other entities that have accepted any Visa-Branded Cards and/or Mastercard-Branded Cards in the United States at any time from January 1, 2004 to January 25, 2019, except that the Rule 23(b)(3) Settlement Class shall not include (a) the Dismissed Plaintiffs, (b) the United States government, (c) the named Defendants in this Action or their directors, officers, or members of their families, or (d) financial institutions that have issued Visa-Branded Cards or Mastercard-Branded Cards or acquired Visa-Branded Card transactions or Mastercard-Branded Card transactions at any time from January 1, 2004 to January 25, 2019. The Dismissed Plaintiffs are plaintiffs that previously settled and dismissed their own lawsuit against a Defendant, and entities related to those plaintiffs. If you are uncertain about whether you may be a Dismissed Plaintiff, you should call 1-800-625-6440 or visit www.PaymentCardSettlement.com for more information.

WhaT merchanTS Will geT from The SeTTlemenT Every merchant in the Rule 23(b)(3) Settlement Class that does not exclude itself from the class by the deadline described below and files a valid claim will get money from the class settlement fund. The value of each claim will be based on the actual or estimated interchange fees attributable to the merchant’s Mastercard and Visa payment card transactions from January 1, 2004 to January 25, 2019. Pro rata payments to merchants who file valid claims for a portion of the class settlement fund will be based on: • The amount in the class settlement fund after the deductions described below, • The deduction to account for certain merchants who exclude themselves from the class, • Deductions for the cost of settlement administration and notice, applicable taxes on the settlement fund and any other related tax expenses, money awarded to the Rule 23(b)(3) Class Plaintiffs for their service on behalf of the Class, and attorneys’ fees and expenses, all as approved by the Court, and • The total dollar value of all valid claims filed.

Attorneys’ fees and expenses and service awards for the Rule 23(b)(3) Class Plaintiffs: For work done through final approval of the settlement by the district court, Rule 23(b) (3) Class Counsel will ask the Court for attorneys’ fees in an amount that is a reasonable proportion of the class settlement fund, not to exceed 10% of the class settlement fund, to compensate all of the lawyers and their law firms that have worked on the class case. For additional work to administer the settlement, distribute the funds, and litigate any appeals, Rule 23(b)(3) Class Counsel may seek reimbursement at their normal hourly rates. Rule 23(b)(3) Class Counsel will also request (i) an award of their litigation expenses (not including the administrative costs of settlement or notice), not to exceed

$40 million and (ii) up to $250,000 per each of the eight Rule 23(b)(3) Class Plaintiffs in service awards for their efforts on behalf of the Rule 23(b)(3) Settlement Class.

hoW

To

aSk

for

PaymenT

To receive payment, merchants must fill out a claim form.

If the Court finally approves the settlement, and you do not exclude yourself from the Rule 23(b)(3) Settlement Class, you will receive a claim form in the mail or by email. Or you may ask for one at: www.PaymentCardSettlement.com, or call: 1-800-625-6440.

legal righTS

and

oPTionS

Merchants who are included in this lawsuit have the legal rights and options explained below. You may: • File a claim to ask for payment. Once you receive a claim form, you can submit it via mail or email, or may file it online at www.PaymentCardSettlement.com.

• Exclude yourself from the Rule 23(b)(3) Settlement Class. If you exclude yourself, you can individually sue the Defendants on your own at your own expense, if you want to. If you exclude yourself, you will not get any money from this settlement. If you are a merchant and wish to exclude yourself, you must make a written request, place it in an envelope, and mail it with postage prepaid and postmarked no later than July 23, 2019, or send it by overnight delivery shown as sent by July 23, 2019, to Class Administrator, Payment Card Interchange Fee Settlement, P.O. Box 2530, Portland, OR 97208-2530. Your written request must be signed by a person authorized to do so and provide all of the following information: (1) the words “In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation,” (2) your full name, address, telephone number, and taxpayer identification number, (3) the merchant that wishes to be excluded from the Rule 23(b) (3) Settlement Class, and what position or authority you have to exclude the merchant, and (4) the business names, brand names, “doing business as” names, taxpayer identification number(s), and addresses of any stores or sales locations whose sales the merchant desires to be excluded. You also are requested to provide for each such business or brand name, if reasonably available: the legal name of any parent (if applicable), dates Visa or Mastercard card acceptance began (if after January 1, 2004) and ended (if prior to January 25, 2019), names of all banks that acquired the Visa or Mastercard card transactions, and acquiring merchant ID(s).

• Object to the settlement. The deadline to object is July 23, 2019. To learn how to object, visit www.PaymentCardSettlement.com or call 1-800-625-6440. Note: If you exclude yourself from the Rule 23(b)(3) Settlement Class you cannot object to the settlement.

For more information about these rights and options, visit: www.PaymentCardSettlement.com.

if

courT aPProveS final SeTTlemenT

The

The

Members of the Rule 23(b)(3) Settlement Class who do not exclude themselves by the deadline will be bound by the terms of this settlement, including the release of claims against the released parties provided in the settlement agreement, whether or not the members file a claim for payment.

The settlement will resolve and release claims by class members for monetary compensation or injunctive relief against Visa, Mastercard, or other defendants. The release bars the following claims: • Claims based on conduct and rules that were alleged or raised in the litigation, or that could have been alleged or raised in the litigation relating to its subject matter. This includes any claims based on interchange fees, network fees, merchant discount fees, no-surcharge rules, nodiscounting rules, honor-all-cards rules, and certain other conduct and rules. These claims are released if they already have accrued or accrue in the future up to five years following the court’s approval of the settlement and the resolution of all appeals.

• Claims based on rules in the future that are substantially similar to – i.e., do not change substantively the nature of – the above-mentioned rules as they existed as of preliminary approval of the settlement. These claims based on future substantially similar rules are released if they accrue up to five years following the court’s approval of the settlement and the resolution of all appeals.

The settlement’s resolution and release of these claims is intended to be consistent with and no broader than federal law

on the identical factual predicate doctrine.

The release does not extinguish the following claims: • Claims based on conduct or rules that could not have been alleged or raised in the litigation.

• Claims based on future rules that are not substantially similar to rules that were or could have been alleged or raised in the litigation.

• Any claims that accrue more than five years after the court’s approval of the settlement and the resolution of any appeals.

The release also will have the effect of extinguishing all similar or overlapping claims in any other actions, including but not limited to the claims asserted in a California state court class action brought on behalf of California citizen merchants and captioned Nuts for Candy v. Visa, Inc., et al., No. 1701482 (San Mateo County Superior Court). Pursuant to an agreement between the parties in Nuts for Candy, subject to and upon final approval of the settlement of the Rule 23(b) (3) Settlement Class, the plaintiff in Nuts for Candy will request that the California state court dismiss the Nuts for Candy action. Plaintiff’s counsel in Nuts for Candy may seek an award in Nuts for Candy of attorneys’ fees not to exceed $6,226,640.00 and expenses not to exceed $493,697.56. Any fees or expenses awarded in Nuts for Candy will be separately funded and will not reduce the settlement funds available to members of the Rule 23(b)(3) Settlement Class.

The release does not bar the injunctive relief claims or the declaratory relief claims that are a predicate for the injunctive relief claims asserted in the pending proposed Rule 23(b)(2) class action captioned Barry’s Cut Rate Stores, Inc., et. al. v.

Visa, Inc., et al., MDL No. 1720, Docket No. 05-md-01720MKB-JO (“Barry’s”). Injunctive relief claims are claims to prohibit or require certain conduct. They do not include claims for payment of money, such as damages, restitution, or disgorgement. As to all such claims for declaratory or injunctive relief in Barry’s, merchants will retain all rights pursuant to Rule 23 of the Federal Rules of Civil Procedure which they have as a named representative plaintiff or absent class member in Barry’s, except that merchants remaining in the Rule 23(b)(3) Settlement Class will release their right to initiate a new and separate action for the period up to five (5) years following the court’s approval of the settlement and the exhaustion of appeals.

The release also does not bar certain claims asserted in the class action captioned B&R Supermarket, Inc., et al. v. Visa, Inc., et al., No. 17-CV-02738 (E.D.N.Y.), or claims based on certain standard commercial disputes arising in the ordinary course of business.

For more information on the release, see the full mailed Notice to Rule 23(b)(3) Settlement Class Members and the settlement agreement at: www.PaymentCardSettlement.com.

The courT hearing abouT ThiS SeTTlemenT On November 7, 2019, there will be a Court hearing to decide whether to approve the proposed settlement. The hearing also will address the Rule 23(b)(3) Class Counsel’s requests for attorneys’ fees and expenses, and awards for the Rule 23(b) (3) Class Plaintiffs for their representation of merchants in MDL 1720, which culminated in the settlement agreement.

The hearing will take place at: United States District Court for the Eastern District of New York 225 Cadman Plaza Brooklyn, NY 11201 You do not have to go to the Court hearing or hire an attorney.

But you can if you want to, at your own cost. The Court has appointed the law firms of Robins Kaplan LLP, Berger Montague PC, and Robbins Geller Rudman & Dowd LLP as Rule 23(b)(3) Class Counsel to represent the Rule 23(b)(3) Settlement Class.

QueSTionS? For more information about this case (In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, MDL 1720), you may: Call toll-free: 1-800-625-6440 Visit: www.PaymentCardSettlement.com Write to the Class Administrator: Payment Card Interchange Fee Settlement P.O. Box 2530 Portland, OR 97208-2530 Email: info@PaymentCardSettlement.com Please check www.PaymentCardSettlement.com for any updates relating to the settlement or the settlement approval process.

www.PaymentCardSettlement.com • 1-800-625-6440 • info@PaymentCardSettlement.com

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CRAIN’S CLEVELAND BUSINESS

REAL ESTATE

Growth by Design

Northeast Ohio’s economic development engine at work

PNC sells Cleveland data center for $51.7 million

By Stan Bullard sbullard@crain.com @CrainRltyWriter

Team NEO will kick off the celebration of National Economic Development Week with “NEO Rising: Celebrating Today.

Building Tomorrow,” an event from 4:30 p.m. to 7:30 p.m.

May 2 at Embassy Suites, Independence.

NEO RISING WILL BE: • An opportunity to recognize economic development professionals.

• A celebration of the economic development achievements reached in 2018 and plans for the future.

• A chance to honor Team NEO’s regional economic development champion awardees.

For more information, go to NEORising.TeamNEO.org.

YOUR STORY. YOUR STAGE.

TeamNeo_1-6V_4-1-19.indd 1

SPONSOR AN EVENT TODAY: Lisa Rudy • lrudy@crain.com

Data centers are a scarce but hot commodity in the increasingly digitized business world, which has allowed Pittsburgh-based PNC Bank to shed its massive operations center at 4100 W. 150th St. in Cleveland for $51.7 million.

Cuyahoga County land records show that was the sale price Feb. 22 when PNC sold to BFR Cleveland Office LLC of New York City, a joint venture of global investment firms and a consulting firm. The complex comprises three buildings with a total 387,000 square feet of space, according to online real estate data firm CoStar. The deed shows the property sits on 13 acres. It’s also loaded with computer equipment that’s been continuously updated since National City Bank initially launched an operations center there in the 1970s.

The county assigned a market value for property taxes of $21 million.

PNC said it made the decision to sell, according to a statement from spokeswoman Shannon Mortland, as part of a practice of continually evaluating its ownership or leasehold positions within its real estate portfolio.

Mortland said PNC plans to continue operations at the site “well into the future,” although she did not detail the length of the company’s long-term lease. The bank, she added, made no 3/25/19 3:05 PM position-related changes as a result of the transaction and continues to employ thousands of staffers there.

BFR Cleveland is a joint venture of

The former National City Bank operations center in West Park has been sold

by PNC Bank to a group building a portfolio of data center properties. (CoStar)

big-league investment and financial firms: Silverpeak Investing and Legacy Investing of New York City and Los Angeles-based Oaktree Capital. Silverpeak is an alternative asset manager that has acquired $17 billion in properties. Legacy Investing is an investor in data centers and critical operations that said it was founded by a group of technology executives. Oaktree Capital is a global investment management firm with $120 billion in assets under management.

Their joint news release stated that the group had acquired data centers in Cleveland and Cincinnati from a large financial institution that the release did not identify. The companies said the venture would make available for lease for the first time a total of 70,000 square feet of raised-floor data center that meets financial data requirements.

Jay Rappaport, CEO of Legacy, was

quoted in the release as saying the prior owner had invested more than $60 million in each of the properties.

Brad Lebovitz, managing director of Silverpeak, said in the release that “the addition of these assets not only expands our sector presence, but also introduces us to edge markets where we see limited supply.”

Edge markets refers to second-tier cities, as opposed to major coastal areas that are home to substantial data-center operations.

This is the second major property sale by PNC this year.

In February, it also sold an office building at 23000 Millcreek Blvd. in Highland Hills to a New York real estate owner and manager for $7.5 million. The building was emptied because the bank shifted staffers to its downtown Cleveland office tower, PNC Center.

Suburban company prepares to expand with Cleveland plant

By Stan Bullard

An affiliate of Bear Diversified of Cuyahoga Heights is seeking tax incentives from Cleveland to install an additional plant for Northern Stamping Inc. at 5900-6000 Harvard Ave. (Stan Bullard)

sbullard@crain.com @CrainRltyWriter

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Auto-parts maker Northern Stamping Inc. is so busy that it can’t satisfy demand with its 200 staffers at plants in Cuyahoga Heights and Valley View, so it plans to add a third location in Cleveland.

The unit of Bear Diversified Inc. of Cuyahoga Heights has legislation pending before Cleveland City Council for a 60% abatement on property taxes for 10 years under the state’s enterprise zone law for a proposed operation at an existing building at 5900-6000 Harvard Ave. In exchange, the company plans to make substantial investments in the recently purchased plant and launch an operation there with a staff equal to 28 full-timers and an estimated annual payroll of $1.4 million, according to a document the City of Cleveland Department of Education prepared to brief City Council on the request.

Legislation granting the investment in the city’s community reinvestment area has been given two readings by Cleveland City Council.

However, it will not be submitted to council for final action until it’s heard by council’s Development, Planning and Sustainability Committee.

Northern Stamping is prepared to invest in updating the largely empty

building on Harvard Road and installing equipment to produce parts under a contract to supply General Motors Corp. with stamps for making metal components and provide welded assemblies for trucks and sport utility vehicles, according to the department.

A mortgage that Bear Diversified Properties LLC, an affiliate of Northern Stamping’s corporate parent, received from J.P. Morgan Chase Bank secured by the real estate is for $33.3 million, which will cover updates to the property and improvements to turn it into a production facility.

Bear Diversified Properties purchased the 227,000-square-foot property on Harvard on Dec. 3, 2018, according to Cuyahoga County land records, which do not include a sale

price. However, the county valued it at $1.2 million for property tax purposes.

The seller, 5960 LLC, held the property for a month after receiving it in quit claim — typically used by related companies to transfer interest — from Bink Enterprises LLC. Bink has operated a building-materials supply firm in the plant since paying $1 million for the former Dougherty Lumberyard in 2012. Bink will continue to operate in about 60,000 square feet of the complex, according to the city document.

Northern Stamping is one of several units of the Bear Diversified Inc. holding company. Matthew Friedman, Bear CEO, did not return an email and two phone calls from Crain’s Cleveland Business about the transaction and pending legislation.

3/29/19 11:29 AM

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Adviser: Tanner McGraw

Eight tips for picking a commercial real estate broker With everything else on your mind, chances are identifying the right space for your company and negotiating the deal is not your idea of a good time.

Fortunately, a cadre of skilled professionals in Northeast Ohio live and breathe commercial real estate markets. For these men and women, helping you find business space to lease or buy is precisely how they have a good time.

Considering rent may consume up to 20% of company revenues, depending on your industry, and that the devil is in the lease details, it’s important you be represented in pursuit of business real estate. The challenge is identifying the right professional for your business.

I was a commercial real estate broker before starting a software company, so I’ve walked in their shoes and in yours. I appreciate the service a really good broker can provide and what it takes to provide a high level of service to a business in need.

Here are eight tips to pick the right commercial real estate broker to help your business find space:

McGraw is founder of Apto, a provider of commercial real estate software.

6. Ask for references.

Don’t be afraid to ask prospective brokers for references, including clients he or she may have helped who were facing challenges similar to yours. A key question for references: “Tell me about the broker’s work as a negotiator on your behalf.”

7. Be sure the broker is adequately tech-enabled.

Many brokers will tell you that the real estate business is all about relationships: knowing landlords, sellers and other brokers. Relationships are critical, to be sure, but not enough.

Today, some information is only available through online services, and technology enables smarter location and pricing decisions, not to mention document management and speed to close. Make sure the broker you hire is up to date.

8. Date a few times before you commit.

Before you hire a broker, have at

least two or three calls and meet- service providers, as well as their ings to gauge his or her responsive- personal knowledge base.

Use the opportunity of finding ness, communication style and understanding of your situation — and new space for your business to bethe consistency of their behavior. come more educated about the It’s the same as hiring market, the state of someone for a job at property supply and deyour company: It’s not Date a few mand, incentives that likely you would hire times before different landlords or someone after just one local jurisdictions may you commit. be offering, and even meeting.

Most commercial the tax treatment of brokers don’t just facilitate transac- leasing versus owning business real tions, they open doors. By engaging estate.

By the time you’re finished locata professional commercial real estate expert, you’ll be able to tap into ing or moving your business, you’ll his or her network of real estate be glad you hired a professional lawyers, property managers and commercial real estate broker.

1. Hire a specialist who knows your property type and geographic market.

There are generalists and specialists in commercial real estate. Many generalists are well-regarded, catering to multiple segments of the market. But why choose a jack-of-alltrades when you can work with someone who has deep experience in exactly what you need? If your need is pretty specific, hire a specialist.

2. Be sure the person is knowledgeable about the broader market, including trends.

The commercial real estate industry is changing faster than ever before. There are more space types and deal structures, as well as ancillary services provided by some landlords.

Ask prospective brokers about the market at large, including evolving lease terms, amenities, tenant improvements and cost-sharing, to understand what options may be available to you.

3. Seek a good listener who is not just interested in closing a deal but is willing to advise you.

Unless you know exactly what you want, where you want to be and what you want to pay, seek out a broker who is a consultant as much as a transaction specialist. Ask questions that indicate your openness to different scenarios to gauge a broker’s willingness to identify and help you evaluate alternative options.

4. Consider small, medium and large firms.

Brokers and brokerage firms come in all shapes and sizes. Be open to working with all manner of professionals and teams, based on what’s important to you and the level of service you need.

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5. Discuss how any contracts, fees or commissions work.

Effective communication up front will help eliminate any potential confusion at the end of the deal, and certainly head off surprises. Also, discuss the potential for the broker to represent both parties, and what that could mean for you.

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3/28/19 3:17 PM

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Cleveland, Rust Belt cities attracting younger generation

By Jeremy Sopko

Editorial

Flight plan Aer Lingus, if it’s really considering launching service from Cleveland Hopkins International Airport, can’t get here soon enough. But if it comes, we hope airport officials have learned from the failures of two carriers offering transatlantic service — Icelandair and Wow Air — and are able to offer support that would put another carrier on a more sustainable path toward success.

There were circumstances beyond the control of Cleveland officials that contributed to the departures of the two Iceland-based airlines, which started flying from Cleveland in summer 2018 and, unfortunately, will not make it to summer No. 2.

Wow Air, which after one season of flights from Hopkins announced last October that it wouldn’t return to Cleveland, was beset by financial problems that last week led the airline to cease all operations. Icelandair last week said it was ending its Cleveland service, citing in part an aircraft shortage stemming from the Boeing 737 Max 8 being put out of commission because of safety issues in the wake of two crashes.

Once again, Cleveland is in need of service to Europe. We don’t have a great history with such service, but the two Iceland airlines served more than 50,000 people last summer, reflecting a level of demand that should be strong enough for some carrier to want to serve it.

Could that be Ireland’s Aer Lingus, which Cleveland.com reported has been looking for new North American cities to start service? That would be encouraging, given that it’s an established operator in growth mode that has marketing expertise in targeting leisure and business travelers. Such a wide-ranging focus is critical, since a transatlantic carrier here needs the support of all categories of passengers — and Cleveland’s corporate community needs connections to Europe.

Airport officials haven’t commented on efforts to attract Aer Lingus or any other transatlantic carrier, but we trust they’re looking hard at issues including the frequency of potential flights, and marketing support, to help make such service viable. The corporate community, too, should stand ready to commit to supporting such service.

The Icelandair/Wow Air experiment didn’t work, but Hopkins has done well in recent years in attracting smaller domestic carriers. We’re hopeful that a new era of transatlantic service isn’t far off.

Feeling better

Northeast Ohio isn’t truly in position to land an Amazon HQ2-style home run to bolster job creation and economic development.

The region is, though, building momentum in the key area of investment in biomedical companies, according to BioEnterprise Corp.’s latest Midwest Healthcare Growth Capital Report, which tracks capital investments made across 11 Midwestern states in three sectors: medical device; biotechnology and pharmaceuticals; and health IT/software and services.

BioEnterprise found that 438 Midwestern companies raised a total of $2.5 billion in 2018, keeping pace with a torrid 2017, when 364 companies raised $2.465 billion — a figure 43% higher than 2016.

Breaking down the numbers by state and region, Ohio and Cleveland do well. Minnesota was the top Midwestern state for investment dollars in 2018, with $690 million, but Ohio was second, at $561 million. Ohio also had the most companies receiving funding, at 121. Among Midwestern metros, Minneapolis ($664 million) and Chicago ($551 million) led the way, but Cleveland, at $294 million, was third, besting Columbus and Detroit-Ann Arbor.

About 60% of the capital raised by Midwestern health care companies last year consisted of later-stage investments, BioEnterprise found. In other words, these are companies that showed enough promise in seed and early-stage funding rounds to continue to attract capital. Those numbers run counter to the narrative of decline that permeates the region. They offer hope that, as these companies continue to grow by offering innovative products and services, so will their workforces — and their need for skilled labor.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

CLEVELAND BUSINESS P010_CL_20190401.indd 10

Managing Editor:

Scott Suttell (ssuttell@crain.com)

Contact Crain’s:

216-522-1383

Read Crain’s online: crainscleveland.com

The largest urban cities — the likes of San Francisco, Los Angeles and Washington, D.C. — have always been top millennial hot spots, as repeatedly shown in U.S. census and Nielson demographics data. These sprawling metropolitan areas consistently draw huge swaths of this generation with promises of lucrative tech, business and finance jobs. The proposition is always the same: better-than-average pay, metropolitan convenience and attractive creative environments within dense urban villages.

But have the seeds been sown for a big change? If national lending and housing Sopko data are any indication, the answer is most certainly yes.

Midsize cities — so-called “secondary cities” — are beginning to attract younger generations like never before. Cleveland in particular just may become a city of the future for millennial homebuyers, who are poised to revive not only home sales in affordable Rust Belt cities but also entire regional economies.

The numbers don’t lie. In an analysis of origination and lending data at Nations Lending, not only do millennial buyers make up more than 46% of new U.S. homebuyers for the first two months in 2019 — the largest generational segment of the market for the fourth year in a row — but millennial movement out of U.S. traditional big cities and Cleveland in into Rust Belt cities is also on the particular just rise. This generation is leaving the big cities for all the promise and may become affordability of locations like a city of the Cleveland, and local residents and economies stand to gain a future for good deal of reward for it. Here’s millennial how the numbers stack up: Millennial borrowing and pur- homebuyers. chasing steadily increased in secondary markets, such as Cleveland, Pittsburgh and Detroit. In fact, from 2017 to 2018, millennials surged 24% with regards to total homebuyers purchasing in Rust Belt cities. Meanwhile, Nations Lending data in the big cities from 2017 to 2018 told a very different story; millennials purchasing in large cities like Dallas, Chicago and Houston decreased nearly 14 percentage points of total homebuyers. 2018 was also the first year that millennial buyers overtook Generation X for the generational lead in share of new loan origination volume nationwide.

Sky-high costs of living coupled with more debt than any other generation mean millennials have a harder path to homeownership, and they’re exploring new paths to that American dream because of it. A 2018 study by the Federal Reserve found that millennials are less financially well-off than members of earlier generations, noting “lower earnings, fewer assets and less wealth” in general. Forty-four million Americans shoulder $1.5 trillion in student loan debt alone, and young people under 35 hold almost half of it, an earlier Fed report notes. Combine that with low and/or stagnant wages and the number of states where the majority of young people were even able to live independently fell to just six in 2015.

So how will this generation make up the gap? Again, the numbers don’t lie, and what they suggest is that millennials are starting to set their sights on housing markets that offer a unique version of homebuying value.

SEE SOPKO, PAGE 11

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com.

Please include a telephone number for verification purposes.

3/28/19 3:47 PM

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LAND FOR SALE: Beacon West, Westlake

Prestigious Westlake Location! » Industrial Zoning with Many Allowable Conditional Uses » Prestigious High Visible Gateway Location » Can Accommodate up to 100,000 SF Building » $450,000 » $62,327/Acre Property Features

SOPKO

● Priced to Sell city of Cleveland has more than 75,000 medical and ● Last Two Available technical personnel, along with 180 health-tech and high-tech companies that have launched business CONTINUED FROM PAGE 10 Parcels there. And no longer does being in the Midwest mean ● Quick access to I-90 Lot 2R Not only is the obvious pricing factor in play here entrepreneurs are “too far away” from venture capital. and Crocker Park 7.226 Acre — the average millennial mortgage at Nations Lending With examples such as the 320 designated Opportuni● Enterprise Zone Parcel was $133,043.55 in Rust Belt cities in 2018, while mort- ty Zones in Ohio that offer deferred tax benefits for in● Major Business and gages in big cities averaged around $200,571.89 — but vestors, Cleveland has been forging its way from the Retail Area for millennial buyers, it’s taken them a lot longer to once-seen Rust Belt city to a growing community of ● Stormwater Pond gather together funds for a entrepreneurs and startups.

Installed down payment. In Cleveland What places like Cleveland Even before millennial VIKING PARKWAY and demographically com- offer is a more approachable, homebuyers discovered the ● Build to Suit Available affordable allure of Rust Belt parable areas, however, lowCONTACT US er housing costs and more neighborhood-oriented version living, these cities were on affordability mean those of the urban lifestyle that sent the comeback. Look for those Charles Marshall or Terry Noonan trends to continue — and down payments go a lot fur330-659-2040 many buyers to the larger perhaps even accelerate over ther for a buyer.

3457 Granger Road, Akron, OH 44333 the next few years. Although Cities like Cleveland fea- cities in the first place.

VISIT OUR NEW PROPERTY WEBSITE the Rust Belt has suffered ture the exact kind of appeal these buyers are looking for. Debt-to-income ratio for from the loss of its once-great stature as a manufacturwww.beaconmarshallproperties.com millennial homebuyers was just over 24% in Rust Belt ing hub, the latest trend in millennial movement patcities in 2018, compared to nearly 29% in traditional terns looks to be a more permanent one than their big cities. What places like Cleveland offer is a more initial sprint to large urban centers. approachable, neighborhood-oriented version of the “It is about having roots and contributing to the reurban lifestyle that sent many buyers to the larger cit- vival of a place that needs businesses that create jobs ies in the first place. Young people with college de- and create value,” Constantine Valhouli, director of grees are already leading the charge back into down- research at real estate research and analyticsBeacon firm Marshall Ad 3-4-Lot 2R.indd 1 town Cleveland, according to a study from Cleveland NeighborhoodX, told CNBC. State University. This trend means others in the city Cleveland truly is coming back smart. And the savviest generation in town has taken notice. are also likely to continue.

Additionally, Cleveland’s strong record with startups and support for young entrepreneurs offers more Sopko is co-founder and CEO of Nations Lending reinforcement of newcomers entering the market. The Corp., based in Independence.

Web Talk

Re: Browns and FirstEnergy Stadium Build a winner and they will come. However, if the Haslams want a “bridge,” well, I hope the city approves any plans they have for a bridge that is safe and is funded by the Browns. Enough for these welfare queens. — Financephil

Re: Building NE Ohio’s film industry While it is great that Crain’s Cleveland Business has finally acknowledged the film Industry in Northeast Ohio, I have lived through 20 years of the Greater Cleveland Film Commission, and their mission of catering to Hollywood to make Cleveland a film location only benefits a select few. We need to do more than have the commission’s phone ringing off the hook. We need to take a cue from Bernie Moreno and Blockland Cleveland and build our own industry. My company, Prelude2Cinema, focuses on what unique treasures we have in Northeast Ohio.

We are also part of Blockland Cleveland and believe in bringing all people to the table. We will be launching a marketing campaign for the cinema industry which includes a TV series shooting in Cleveland, “Out of Darkness: Cleveland,” and building a network of studio/locations. ... It is time to commit to Cleveland. — Alex P. Michaels I “work” in the local film industry, but I’m way down the depth chart and am lucky to get a call as a backup production assistant for a commercial during that one week in the summer when there are two movies in town and everyone else is busy. I also have a master’s degree in urban planning, so I’m more interested in the film incentives as an economic development tool for the state than I am as a wannabe filmmaker looking for a handout. I’m on the fence as to their long-term effectiveness. On the one hand, tax incentives are brazen corporate welfare that double-count the economic benefits, as many local workers have other jobs (like me), and don’t properly account for the opportunity cost of subsidizing other established industries, which are more highly localized. On the other hand, I do see the value in trying to create a critical mass of activity that will justify permanent infrastructure upgrades and attract new investment in upstream and downstream support services. ... As things stand, the

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tax credit is a job training program for the state of California, paid for by the state of Ohio, because anyone who wants to work in the industry full-time ultimately has to leave the state or settle for indefinitely “paying their dues” as a background actor or department intern. — Karl Toth I recently moved from Los Angeles back to Cleveland (my hometown). I have a bunch of friends in the film industry. It’s very difficult for new talent or filmmakers to get noticed in a Hollywood system that is full of huge corporate mergers. And it’s difficult for editors and other behind-the-scenes talent to pay their rents. I would love to bring my L.A. friends here, of course, so I was noodling on what Cleveland could do to genuinely support indie filmmakers in a way that Hollywood cannot, which is to help them get noticed and raise money. The Cleveland International Film Festival is a pretty cool festival; makes me wonder what could be built around that to incentivize filmmakers to work or live in Cleveland. — Karen Leventhal

Re: Possible bailout for FirstEnergy nuclear plants This would be insane in any case, but it would be more insane to give existing nuclear power credit for cutting no additional carbon, but refuse to give the same credit to wind and solar for cutting additional carbon. The insanity has just a little to do with the basic fact that Ohio’s nuclear plants cannot compete with existing natural gas, wind, solar or just about anything else. ... Lawmakers can’t raise everyone’s rates for the benefit of customers of one utility, because it will spend a few years in the Ohio Supreme Court before it gets junked. They could try to raise everyone’s taxes, but that runs into an entire set of issues even the Republicans don’t like. ... Wind and solar in Ohio are now so cheap that they can lower electric rates, and if we get the Republicans to remove some of the legislated barriers, we will have more than we need for a clean and sustainable future, equitable distribution of taxes for schools and road-building, tens of thousands of new jobs and lower electric bills. This is the moment of truth for Ohio Republicans. The truth is that a bailout is insane. The moment is now.

— nedford

3/28/19 3:25 PM

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CRAIN’S CLEVELAND BUSINESS

Focus LEGAL AFFAIRS

Uncovering talent Fisher Phillips partner leads national effort to advance women in law

By Judy Stringer clbfreelancer@crain.com

When it comes to women and leadership, one common belief is that their careers are disproportionately sidelined compared to men because women tend to be the predominant caregivers in families. Maybe they take time off to stay at home with children or care for an aging parent, or don’t work as late due to day-to-day household obligations.

Melanie Webber, a partner in the Cleveland office of the national labor and employment law firm Fisher Phillips, said that might be true in some instances, but it’s just not the whole story — at least not among the female attorneys with whom she interacts daily.

“We look at female hours worked and billed and it is right in line with males,” she said. “It seems that lot of it is (women attorneys) are just not pulling in as much business, or as big business, as some of the men. Maybe they are not getting as much of the high-dollar work.

“We are still trying to get our arms around it, but we are not seeing that it is directly attributed to our women attorneys needing to be at home.”

Webber heads Fisher Phillips’ Women’s Initiative and Leadership Council (WILC), which consists of partners,

associates and staff from its 32 offices spread across 23 states and Washington, D.C. One of WILC’s goals is to attract women to Fisher Phillips. That’s important, Webber said, but perhaps more critical are its efforts to retain and advance women in the practice. That’s because while the number of women at the associate level — i.e., nonpartner Webber roles — mirrors the number of female law school students, “the percentage of women attorneys being elevated to partner level is not akin to the number of women we are hiring at the associate level,” she said.

That is not, of course, just a Fisher Phillips issue. A 2018 report by the National Association of Women Lawyers (NAWL) said data collected over the last 11 years have demonstrated “a consistent and relatively undisturbed pattern showing the absence of women in the upper echelon of law firm and legal profession leadership.”

Despite making up half of law school grads and a proportional amount of new associate recruits, NAWL found that women comprise just 30% of nonequity partners at the nation’s 200 largest law firms and only 20% of equity partners.

SEE WILC, PAGE 18

Illustration by Meriel Jane Waissman

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LEGAL AFFAIRS

Licata Law Group bridges NE Ohio, China

By Jeremy Nobile jnobile@crain.com @JeremyNobile

As Chinese investors seek out deals in the U.S., Cleveland lawyer Louis Licata may be a catalyst who funnels their capital to Northeast Ohio.

Licata’s business contacts in China are looking to the former Council of Smaller Enterprises (COSE) chair to source deals across the U.S., since there’s a sense their money could see better returns here because of the fragility of the Chinese economy right now.

“Part of the reason their economy has struggled over the last two years is because ours is doing so well,” Licata said. “In the last 20 years, I’ve seen this sort of back-and-forth. When China’s economy is really good, ours isn’t. A lot of the U.S. tries to invest in China.

Then it shifts, and China comes back and tries to invest in the U.S.” But Licata — who founded his Independence law firm, Licata Law Group, in 1990 and has spent decades navigating global business deals for smaller and midsize companies — has developed some special connections in Asian markets, to which roughly 35% of his firm’s revenue is tied. That positions him and his practice as a portal connecting businesspeople in China and Cleveland.

To that end, Licata recently signed an agreement with the Liaoning Zhuozheng Law Firm in Shenyang

Louis Licata of the Licata Law Group with Liu Zhengwei, founder and director of the Liaoning Zhuozheng Law Firm. (Contributed photo)

City in China’s Liaoning province. It’s believed to be the first formal relationship between law firms in the U.S. and China’s populous northeast region. The idea is to establish, in writing, a dynamic whereby the two entities will work deals on behalf of their respective businesses, clients and potential investors.

Founded in 2010, the Liaoning Zhuozheng firm has more than 100 lawyers. A goal of the firm is to increase its relationships in China’s northern provinces versus the southern region where it’s already well meshed into the business fabric. That ultimately means helping investors there make money.

“We are pleased to initiate this new agreement to establish the communication and collaboration between Chinese and American lawyers in the future, in the mutual understanding to create economic development projects for both of our law firms and business communities,” said Liu Zhengwei, founder and director of Zhuozheng, in a prepared comment.

That’s something that particularly excites local stakeholders.

“There’s no shortage of initiatives and ideas for how to move U.S. products to China, and those are certainly important,” said Joe Roman, CEO of the Greater Cleveland Partnership, in a statement. “What’s exciting about

this initiative is that it focuses the discussion on Northeast Ohio and highlights what our region has to offer to Chinese investors that might otherwise be unaware of the strength our own region has to offer. There’s nothing but upside for the local business community in an agreement like this.”

Chinese investors sourcing deals here — and vice-versa — is certainly not novel. But the coordinated effort to focus on the Northeast Ohio region at this time, to some degree, is.

And there are a number of reasons why it’s playing out now.

“The Chinese money coming to U.S. has been a long history, but most money goes to the West and East coasts,” said Su He, an attorney with He & Associates in Beachwood and executive director of the 2-year-old Greater Cleveland Chinese Chamber of Commerce. “But it’s hard to get into those markets because there are lots of people there already. The relationships are not as easy as we can get here.”

That’s one element of the opportunity investors have here: the ability to foster new relationships in regions with which overseas businesspeople naturally aren’t as familiar, such as the Buckeye State.

After all, said He, to foreign businesspeople, there are no discernible differences between Cincinnati, Columbus and Cleveland — let alone Ohio compared to the rest of the Midwest. She noted the Chinese chamber devotes a bulk of its resources to building up Cleveland’s

public image and courting large Chinese companies to visit the market “because we truly believe Cleveland has such huge potential.”

A more global Cleveland Licata’s connections to Asia began with his undergrad degree, which bent toward China and Asia studies.

He worked on business deals for smaller and midsize companies through the 1990s, sometimes his contribution as simple as writing out terms and conditions.

But as his practice developed, and he sought more global opportunities for his growing clientele, his familiarity with the country naturally steered his attention there. Some of his work evolved into helping various U.S. companies and suppliers introduce facilities and products to the Chinese market.

While reluctant to name-drop clients with deals in the works, one of the local manufacturers with whom Licata has been working is Cleveland Whiskey. There, he has assisted CEO Tom Lix to sell product in a country packed with stiff liquor competition (Jack Daniels, for instance, has its own facility for distribution capabilities there).

Lix recently pulled back on expanding to overseas markets for now, including China and Europe — largely because of retaliatory tariffs that have hurt margins and good will — but is working with Licata on possible re-entry opportunities in China.

SEE LICATA, PAGE 18

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CRAIN’S CLEVELAND BUSINESS

LEGAL AFFAIRS

NEO faces a resurgence of patent trolling

By Jeremy Nobile jnobile@crain.com @JeremyNobile

A few years ago, thousands of lawsuits were being filed annually by socalled patent trolls, a pejorative term for entities that acquire patent rights, aggregate them and then use the threat of litigation to pressure companies into paying them licensing fees, all without producing any goods or services of their own.

However, a series of Supreme Court decisions and changes to post-grant review processes ultimately put downward pressure on those types of cases.

Around 2014, the frequency of cases brought by patent trolls — or non-practicing entities (NPEs), as they’re otherwise known — nosedived. Some of the more active NPEs, such as Shipping and Transit LLC, eventually went out of business in the years following.

NPEs never went away entirely, though, and after a few years of muted activity, some patent lawyers report that their clients are fielding an uptick in threats. Cases filed locally in the Northern District of Ohio — such as Zavala Licensing LLC v. Winncom Technologies Corp. (a Solon company that declined to comment on pending litigation) and Landmark Technology A LLC v. U.S. SafetyGear Inc. (of Wickliffe) — have IP attorneys like Calfee’s Tracy Scott Johnson cautioning clients that trolling activity is picking back up.

“And you’re not just seeing claims of exceptionally questionable substance for a pure economic fight,” Johnson said, noting that a patent troll’s strategy is often to threaten a lawsuit without having a valid claim in hopes of scaring a company into paying them licensing fees that would amount to a fraction of

the cost to litigate a case. “You’re seeing trolls who I think have a more substantial patent-infringement case to be made. They’ve always been active, but some took maybe a year or two to pause and think about it, and now they’re being more active.”

Ari Sherwin, senior counsel for intellectual property at Sherwin-Williams, can’t talk publicly about protocols for dealing with patent trolls — or how many cases the company has settled instead of fighting — but noted that large companies like his tend to have the size, scale and resources to combat a case. That’s why NPEs tend to primarily target smaller and midsize firms, building a war chest of money from smaller settlements to use to take on larger corporations.

Sherwin said an IP infringement case can easily cost $1 million before even getting to trial and could quickly balloon to two or three times that, if not more, for a full defense.

“So those litigation, trial, post-trial costs can be prohibitive for smalltime players,” he said. “But there are more weapons available for startups and independent investors and even big companies to put more arrows in their quiver to go after these trolls.”

Those arrows can come from both federal and state laws, although Sherwin said that an Ohio bill to prohibit bad-faith lawsuits by allowing fines for punitive damages on baseless claims crept up around 2014 or 2015 but never passed.

SCOTUS applies the brakes While these kinds of lawsuits amount to what many lawyers describe as legal extortion, Sherwin pointed out that not all NPEs are bad. Some of them even help out the “little guys” by

forming to aggregate patents on behalf of members to prevent more troll-minded groups from getting their hands on a patent in the first place.

Historically, though, the trolls’ cases have a history of being baseless, which put political pressure on Frisina Congress to do something about it. That led to the passing of the Leahy-Smith America Invents Act in 2011. A key feature of that bill was the ability for someone to request that the United States Patent and Trademark Office re-review a previously awarded patent for issues of validity.

Doing that might cost a defendant a few hundred-thousand dollars and much less time than a full defense. It also shifted some risk to the patent trolls.

“That was an attack on the economic leverage the trolls previously enjoyed,” Johnson said.

In 2014 came the U.S. Supreme Court decision on Alice Corp. v. CLS Bank International, which dealt with patent eligibility. There has always been an exclusion in patent cases on patenting an abstract idea: You can’t patent the law of gravity, for example.

The Alice Corp. case, Johnson explained, dealt with mathematical formulas implemented through computers. The court ruled that those formulas were abstract, making it a modern case addressing the patent eligibility of software-related inventions.

The decision and the post-grant review processes undercut the foundation of patent trolls’ business model.

Also in 2014 was Octane Fitness LLC v. ICON Health & Fitness Inc., another Supreme Court case that allowed for the recovery of court costs

filed there that previously would’ve been taken elsewhere.

“Pre-TC Heartland, plaintiffs preferentially filed in the Eastern District of Texas, which has had a strong tendency to favor patentees,” explained IP lawyer Dominic Frisina of Frisina LLC. Johnson Sherwin “The cause of at least part of and attorney fees by defendants in a any rise in patent troll activity in the Northern District of Ohio likely results patent case deemed frivolous.

Those cases largely applied the from the Supreme Court’s ruling in TC Heartland that the word ‘resides’ in brakes to patent litigation. the patent venue statute refers to a defendant’s state of incorporation.”

Trolls follow the money It’s nonetheless difficult to quantiYet another Supreme Court deci- fy any overall uptick in patent lawsion, 2017’s TC Heartland LLC v. suits.

Frisina said cases may be increasKraft Foods Group Brands LLC, dealt with the venues in which patent law- ing as NPEs become more savvy, adjusting to the legal landscape in suits could be filed.

Because of how patent laws worked, which they’re playing, while Sherwin cases could be filed in virtually any said cases may increase locally bemarket in which a targeted company cause of the growing tech and startup was doing business, which meant ef- scene — something that could signal fectively anywhere thanks to e-com- to NPEs the region has organizations merce. That led to the phenomenon of ripe for attack. patent trolls increasingly filing patent While recent court decisions should cases in the U.S. District Court for the put downward pressure on the numEastern District of Texas. The two- ber of patent troll cases, Johnson’s conjudge courthouse — which has a his- cern is that recent local cases filed, tory of being anti-corporation, John- coupled with anecdotal feedback from son said — offered predictable judges clients facing threats for licensing who were also motivated to move cas- agreements, indicate patent trolls may be lurking in Northeast Ohio. es through the system quickly.

“I now have clients who hadn’t reAn effect of SCOTUS’ TC Heartland decision was that NPEs now had ceived letters for years and suddenly to “come where the companies are,” have multiple efforts to get into licensJohnson said, instead of being al- ing agreement discussions,” Johnson lowed to file cases virtually any- said. “A couple years ago, TC Heartwhere. The ruling saves defendants land made it feel as though most the costs of traveling to the city where Northeast Ohio companies weren’t their case is filed. going to be sued, and you could igThat is probably why the Northern nore10:43 those letters with relative safety 03-07John S Grimm.qxp 2/23/2016 AM Page 1 District of Ohio is seeing some cases and impunity. Now, I’m not so sure.”

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LEGAL AFFAIRS

Adviser: Rina Russo and Mark Fusco

A 1930s labor law with 21st-century consequences One might think that the long-established Fair Labor Standards Act (FLSA), which governs minimum wages and overtime, would be easily understood by employers today.

After all, it turned 80 years old in 2018.

However, an uptick over the past few years in FLSA wage and hour lawsuits continues to prove that employers aren’t paying the necessary atten-

tion to the FLSA to remain compliant.

While 2018 data are not yet available, United States Courts annual statistics indicate that from 2010 through 2017, the pace of new FLSA cases being filed is increasing, although not always in a strictly linear fashion.

To demonstrate the sheer volume of cases as compared to years past, in 1990, the federal district courts only reported 1,257 FLSA cases filed

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across all U.S. district Russo is a courts that year. In 2000, partner in labor the number increased to and employment 1,935. However, since and Fusco is a 2012, that number has partner in been consistently in the litigation for the range of 7,500 to 8,781 new Cleveland office FLSA cases filed each year, of Walter a seven- to eight-fold inHaverfield LLP. crease over years past.

(Anecdotally, any lawyer who reads the daily case filing reports from local courts knows ing an action against an employer. that rarely does a week go by without Although failure to correctly pay several new FLSA cases filed against overtime and improper classificaNortheast Ohio employers.) tions of individuals continue to be As basic background, the FLSA subjects of FLSA lawsuits, some addiprovides for a federal minimum wage tional trends have emerged. for employees and requires overtime For restaurants, one of the more premium pay of one and one half heavily FLSA-regulated industries, times an employee’s regular rate of employers should be prepared for pay for all hours worked over 40 lawsuits alleging unlawful tip-poolhours in a workweek. Additionally, ing arrangements, failure to provide there are certain exemptions to the a tip credit notice to tipped employminimum wage and overtime re- ees for whom a tip credit is taken quirements of the FLSA for employ- against minimum wage, and wage ees working in certain kinds of jobs. deductions from employees making In Ohio, the Ohio Minimum Fair minimum or below-minimum hourWage Standards Act (OMFWSA) mir- ly wage with a tip credit.

In other sectors, lawsuits alleging rors the FLSA in many ways, but provides for a higher minimum wage failure to pay employees for certain than the FLSA: $8.55 per hour in preliminary and postliminary activi2019, as compared to the FLSA’s cur- ties have been another trend. In the rent $7.25 per hour. Additionally, the manufacturing setting, this can inOMFWSA provides some harsher clude donning and doffing personal penalties than the FLSA. While the protective equipment necessary to FLSA provides for “liquidated” or perform primary job duties. For double damages for violations of the call-center employees and other ofstatute, certain violations of the OM- fice workers, this can include failure FWSA, such as the failure to pay the to pay for time spent logging into varOhio minimum wage, allow for triple ious software programs prior to damages. Both the FLSA and OMFW- clocking in for the day.

As new FLSA case filings remain SA permit a prevailing plaintiff to recover his/her attorneys’ fees in bring- consistently high, employers must

3/7/19 5:07 PM

not only make sure they are in compliance with all existing laws and regulations, they must also keep up to date with new Department of Labor guidance.

Having clear, compliant policies for employee timekeeping and setting up procedures for employees to voice complaints regarding pay is just the minimum. Employers should have an outside lawyer review wage and hour policies, practices and employee classifications to confirm they are in compliance with all applicable wage and hour laws, including the duty to maintain accurate wage and hour records.

Having an attorney review and provide guidance on wage and hour practices is helpful for several reasons. Employers are not only more likely to be in compliance with applicable laws, but the ability to indicate that an attorney has reviewed and opined on a company’s wage and hour practices is an important factor for courts in determining whether a violation of the FLSA was “willful,” thereby invoking the longer threeyear statute of limitations, instead of the standard two-year statute of limitations.

Although some insurance policies cover defense costs, liability coverage for FLSA and related state-law claims is usually excluded from insurance policies. Therefore, employers are often required to pay the above damages and attorneys’ fees out of pocket if a violation is proven or a settlement reached.

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April 1, 2019

ASK THE PROFESSIONAL

Navigating workplace legal challenges Insights from a litigation attorney

I

n 2018, workplace classaction settlement values dropped sharply, to $313.4 million versus 2017’s record high of $927 million, according to the Society for Human Resource Management.

The steep decline was likely influenced in part by the Epic Systems decision, a landmark 2018 Supreme Court ruling that gives businesses the power to stop employees from coming together to file class-action lawsuits. As pro-employer friendly as the decision may appear, any company or organization still should be mindful of any potential vulnerabilities that increase their legal exposure.

“Any company that deals with customers on a regular basis faces additional risk,” said Michael J. Zbiegien Jr., a partner at Taft. “Companies should consider including a class-action waiver or arbitration clause or both of these in any type of standard sales or services contracts or other standard terms and conditions,” regardless of the Epic Systems precedent.

“They are generally enforceable and may prevent a company from facing a class action.”

Zbiegien has represented companies in nationwide class actions, including matters related to the Fair Credit Reporting Act, consumer issues, employment issues and insurance rates.

He sheds light on some of the key issues companies confront when it comes to entering into litigation and attempting to avoid a lawsuit altogether.

How do class-action waivers and arbitration clauses help companies minimize their exposure to litigation?

Most companies can handle the potential exposure from a lawsuit brought by a single plaintiff or even a few lawsuits brought by a handful of plaintiffs. But a class action poses a substantially greater risk by allowing a single customer or employee to attempt to bring suit on behalf of all customers or employees, or some subset of customers and employees, and to aggregate their many smaller claims into one massive litigation.

A class-action waiver or properly worded arbitration clause can prevent that aggregation of claims by requiring each customer or employee to litigate their claims individually. This can reduce a company’s exposure to litigation in two ways. First, a single smaller claim is often

easier to resolve through a settlement quickly, resulting in lower litigation costs.

Second, and just as important if not more so, many customers and employees will never file suit to begin with.

Are there any ways in which an entity can avoid litigation?

Unfortunately, in our system, a business cannot avoid litigation altogether. A business can minimize its litigation risk and exposure by diligently monitoring its compliance with laws and other regulations and treating its customers well. If a business has enough interactions (for example, with customers, suppliers or employees), then eventually, someone may have a bad experience and sue, even though the claim may lack merit.

A class-action waiver or arbitration clause can decrease a company’s risk of reputational harm once a case is filed. When a court decides that a

customer or employee may proceed on behalf of a group of customers or employees through a process called class certification, notice of the claim is sent to all the class members, usually by mail. Each customer or employee who makes up the class receives a mailing describing the bad things the company is alleged to have done. A class waiver or arbitration clause can help to avoid this negative publicity.

What kinds of workplace claims are on the rise?

We continue to see high rates of class actions and collective actions (a special type of group litigation under the federal Fair Labor Standards Act) claiming employees were not paid overtime or the minimum wage under the FLSA and corresponding state laws. These claims are often brought by disgruntled former employees who claim they weren’t paid enough. While the lower unemployment rate may result in a reduced number of these types of claims being filed, their overall volume is expected to remain high.

In addition, the #MeToo movement seems to be spurring more workplaceharassment class actions, although it remains to be seen if they will reach the volume of the minimum-wage and overtime suits.

continue to craft strategies to attempt to work around those rulings. In fact, Epic Systems resulted from attempts to sidestep the AT&T Mobility decision by arguing that provisions in the National Labor Relations Act precluded the enforcement of arbitration clauses in employment litigation. In response to the decisions regarding arbitration clauses, we may see an increase in classaction suits involving plaintiffs who never entered into a contract with the business — and therefore never agreed to an arbitration clause.

Are there any other anticipated legal changes that could impact an employer?

The case law is continuing to develop on these issues. On Jan. 15, the U.S. Supreme Court issued a decision in New Prime, Inc. v. Oliveira, holding that a truck driver’s employment contract fell within the transportation workers’

exception to the Federal Arbitration Act, so courts lacked the authority to compel arbitration of his claim that he wasn’t paid the minimum wage. This decision means that the protections against class actions afforded by Epic Systems may not be available to employers of certain transportation workers who are engaged in interstate commerce. Enterprising class-action attorneys may attempt to use the New Prime decision to create a broader exception to the Epic Systems decision.

If the Democrats resume control in Washington, there may be statutory changes that could reduce the effectiveness of class-action waivers and arbitration clauses. On Feb. 28, 2019, Sen. Richard Blumenthal and Reps. Hank Johnson and Jerry Nadler introduced the Forced Arbitration Injustice Repeal Act (or “FAIR” Act), which if passed, would nullify classaction waivers and arbitration clauses in consumer, employment, civil rights and anti-trust disputes.

What can a business do to minimize the risk of a lawsuit?

Many consumer class actions are brought by people who had a bad customer experience, so having a customer-service department that is empowered to resolve complaints can go a long way toward minimizing litigation.

We once had a potential class action dismissed because it turned out that, before filing the lawsuit, the lead plaintiff had called the company’s customerservice department and accepted a credit to resolve his complaint.

What does the Epic Systems decision mean for companies’ risk of class-action lawsuits?

Epic Systems continues a line of U.S. Supreme Court cases that started with AT&T Mobility LLC v. Concepcion, which upheld the use of arbitration clauses to avoid class-action litigation.

Those cases provide tools that businesses can use to reduce their litigation exposure. Like a seatbelt, however, they work only if they are used, and some people still don’t wear seat belts.

Businesses also must remain vigilant because plaintiffs’ class-action attorneys

Today’s Contentious World Taft’s Commercial Litigation Team: Assessing and minimizing business risks.

www.taftlaw.com

This advertising-supported section is produced by Crain Content Studio-Cleveland, the marketing storytelling arm of Crain’s Cleveland Business. The Crain’s Cleveland Business newsroom is not involved in creating Crain Content Studio-Cleveland content.

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CRAIN’S CLEVELAND BUSINESS

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WILC

CONTINUED FROM PAGE 12

“So, nationwide we are still seeing the number of women advancing to those leadership roles, or the elevated status within a firm, at a lower percent than what we would like to see,” Webber said.

WILC initiatives aimed at improving those career trajectories include appointing a leave liaison for women who are taking a leave of absence, perhaps after childbirth or adoption.

The liaison is someone in the office of the affected employee, typically a partner, who keeps her in the loop while she’s away and then aid her re-entry into the workplace.

The firm also has revamped its policy to include not only paternity leave, but also reduced performance metrics — which often means lower billable-hour requirements — for attorneys and other staff members in the four weeks leading up to a leave of absence and for four weeks after they return. Reducing work demands eases the transitions, Webber said, and has proved a “very appreciated program.”

“If men are the primary caregiver, they get same arrangement with the ramp-up and ramp-down,” she noted.

In addition, Fisher Phillips has appointed WILC ambassadors who are responsible for female-targeted programming in their office or region and are a point of contact for any issues that are specific to women attorneys or female staffers.

A rising tide Webber said she believes, however, that some of WILC’s greatest work falls outside of leave policies and female-friendly practices. The nationwide WICL steering committee hosts periodic conference calls that are open to anyone in the company — man or woman — and focus on “gender-targeted business development.” The gist of those calls is how to generate more business from female clients.

“We talk about unique business development ideas that might break the traditional mold of attorneys,” said Webber, “that the way to get business is to take your buddies out

to play golf every day.”

It’s the philosophy of a rising tide lifting all boats: Increasing the density and depth of business from female business owners will likely translate into more and bigger projects for female attorneys, work that will eventually advance more women into those male-dominated partner roles.

“Some larger organizations are also mandating law firms staff their cases with diverse attorneys, including women attorneys, so I think that will help as well,” Webber said. “It will be a combination of each firm’s commitment to advance women and support from outside organizations that see the opportunity in more diverse work groups.”

Many of the ideas arising from these WILC steering committee calls resonate beyond its female client base, she added. Busy professionals today aren’t necessarily inclined to spend an entire Saturday golfing, but might take a few hours after work to try out sushi-rolling or drop into a zoo event where they could bring their kids.

Melissa Dials, an attorney in Fisher

Phillips’ Cleveland office, said that for women who are active in WILC, the organization also can act as a springboard for career opportunities.

She herself has benefited from policies that make it easier for parents to balance work and family. Dials and her husband adopted a little girl from Ethiopia and she credited WILC’s efforts for providing her the workplace and work-hours flexibility that lets her spend quality time with the active 6-year-old.

Dials added that different mentoring opportunities and relationships she’s built through WILC have translated into projects and experiences that might not have surfaced in more traditional circumstances. She has pursued outside expertise in European data privacy and nonprofit leadership and has championed educational access for young girls in Uganda.

“One of WILC’s primary purposes is leadership development, so I knew that if I took that initiative of identifying opportunities that interest me, the firm would be unconditionally supportive,” she said. “I think that makes a big difference.”

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As far as the kinds of items Chinese investors want, whether from the U.S. or elsewhere, in Licata’s world, it’s often a short, specific list of consumer-related products. Items in high demand right now include honey, olive oil, American red wine and juice products. Licata is currently working on deals involving all of those with suppliers in Greece for olive oil and the Middle East for honey.

Going the other way, Licata noted that Chinese investors are relatively agnostic about what they’d invest in here. On the table is everything from what’s tied to the obvious, big corporate players in the market, such as Cleveland Clinic, to real estate projects.

“The way this is working is, if I see something in our region that might be a good opportunity for Chinese investment, they just want me to bring it to them to start,” Licata explained. “It could really be anything.”

Some may want to invest in smaller funds: One effort in which Licata is engaged involves selling investors on Flashstarts’ $6 million, pre-seed Blockchain+ Fund, which carries just a $10,000 minimum buy-in. Others may want to outright acquire factories, product suppliers or warehouses, whether to collect on returns or otherwise establish a foothold in the American market (which would help them skirt taxes and exchange rates when money moves overseas).

The perception in China right now, said He, is that any opportunity in the U.S. could be potentially viable — hence the reliance on a network here through Licata or someone like him.

Various factors, not just Licata’s experience, are leading to a lot of that potential being framed through the Northeast Ohio market.

“The general feeling is Chinese investors are exploring the Midwest area,” He said. “They are still motivated to source deals in the U.S., but because of harsh economic/trade policies, they are getting slower or waiting-and-see.

“One special thing in Cleveland is we are an important city in the health care industry,” she added. “China is very focused on developing health care-related businesses, such as diagnosis service, hospital management, medical devices and innovative technologies. So for this part, I see lots of Chinese investors still motivated and expanded opportunities in the Greater Cleveland area.”

He said the Chinese chamber is aware of a number of potential deals in the works, but can’t disclose them publicly because of ongoing negotiations. A couple of related companies also declined interviews about those deals.

Licata said the agreement with Liaoning Zhuozheng doesn’t include any formal goals to ink a specific number of deals or help deploy a particular amount of capital in any specific amount of time. But with several deals already in the works, it’s very possible Chinese money could weave its way into the local business fabric more than ever.

That, in turn, could further grow and globalize the city and the region.

“I think this community has tremendous, unrealized potential to be a global city,” Licata said. “I think Cleveland has all the right pieces, but we’re not realizing the potential of the collective use of those pieces. We are very fragmented in terms of being a global city. But we have good people in place and a lot of good opportunities.”

3/29/19 10:05 AM

CRAIN’S CLEVELAND BUSINESS

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PA G E 19

THE LIST

Commercial Contractors Ranked by 2018 local revenue THIS COMPANY YEAR PRIMARY LOCAL ADDRESS

LOCAL REVENUE (MILLIONS) 2018/2017

TOTAL REVENUE (MILLIONS) 2018

STAFF (FTE) LOCAL TOTAL PRIMARY INDUSTRIES 3-1-2019 SERVED

PRIMARY SERVICES OFFERED

PROJECTS UNDER CONSTRUCTION IN TOP LOCAL 2018 EXECUTIVE

1

Gilbane Building Co. 950 Main Ave., Suite 1410, Cleveland (216) 535-3000 / gilbaneco.com

$306.3 $227.5

$5,728.0

67 2,847

Corporate, health care, education, sports/ entertainment, residential

Construction management firm

The Lumen at Playhouse Square, LCC Health Technologies Building, Chagrin Falls Intermediate School

Kyle Merrill, area manager

2

Kokosing group of companies 13700 McCracken Road, Garfield Heights (216) 587-4900 / kokosing.biz

$302.1 $319.7

$1,290.0

244 2,564

Water, power, industrial, transportation, marine, commercial

General contractor: design-build, construction management at-risk, aggregate asphalt supplier

Euclid membrane bioreactor; I-271 pavement replacement/widening; Opportunity Corridor phase 3

Matt Wilson, area manager

3

The Albert M. Higley Co. 3636 Euclid Ave., Cleveland (216) 861-2050 / amhigley.com

$238.0 $140.1

$238.0

101 107

Corporate office, health care, education, cultural/ nonprofit, hospitality

Construction management, general contracting, design-build, preconstruction/estimating

Lake Health Beachwood Medical Center, Polaris Career Center, Key Center renovations

Gareth D. Vaughan, president, CEO

4

Donley's Inc. 5430 Warner Road, Cleveland (216) 524-6800 / donleyinc.com

$210.0 $147.0

$298.0

210 551

Higher education, health care, commercial, institutional

Construction management, concrete services, restoration

Tri-C Westshore Campus, Summa Health West Tower, Cleveland Clinic/CWRU Health Education Campus

Malcolm M. Donley, president, CEO

5

Panzica Construction Co. 739 Beta Drive, Mayfield Village (440) 442-4300 / panzica.com

$158.0 $148.5

$158.0

120 120

Commercial, industrial, institutional

Construction management, designbuild, general contracting

One University Circle, Centric, Berea City School District

Anthony M. Panzica, owner, president, CEO

6

The Ruhlin Co. 6931 Ridge Road, Sharon Center (330) 239-2800 / ruhlin.com

$127.7 $111.9

$159.6

155 193

Health care, industrial, transportation, education, commercial building

General contracting and construction management services

Kent State master plan, Cleveland Clinic Akron General emergency department, Tallmadge City Schools

James L. Ruhlin, president, CEO

7

Rudolph Libbe Group 4937 Mills Industrial Parkway, North Ridgeville (440) 406-8800 / rlgbuilds.com

$76.6 $62.0

$574.3

165 1,521

Manufacturing, metals, chemical, food processing

New construction, industrial site maintenance, HVAC/mech, process equipment installation, electrical

Ford Ohio Assembly Plant retooling, Lordstown Energy Center

David L. Boyer, GM, NE Ohio

8

Shook Construction Co. 6860 W. Snowville Road, Brecksville (440) 838-5400 / shookconstruction.com

$70.7 $61.1

$255.5

93 400

Education, health care, industrial, mission critical, water resources

General contracting, construction management, design-build

Elyria Public Library, Summa Health West Tower, Norfolk Southern Moorman Yard water treatment plant

Chris Halapy, executive vice president

9

Independence Excavating 5720 E. Schaaf Road, Independence (216) 524-1700 / indexc.com

$67.4 $60.0

$220.5

273 587

Power, automotive, health care, transportation, entertainment, federal

Site development, demolition, earthwork, utilities, environmental remediation and aggregate crushing

ODOT Opportunity Corridor, Hopkins Airport North Airfield improvements, The Lumen

Victor DiGeronimo Jr., CEO

10

Infinity Construction Co. Inc. 18440 Cranwood Parkway, Warrensville Heights (216) 663-3777 / infinityconstruction.com

$54.5 $69.6

$56.9

44 47

Commercial, health care, educational, sports/ recreation, retail, municipal

General contracting, construction management, design-build

Warrensville Heights elementary, ODOT District 12 maintenance facility, Tri-C Public Safety facility

Charles A. Izzo, president

11

Independence Construction 5720 E. Schaaf Road, Independence (216) 446-3700 / ind-con.com

$53.2 $80.0

$53.2

19 19

Retail, entertainment, automotive, higher education

Development through preconstruction, construction and commissioning

Pinecrest, University Market @ Baldwin Wallace

Kevin DiGeronimo, president

12

Precision Environmental Co. 5500 Old Brecksville Road, Independence (216) 642-6040 / precision-env.com

$44.5 $37.1

$47.0

298 298

Industrial, commercial, government, health care, education, historical

Asbestos/lead abatement, selective demolition, concrete sawing/drilling, GPR

Former May Company Building, Quicken Loans Arena, Valor Acres (former VA Hospital - Brecksville)

Anthony DiGeronimo, president

13

Drake Construction Co. 1545 E. 18th St., Cleveland (216) 664-6500 / drakeconstructionco.com

$35.0 $21.0

$35.0

50 50

Medical, retail, multifamily housing, tenant build-out, hospitality

General contractor

Hospital projects, apartment rehab projects, retail projects

Steve Joseph Ciuni, president

14

Fiorilli Construction Inc. 1247 Medina Road, Medina (216) 696-5845 / fio-con.com

$18.5 $12.4

$27.0

32 32

Commercial, industrial, office, student housing/ multifamily, retail, etc.

General contracting, construction management, design-build

Chase Bank on Mayfield Road; The Fives at Erieview, Sherwin Williams store in Bainbridge

Carmen Fiorilli, president

15

Metis Construction Services LLC 175 E. Erie St., Suite 303, Kent (330) 677-7333 / metisconstruction.com

$18.0 NA

$18.0

43 43

Office, restaurant, retail, banking

Commercial interior renovations and additions, ground up construction and facilities maintenance

Girl Scouts of Northeast Ohio Program Center, Dollar General Ravenna, Akron Rotary Camp dining hall

Julie Brandle, president Donna Komar, CFO

16

Fortney & Weygandt Inc. 31269 Bradley Road, North Olmsted (440) 716-4000 / fortneyweygandt.com

$16.5 $6.1

$105.8

84 97

Senior living, hotel, retail, restaurant, commercial, office and industrial

National account general contractor

Outback Steakhouse, Mentor; Bibibop at Pinecrest, Orange Village; Tim Horton's, Youngstown

Mitch Lapin, president

17

The Krueger Group Inc. 12600 Triskett Road, Cleveland (216) 252-0222 / buildwithkrueger.com

$9.5 $13.3

$9.5

15 15

Commercial, residential, nonprofit, educational, industrial, historic

General contracting, construction management, design-build

Hyland Software, The Forest Sandusky, Q-Lab

Robert E. Krueger III, president

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Get all 19 companies and more executives names in Excel format. Become a Data Member: CrainsCleveland.com/data Should your company be on this list? To submit, visit bit.ly/2Yy6mdg or email Chuck Soder: csoder@crain.com. Information is supplied by the companies.

WORKERS CONTINUED FROM PAGE 1

The pre-apprenticeship program’s first class graduated in May 2018, and the second class did so the following November. A third class is set to begin later in April. Of the 50 people in the first two classes, more than 40 have been accepted into apprenticeship programs, said Kenny Torres, the program’s manager at SAC. Some, who worked in construction in Latin America, have started as second-year apprentices.

Torres said the SAC’s six-week program offers an explanation of the local construction industry and the union structure, education on the difference between working in construction in Latin America and Cleveland, as well as discussions about on-the-job safety, in particular the requirements of the federal Occupational Health and Safety Administration.

Most of those taking the classes are underemployed rather than unemployed, and many are construction workers who fled Puerto Rico in the wake of Hurricane Maria, which hit

P019_CL_20190401.indd 19

The Spanish-American Committee’s Latino Construction Program is preparing West Side community members for construction jobs at MetroHealth. (Contributed photo)

the island in September 2017.

“They’ve been very successful. I think they are doing it right,” said David Wondolowski, executive secretary of the Cleveland Building Trades Council. “We’ve had a lot of people come on, and we’ve had very few fall off. They’ve stuck with our apprenticeship programs and are doing very well.”

Wondolowski told Crain’s in Feb-

ruary that while he believes the trade unions will be able to meet the regional demand for construction workers for the next year or two, the aging trade workforce might not meet demand if the construction business remains strong. He said some union apprenticeship programs are starting without full student rosters.

Workers who are hired as trade apprentices earn about $15 to $16 an hour for the three to five years before they reach journeyman status, Wondolowski said. The council has 27 union locals, representing 22 trades among its members, from plumbers to tile layers to elevator construction workers.

Jason Jones, vice president of Turner Construction and general manager of its Cleveland office, welcomes the program. “The reality is, the building trades need more workforce,” he said. “We crave workers.”

Glen Shumate, executive vice president of the Construction Employers Association, whose members hire union tradespeople, added that the program helps meet the goals set by the Jackson administration, and agreed to by a number of leading employers, including MetroHealth, to make community benefits a priority.

Under this Community Benefits Agreement, the businesses and organizations pledged to work to increase their hiring of local workers; use small, minority and women-owned Cleveland businesses; and report their success at meeting these workplace goals.

“The mayor’s community benefit agreement created a framework that said, ‘We’ve got to be inclusive and reach out,’ ” Shumate said. “Efforts like this one (from the SAC) are in line with both the demands of the industry for workers and the expectation of Mayor Jackson saying, ‘We’ve got to create a culture of how Cleveland can be inclusive.’ ” Torres said carpentry has attracted the most graduates, and others have moved into electrician or general labor apprenticeships.

While most class members, especially those who worked in construction in Puerto Rico, understand English, the SAC has teamed up with an English-as-a-second-language program to help them improve their understanding of construction industry terminology in English.

“In Puerto Rico, people take English courses in school so they are already exposed to the language. You just have to get them in the habit of practicing and hearing it,” Torres said. “We find out they know a lot more than they think they do, especially when you start talking about salary — then they get it.”

3/29/19 3:36 PM

PA G E 2 0

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CRAIN’S CLEVELAND BUSINESS

AKRON

Entrepreneur hopes table tennis spot is a hit

By Judy Stringer clbfreelancer@crain.com

In about a month, Samson Dubina will be among Akron’s newest business owners. People will come to his South Arlington Road facility to chop, flick, smash, drive and block. Some will play for money or rankings, while others will play for fun.

But one thing’s for sure: No one will be playing pingpong.

“Table tennis is the Olympic sport, and pingpong is like a family pastime,” said Dubina, whose Samson Dubina Table Tennis Academy will become the first of its kind in the Midwest and the fifth-largest table tennis training facility in the country when it opens May 2. “So, there is a little bit of distinction between the actual sport and a recreation activity.”

That’s not to say novice players aren’t welcome.

“We will be training serious Olympic-level players here, but we also invite new players or people who do want to play recreationally or with their family,” he said. “The goal really is to offer something for everyone and draw more people into the sport.”

If anyone can do that, it’s Dubina, according to Matt Hetherington, a Denver-based spokesman for USA Table Tennis (USATT), the nonprofit governing body for table tennis in the U.S. “He’s probably one of the hardest-working coaches in the country,” Hetherington said. “He has online tutorials and blogs, and does Skype coaching and in-house coaching. He works really, really hard, so he’s kind of the perfect person to open this.”

What this is is a 15,000-sqare-foot training center that will feature 20 new Nittaku-brand table tennis tables perched atop rubberized flooring, a

“We will be training serious Olympic-level players here, but we also invite new players or people who do want to play recreationally or with their family.”

Samson Dubina, founder, Samson Dubina Table Tennis Academy

Canton native Samson Dubina is an in-demand table tennis coach, but he also hopes his new Samson Dubina Table Tennis Academy will appeal to recreational players. (Contributed photo)

pro shop, a snack bar, ball-launching robots, a workout zone and a lounge for players and families. The facility, at 2262 S. Arlington Road, is designed to host group classes, private lessons, tournaments, leagues and regularly scheduled drop-in play hours, as well as special events. Public grand-opening events will be held May 3 and 4, including a tournament with $600 in cash prizes.

Dubina said the training academy is the next step in his ambition to

bring world-class table tennis to Northeast Ohio.

The Canton native began playing at the age of 12 at the Canton Table Tennis Club. By the time he was 17, he was the top-ranked player in Ohio.

When he was 20, Dubina moved to Ottawa, Canada, and spent three years training with the Canadian Olympic team. Shortly after moving back to Ohio in 2007, he made the U.S. National Men’s Table Tennis Team.

Today, Dubina is a full-time coach.

For the past decade, he’s done much of that coaching out of his basement.

He also rents space at Akron’s Shaw JCC, where twice a week he puts up tables and holds group lessons and clinics.

While most of his students are Ohio-based, people come from all over the country to train with him.

Through Skype lessons, he coaches players outside the U.S. as well. And Dubina organizes and hosts a semiannual, USATT-sanctioned table ten-

nis tournament, primarily at the JCC location.

As his popularity as a coach grew, students, parents and sponsors began asking Dubina about opening his own training site, he said.

“It has obviously been a really big decision to move forward now,” he said. “My wife and I have six kids (ages) 8 and under, so I am pretty busy and I did not want to take the risk unnecessarily.”

SEE DUBINA, PAGE 21

Marijuana testing device moves closer to reality

By Beth Thomas Hertz

This concept art shows what Triple Beam Technologies’ Cannibuster unit might look like.

(Contributed photo)

clbfreelancer@crain.com

Akron’s Triple Beam Technologies continues to move forward in its efforts to create a device that can measure how much THC, the active ingredient in marijuana, is in a person’s body by testing a saliva sample.

The company has proven its concept in the lab and now is working to create a prototype of the device.

Triple Beam Technologies was started by Kathy Stitzlein about four years ago in response to an idea she first hit upon while working on her doctorate in biomedical engineering at the University of Akron.

As she saw marijuana laws change nationwide, from zero tolerance to limited use in some states, she realized that while there are devices that can measure if a person has been using marijuana — giving only a yes-orno answer — there weren’t any that could quantify impairment levels, as alcohol breath tests do.

“At the time, I went around and talked to people about it and everyone was like, ‘What do you need that for? Colorado is the only place that has legalized marijuana, and that’s never coming to Ohio,’ ” she recalled.

“Everyone looked at me confused.”

That has changed as marijuana laws continue to evolve. Now, she fre-

P020_CL_20190401.indd 20

quently hears from people wanting to know when the device might be available commercially or from those who offer to help with field testing. Not surprisingly, law enforcement officers have been among the most interested, as it could help them definitively assess the condition of drivers.

One person who has expressed particular interest is Richland County Sheriff J. Steven Sheldon.

“The recent legalization of medical marijuana within Ohio will lead to new challenges for law enforcement. I can see an immediate need for a device capable of performing roadside

evidential quality exams to determine the use of cannabis,” Sheldon said. “The use of such a device would help us in the arrest of impaired drivers, which would keep our roads safer.”

Currently, police officers who suspect a driver is impaired only can perform subjective tests, such as observing behavior or looking for dilated pupils. Getting objective answers requires transporting the driver to a hospital and impounding his or her car.

“It’s a lot of effort, time and cost,” Stitzlein noted.

Stitzlein, 57, also sees other uses for her device down the road, such as at-home testing by a person who has permission to use medical marijuana but wants to be certain they are safe to drive; by a doctor’s office wanting to monitor a patient’s dosage; or by a buyer who wants to assess the quality of the marijuana they purchased from a dispensary.

But Stitzlein’s plan for now is to focus on the law enforcement aspect.

“We are a pretty small company, and we think that’s the place to start,” she explained.

As the company finishes making the prototype of the device, which Stitzlein said will be about the size of a programmable calculator — bigger than a typical smartphone but still able to be held in one hand — she is looking to line up places to conduct field testing in the next year.

“We are always looking ahead,” she said.

For now, the device is being called Cannibuster, but she doesn’t know if that name will stick.

The company, which is housed in the Bounce Innovation Hub in downtown Akron, currently has five employees, including herself, along with some part-time research assistants.

While everyone does a little bit of everything, most of the staff is focused on business development, she said.

Stitzlein’s four college-aged children have helped along the way, both in hashing out the idea and working at the company. One son may take on a marketing and sales role in the western U.S. down the road.

Once the device is ready to be mass-produced, Stitzlein said, the company will have two options: licensing it to a bigger business or having someone else manufacture the components with Triple Beam operating as a quality-control and research facility that also develops other products.

SEE TESTING, PAGE 21

3/29/19 1:20 PM

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AKRON

Goodyear, Bridgestone keep adding to TireHub

By Kathy McCarron Tire Business

Combining two legacy brands, such as Goodyear and Bridgestone, into a cohesive joint operation is a challenge that requires collaboration and logistics.

Just ask TireHub LLC CEO Peter Gibbons, who has spent almost a year getting the wholesale joint venture off the ground, after Akron-based Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. created the $600 million, stand-alone company based in Atlanta.

Since opening for business last July, TireHub has consolidated several distribution centers in certain markets where Goodyear and Bridgestone’s Tire Wholesale Warehouse both had operations. TireHub also opened locations in San Diego and Baton Rouge, La., for a total of 68 distribution centers, and added employees for a workforce of more than 1,200.

One of the challenges of creating a joint venture was combining sales forces and employees loyal to one company and having them work together for the new enterprise, according to Gibbons, who said TireHub calls its employees “hubbers.”

He said that with such a venture, every situation is new and every situation requires collaboration, noting the cooperation from employees and customers has been “fantastic.”

DUBINA

CONTINUED FROM PAGE 20

So, rather than footing the full investment himself, early last year Dubina reached out to the community to gauge interest and see if the people who told him to open his own facility would be willing to seed its launch.

Within two months, more than $30,000 in donations poured in.

Donors are primarily individuals or families, according to Dubina, but a number of corporate sponsors are supporting the academy, too. One of the newest is Canton-based Akers Signs, which will provide window graphics for the Arlington Road location as well as a billboard on Interstate 77 to promote the center.

Presper Financial Architects, an Akron financial planning firm, has sponsored Dubina’s tournaments for the past couple of years, Presper business manager Chris Jordan said. That relationship began after Jordan took up table tennis in 2015 and introduced a playing table into the office.

“We like the fact that it is a family sport,” she said. “It’s something anyone in the family can do and it is in-

TESTING

CONTINUED FROM PAGE 20

“I am not sure which way we’ll go at this point,” she said.

The company has received some money to get it started, including a $10,000 award from the LaunchTown entrepreneurship competition in Akron in 2015, a $50,000 Third Frontier grant from the state of Ohio and $25,000 from the Great Lakes Innovation and Development Enterprise at Lorain County Community College.

P021_CL_20190401v.indd P021_CL_201904015.indd 21 17

Gibbons

Wilks

“We like to say, ‘Hubbers deliver without being asked.’

And that attitude has helped us get through that startup phase.”

— Peter Gibbons, TireHub LLC CEO

“We like to say, ‘Hubbers deliver without being asked.’ And that attitude has helped us get through that startup phase — where everything is new, everything is a first — to grow and succeed,” said Gibbons.

Silvia Wilks, TireHub’s vice president of operations, said, “We’ve taken the best of both worlds, taken the best of both companies, and using that to create something that is quite unique to TireHub." First and foremost, said Wilks, the company is focusing on customers in markets where it’s already got locations. TireHub also has been working to increase its delivery frequency.

“We like the fact that it is a family sport.

It’s something anyone in the family can do and it is inexpensive, which is similar to how we operate.”

“TireHub is being really great about seeing the bigger picture,” she said. “This is our opportunity to change the tire distribution industry and to really do it differently and to do it our way.”

She added, “We continue to evaluate what we need to do next that might be different, that the customers might be looking for, to improve our service and our delivery.”

Growing both brands Gibbons declined to reveal the ratio of Goodyear to Bridgestone sales, but said overall sales are “not decreasing.”

“We’re a 50/50 joint venture, so we strive to grow sales for both brands,” Wilks added.

During a recent conference call with analysts, Goodyear chairman, president and CEO Richard Kramer said, “TireHub’s customer transition activity orders and deliveries of Goodyear-branded product each performed in line or ahead of our expectations.

“Over the long term, TireHub will strengthen our ability to promote our premium brands, our industry-leading e-commerce solution and our strategy of targeting the industry’s most profitable large-room segments.”

He added that the tiremaker didn’t lose any customers.

“We’ve had some growing pains as we’ve put TireHub in place, as you

expensive, which is similar to how we operate. We don’t have a minimum.

We pretty much help anyone.”

Dubina said there are roughly 300 serious table tennis players in the Greater Akron area — those who pay for lessons, enter tournaments or join leagues. His hope is that each of them will filter, one way or another, into the academy. He will be joined by another full-time coach, Chance Friend, and the facility also will employ a part-time coach/business manager and pro shop/snack bar manager.

Dubina aims to attract recreational players and families looking for fun with open drop-in play times, which will cost

$5 per person for five hours of play.

Hetherington said that while the number of table tennis players has been steady for some time now — an estimated 10,000 people nationwide are competitive players — there is a need for larger training facilities like Dubina’s because the USATT lacks a central training site.

“There are a lot of private clubs, but those are smaller, and there are not as many training centers in areas like the Midwest and up north around Ohio.

My guess is players would have to go to North Carolina or New York for the nearest site,” he said.

What’s more, according to Hetherington, there has been growth on the “social” side of the sport. Spin, a chain of franchised table tennis clubs/bars, opened its ninth location in December in Washington, D.C., and table tennis tournaments are becoming a popular fundraising event as charity organizers look for new ways to engage their constituents.

“There are more places than ever for Americans to be introduced to the sport and play that don’t have the scary sort of competitive thing going on,” Hetherington said. “That’s definitely helping to raise our profile.”

It also received $50,000 in matching funds through the University of Akron with the Technology Validation and Start-up Fund. But most of the company’s work has been self-funded, and that will probably continue for now, she said.

“We are trying to keep 100% of the company equity ourselves, as long as we can,” Stitzlein said. “Once we have the beta prototypes ready for clinical trials and field testing, then we might start looking for bigger investors, because to move to the next stage takes a lot of money.”

She said it’s too early to speculate about the price point for the device, but she expects to get a clearer picture in a few months. In addition to buying the device, users would need to buy a disposable kit containing the test strip and a saliva collection device.

Meanwhile, Stitzlein has one other thing on her checklist: finally finishing the doctorate that started her on this journey.

“I have to defend my dissertation, so that’s my last step. I’m trying to fit that in between keeping the company growing and moving forward,” she said.

— Chris Jordan, business manager, Presper Financial Architects

would with any startup company, but we have not had any significant customer losses at all as we move ahead,” Kramer said.

Overall, the transition of TireHub is on or ahead of schedule, Kramer said.

TireHub is working to make the process as seamless as possible, Gibbons added.

“So our in-stock availability needs to be excellent,” he said. “Being able to interact with those customers online or by telephone needs to be excellent. We need to make sure of our capability to deliver and get goods where they want, when they want it and done in a fashion that they appreciate and want to come back to us.”

TireHub offers Bridgestone’s and Goodyear’s portfolio of brands, as well as Toyo-brand tires, which Bridgestone’s Firestone Complete Auto Care retail stores have been selling for several years.

Gibbons didn’t rule out adding other brands to its portfolio in the future after evaluating customer demand and other factors.

Seeking feedback As for the reaction of dealers to the new TireHub operations, Wilks said the company has sought feedback from its customers but declined to reveal details.

“Our leadership team recently had the opportunity to meet with a large

number of customers, and they were very straightforward with us. We asked them to give direct feedback telling us what’s working and what we could do to improve our service to them.

“They gave us some really great feedback, and that compels us to get better and better every day and continue to say yes to them every day,” she said.

Gibbons noted that TireHub has been augmenting its online sales and ordering system, including integrating with dealers’ point-of-sale systems, customers’ e-commerce platforms and its own B2B e-commerce site.

“Sales across all platforms continue to increase,” he said. “We’re working on optimizing and improving e-commerce and interacting with our customers.”

While online sales are becoming more accepted as a way of doing business, he acknowledged there are times when customers want to talk and interact with salespeople.

Gibbons said the biggest challenge in the wholesale market is the wide range of products that dealers physically cannot stock themselves.

“They’re looking for people like us to help them manage that more effectively. Their ability to store inventory is finite, and so our job is to allow them to access the whole range of Goodyear and Bridgestone products and access that quickly and efficiently when they need it,” he said.

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BETTING

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“We’re losing opportunities to market our state to the younger demographic,” he said. “By always lagging behind to any new thing — I saw a quote: ‘We don’t want to be first; we want to be the best’ — but the best people are ahead of the curve. The best people are exploring new things, trying new things.”

Eklund, who, along with O’Brien, initially introduced a 16-word placeholder bill in July, is trying to get things moving. The senator said he's hopeful the state soon will hold hearings on the bill and that the legislation, once the inevitable adjustments are made, will be approved sometime this year.

Bars would raise a glass Rick Lertzman, a Moreland Hills resident who was involved in multiple pushes to bring casino gaming to the state last decade, isn’t nearly as optimistic as Eklund.

The gambling advocate and author had planned to get a constitutional amendment that would bring sports betting to bars, restaurants and bowling alleys on the ballot for 2019, but now thinks 2020 is more likely. He figures that year will be better anyway, because of the higher voter turnout that the presidential election will produce.

Asked if he thinks Ohio will have a sports betting law in place by then, Lertzman said, “They definitely won’t have it. It’s a no-go in Ohio. It could be a very profitable industry and something that can benefit not just casinos but every restaurant and bar in the state.”

Masurekar, the gaming expert, agrees with the latter sentiment, but for reasons that differ from Lertzman’s view of betting terminals at the

corner bar.

The bill being proposed in the state senate offers mobile and online betting, which, like that of casino and racino wagering, would be regulated by the Ohio Casino Control Commission.

“It basically drives business for the restaurants and lounges that are not in the casino,” Masurekar said. “Once they get on the app, they’ll sit in the local bar and restaurant watching these games. Super Bowl weekend in New Jersey (which legalized sports betting in 2018), the restaurants were completely full because of that.”

Getting a handle on it Andrew Fodor, the chair of the finance department at Ohio University, said New Jersey, because of its similar population and strong appetite for sports, is a good comparison for the Buckeye State’s potential in the industry.

In the last four months, almost $1.4 billion has been legally wagered on sports in the Garden State. In November, the industry produced a record $2.45 million in tax revenue for the state.

“If that’s what New Jersey is looking at, I think that’s reasonable for Ohio once things are relatively established,” Fodor said.

New Jersey imposes an 8.5% tax on sports betting revenue — which is the amount that’s left after sports books pay out the winning wagers.

The legislation being proposed in Ohio would have a tax rate of 6.25%.

Masurekar estimates that sports betting could be a $4 billion annual market in Ohio. With revenues on the wagers projected at 5% of the total handle, the casinos, racinos and online operators would bring in about $200 million.

If the 6.25% tax rate stands, that would mean $12.5 million in sports betting revenue for the state. An esti-

What’s in the bill?

Some highlights of Senate Bill 111, which would legalize sports wagering in Ohio: JJThe

state’s 11 casinos and racinos could offer sports betting.

JJThere

would be online and mobile wagering options.

JJThe

Ohio Casino Control Commission would regulate the industry.

JJLicensees

would pay a $100,000

fee.

JJGross

wagering revenues would be taxed at 6.25%.

JJThere

is no integrity fee for the professional sports leagues.

Note: In sports wagering parlance, the revenue is what’s left for the sports books after the winning bets have been paid. The total amount wagered is the handle.

mate of $12.5 million to $20 million in tax revenue is lower than Masurekar’s pre-SB 111 projection of $40 million to $50 million, which the Keybanc Capital Markets executive attributes to the operator-friendly tax rate and the “low to moderate availability” of sports wagering at 11 brick-and-mortar locations in the state.

That, however, doesn’t mean Masurekar is against Ohio’s current proposal.

“If I was to craft a piece of legislation, I would do something pretty similar to this,” he said. “What it does is gaming operators already have the structure in place. That’s one.

“Second, with the gaming operators, this is not a major profit for them,” he added. "A sports book is basically used as a traffic generator.”

The general rule of thumb, according to casino and gambling sources, is that sports books, after expenses are paid, make about a 1% profit on the total handle.

‘A solid platform’

“I’m of the mind it’s probably not going to be a pot of gold at the end of the rainbow.”

— State Sen. John Eklund

Eklund has seen the tax projections for Ohio, which he acknowledges are all over the place.

“I’m of the mind it’s probably not going to be a pot of gold at the end of the rainbow,” the Republican senator said.

What’s crucial, he added, is deciding where the tax revenue would go.

That was left out of the early version of the sports betting bill, because the senators wanted to encourage “a robust conversation” on the topic.

“If we’re trying to repair every broken bridge and road in the state, $30 million isn’t going to make much of a dent,” Eklund said. “To me, the question is where can the resources be applied most purposefully?”

Also to be worked out is the “balancing act” between how controlling the legislation is from the state’s perspective and how much leeway is giv-

en to the casino control commission and the operators.

“We don’t want to handcuff the experts, especially in a world in which technologies and techniques change very rapidly,” Eklund said.

In New Jersey, online sports betting has outnumbered brick-andmortar sports gambling by a margin of more than a 3-to-1 in the last four months.

In Masurekar’s view, that’s a boon for restaurants and bars. For Eklund, though, it means the necessary security procedures must be in place once Ohio is ready to make the leap.

“Personally, I’ve come to believe that there is a way to do this to maintain the integrity of the (sports) events, the integrity of the gaming and the jurisdictions we’re gonna put in so we don’t have every 12-year-old and their sister laying odds down on the Super Bowl.”

The racinos and casinos — a group that includes JACK Cleveland Casino, JACK Thistledown Racino in North Randall and Hard Rock Rocksino Northfield Park — should do just fine, too.

“Senate Bill 111 provides a solid platform for the legislative discussions, and we appreciate the opportunity to be involved in the legislative debate,” JACK Entertainment, which is owned

by Cavs owner Dan Gilbert, said in a statement provided to Crain’s.

For Masurekar, “the real story is the traffic you’re generating to the gaming properties. Since gaming taxes are 33%, that would help even more.”

He and other analysts told Crain’s that the earlier legislation is in place, the better.

“The sports betting market is so massive,” said Ricky Volante, a Cleveland attorney and Case Western Reserve University School of Law instructor. “Ohio could be missing a huge economic opportunity if it doesn’t so something soon.”

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agonia heir

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Jason Therrien

CEO, thunder::tech

Jason Therrien grew up in Strongsville in an entrepreneurial home. He watched his father, Albert, build his own business, Transport Services, a North Royalton firm that sells and leases transportation equipment. And while his brother Adam stayed in the family business, Jason, at an early age, was already moving in a different direction. In 1999, while attending John Carroll University, between classes and football, Jason Therrien started a one-person web design business. That has since grown into thunder::tech, an integrated marketing firm that employs nearly 50 people and handles advertising, content and digital marketing, graphic design, video, marketing automation and social media. In addition to running thunder::tech, Therrien chairs the board of directors of Youth Opportunities Unlimited, a workforce development nonprofit organization that works with teens and young adults living in economically distressed areas in Northeast Ohio. He is also a member of the board of Destination Cleveland, the convention and visitors bureau. — Jay Miller

The Therrien file Advice to a would-be entrepreneur You need to get comfortable with uncertainty, so ask a lot of questions every day, believe in yourself and make the leap.

Website you rely on I use LinkedIn every day to keep track of thunder::tech’s clients and contacts across the world.

What’s the best advice you’ve gotten?

The best way to predict the future is to invent it.

Lunch spot Map of Thailand 3710 Payne Ave., Cleveland 216-361-2220

The meal One had Pad Thai, the other Massaman curry, extra spicy.

The vibe It’s a small, quiet room in a shopping strip in the heart of Asia Town, a step or two above casual. Check out the bakery two doors down.

The bill $19.40 with tip

How has marketing changed since you started doing web design when you were in college?

Yeah, the Mad Men have left the building. I mean there’s still some old-line firms out there because people are paying for it. But those brands that are paying them, they’re on borrowed time. To me, it’s really sad. I don’t like, locally or nationally, to watch any good talent go to waste. But that’s capitalism, isn’t it?

Where did you get the name thunder::tech?

It goes back to my football days when I was 65 pounds heavier.

You went to John Carroll to play football?

I got recruited at John Carroll and I came in with another very talented tailback and a coach realized three weeks into practice that I liked running into people. He said, “Have you ever thought about fullback?” I said, OK, and he said, “We can work on that. You’ve got four years here.”

So I put on 65 pounds and my nickname was “Thunder.” It was great fun.

Where did the two colons in thunder::tech come from?

I’m really glad to hear this. I’m a student of history, and when we were first designing the logo, it looked fine, but I wanted a mark that had some historical significance. I know there was a group, I think Roycrofters (a community of artisans who worked as a community in East Aurora, N.Y., near Buffalo, from 1894-1938). They were a group of

artists that came together during the industrial revolution and they started marking their wares, like logos. I just liked the two colons. It was this stamp of workmanship. So when you’re putting that on an email, you realize that’s being quality-assured by yourself.

You actually started the business while you were in college, didn’t you?

I’m self-taught in a lot of things. I grew up in a family business. I grew up turning wrenches, learning how to weld. It was awesome. And then I was able to work in the office. My background in marketing was because of the family business. It was opportunistic. I raised my hand and then I figured it out. I kept raising my hand for more things and it was the mid- to late ’90s and I’m the young guy, the young person in the office, you know — it was like, “Do you know anything about the internet?” In college, my concentration would be the equivalent of an information sciences degree. So, I had some basic schooling. That combination of jobs and opportunity just kept snowballing. And then I was able to get part-time jobs. I had a great nine-month gig at General Electric.

That was a lot of fun. I worked at their automotive lighting division as an undergrad. One of the guys there invented the Xenon, the blue headlamp. They hired me because of my experience to build the first intranet for their automotive lighting division. And then I worked at Scott Labs, the Scott Fetzer subsidiary of Berkshire Hathaway. I did a first e-commerce project for them.

So while you were in college you started taking on clients doing web design. But didn’t you have an opportunity for an outside job after you graduated from John Carroll?

Yes. So I actually got hired by Accenture, the management consulting firm, in 2001, just before graduation. They needed, during the dot-com boom, a lot of people that had any background in computers.

So I reluctantly took the offer, and then two weeks before graduation, they put everybody new they hired nationally on furlough. I didn’t know what that term meant then. So I said maybe this is a sign. I had like 15 clients that were feeding me work of various sizes. It was web design, but I was starting to branch into other areas. So I took the stipend that Accenture offered and basically said, “Can I at least feed myself?” I had to find out.

So that lasted five months, and I got a callback and they started rehiring everybody, and I said no thanks. Of course they thought I was crazy.

CLEVELAND BUSINESS 700 W. St. Clair Ave., Suite 310 Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com Twitter: @CrainsCleveland Publisher/editor Elizabeth McIntyre Group publisher Mary Kramer Managing editor Scott Suttell Sections editor Michael von Glahn Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard, Real estate/construction Reporters Jay Miller, Government Dan Shingler, Energy/steel/auto/Akron Rachel McCafferty, Manufacturing/ energy/education Jeremy Nobile, Finance Lydia Coutré, Health care/nonprofits Senior data editor Chuck Soder Cartoonist Rich Williams Events manager Ashley Ramsey Marketing coordinator Megan Lemke Integrated marketing manager Michelle Sustar Managing editor custom/special projects Amy Ann Stoessel Associate publisher/Director of advertising sales Lisa Rudy Senior account executives Dawn Donegan, John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein Office coordinator Denise Donaldson Pre-press and digital production Craig L. Mackey Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Crain’s Cleveland Business is published by Crain Communications Inc.

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So how long before you hired your first employee?

I just assumed that the work would stop coming in the day that person started. So I hired a female programmer who I’d known from an earlier job. That was probably six months after graduation.

Reprints: Laura Picariello, 732-723-0569 or lpicariello@crain.com Customer service and subscriptions: 877-824-9373

And you were working from home?

That summer of 2001 and into the fall, almost a year, and then we moved into a basement at East 40th and Payne. We couldn’t even afford the whole basement. And we’ve been where we are now (on Perkins Avenue in Midtown) for 15 years.

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THE WEEK On the grow

miles off downtown Cleveland, took another step forward as it received a required construction permit from the U.S. Army Corps of Engineers. It previously earned approvals from local, state and federal environmental agencies, though it still needs the Ohio Power Siting Board’s OK. The project consists of six, 3.45-megawatt turbines on Lake Erie.

If permitted, the wind farm — being developed by Norwegian-owned Fred. Olsen Renewables and the nonprofit Lake Erie Energy Development Corp. — would be the first such project built in freshwater.

University Hospitals will break ground this fall on a $200 million expansion of its Ahuja Medical Center in Beachwood.

The project will add a five-floor hospital tower and a 64,000-squarefoot, two-floor sports medicine complex to existing buildings. This is Phase 2 of development at the center.

Phase 1, which opened in 2011, created the current 144-bed hospital, 22-bed emergency department and a 60,000-square-foot outpatient medical building.

The project is estimated to be completed in 2022.

Fresh development Icebreaker Wind, the offshore wind energy project proposed for 8

P023_CL_20190401.indd 23

Cutting back University Hospitals’ $200 million expansion of the Ahuja Medical Center in Beachwood will add a five-floor hospital tower and two-floor sports medicine facility. (Contributed rendering)

Ferro Corp., a supplier of coating and color products, is closing its porcelain enamel manufacturing operations in Cleveland.

The Mayfield Heights company said employees at the 4150 E. 56th St. location will be laid off beginning May 22. An estimated 71 employees will lose their jobs. Ferro is consolidating two U.S. facilities, including the Cleveland operation, and some sites in Latin America into one expanded location in Mexico.

Opening up Cleveland State University entered into a strategic partnership with Boston-based Shorelight Education to strengthen support for international students.

Cleveland State is the academic provider. Shorelight Education will provide resources to help students, ranging from assistance with onboarding to help finding cultural activities.

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