Giant Bankruptcies Felt at the Local Level

Our Franchise and Bankruptcy attorneys helped dealers navigate their franchise agreement during historic manufacturer bankruptcies.

Giant Bankruptcies Felt at the Local Level

When two companies the size of Chrysler and General Motors declare bankruptcy, the ripples are felt far beyond Detroit. In Maine, New Hampshire and Vermont, dozens of auto dealerships were told that their franchise agreements were to be revoked, an utter disaster not just for the dealerships, but for the local economies they support. Hundreds of jobs were suddenly at risk, along with millions in state and local tax revenues.

It was an anxious time, as many of these dealers were being forced to wind down their operations, unable to order new cars, and burdened with reassuring long-time customers that service contracts and warranties would still be honored. Some dealerships lost their franchises despite GM's admission that hundreds of its closing decisions had been "arbitrary."

Having long represented dealers in northern New England and the Maine Auto Dealers Association, it fell to our Franchise and Bankruptcy attorneys to help dealers understand the finer details of their own franchise agreements, and their rights under bankruptcy law—rights most of them had never dreamed they'd ever have to invoke.

By December 2009, Congress passed legislation mandating binding arbitration, which allowed these dealers to appeal their terminations. We advised dealers in Maine, New Hampshire and Vermont of their rights under the federal statutes and franchise law and represented dealerships in six arbitrations—five in Maine, one in New Hampshire. For a number of clients, we secured the return of their franchise agreements. In other cases, we negotiated settlements on behalf of dealers.

 

A Victory for Renewable Energy

For GridSolar and IECG, we helped to scale back a CMP upgrade project, replacing traditional transmission components with a breakthrough smart grid program.

A Victory for Renewable Energy

How do you promote hundreds of megawatts of renewable energy, lower greenhouse emissions, reduce the electric bills of Maine residential customers, and save Maine ratepayers about $200 million in new high-voltage transmission equipment?

It may sound ambitious, but that's just what our clients are doing. GridSolar, a Portland-based entrepreneur in the emerging field of "smart grid" technology, joined forces with the Industrial Energy Consumer Group (IECG) to vigorously oppose a $1.5 billion transmission system upgrade proposed by Central Maine Power (CMP). In representing GridSolar and IECG, our Energy and Communications group succeeded in scaling back the upgrade project in order to replace traditional transmission components with a breakthrough smart grid program.

Having worked aggressively to help craft and pass Maine's first smart grid statute, we used that statute to form the basis of a regulatory settlement that we helped negotiate with CMP. Under the settlement, $200 million would be removed from the CMP's upgrade proposal, in favor of a more cost-efficient smart grid solution that would manage several local distribution zones within CMP's territory and ensure that Maine's grid remained reliable using local distributed generation resources and smart grid technologies.

So for the first time, distributed renewable energy generation, managed by smart grid technology, will effectively reduce the need for new high voltage transmission. This is a victory not just for GridSolar, but also for power consumers, Maine ratepayers, and the environment as a whole.

Adding two kayak brands and 48 jobs

Preti helps Old Town Canoe, and its 200-plus employees, assure a strong and lasting future in Old Town.

Adding two kayak brands and 48 jobs

Old Town Canoe has long been known as a maker of finely crafted canoes and kayaks. So when their parent company, Johnson Outdoors, was looking to consolidate its North American watercraft operations, it decided to relocate two additional kayak production lines to Old Town Canoe. Adding the Necky and Ocean Kayak lines brought 48 new jobs to Old Town, Maine, and more importantly, assured the company's, and its 200-plus employees, a strong and lasting future in Old Town.

Factors cited in the decision were the craftsmanship and work ethic of the people of Old Town Canoe, as well as their new modern production facility on Gillman Falls Avenue. The facility is designed for maximum production efficiency, while reducing energy use by 50 percent.

Our attorneys played a key role in obtaining nearly $1 million in federal, state, and local funding—including grants, tax reimbursements, and tax credits—to help our client, Old Town Canoe, relocate to its new facility. We're also advising them on the environmentally-sound closing of their former facility downtown.

Small Maine Phone Companies Defend Universal Service

Preti Flaherty works to uphold the Rural Exemption for local phone companies.

Small Maine Phone Companies Defend Universal Service

In 1996, Congress passed the landmark Telecommunications Act, implementing a major restructuring of the telephone industry. As part of the Act, however, Congress included the "Rural Exemption" to protect small phone companies from being required to grant accommodations, otherwise required by the Act for large competitive telecommunications providers. The reason for the Rural Exemption was to assure that the big companies couldn't "cherry-pick" the more profitable customers in the easy-to-reach areas, leaving the small phone companies to service the more rural, more costly customers, which could result in higher rates for the remaining customers and diminish ability of the small phone companies to meet their public service obligations.

But in many cases the Rural Exemption has turned out to be the exception. In the original law, Congress authorized a state PUC to terminate the Rural Exemption if certain criteria were demonstrated by the competitor. This has resulted in many small phone companies across the country losing their exemption, either by declining to litigate against the superior resources of bigger competitors, or by adverse action from their PUCs.

In Maine, as elsewhere, the Rural Exemption has recently been under challenge.

Time Warner Cable, through its wholesale partner, petitioned the Maine Public Utilities Commission (PUC) to terminate the Rural Exemption of five small Maine phone companies in order to obtain certain competitive accommodations in their service areas. Four of the companies, in recognition of the potential economic harm to them and their customers, asked our Energy and Telecommunications practice group to help them fight back.

In deciding to defend their Rural Exemptions, the five Maine companies knew they were bucking a national trend reflected in the discouraging precedent seen in other States. Our attorneys worked closely with the companies and their consultant in developing strategy and presenting their case.

In November 2008, we succeeded in convincing the Maine PUC to grant a motion to dismiss Time Warner Cable original petition for including insufficient testimony.

While this was a victory in itself—and a much-needed upholding of the principle of Rural Exemption—Time Warner and its partner were undeterred. They refiled their request, this time bringing four outside law firms, several consultants, their internal legal departments, and large volumes of testimony and exhibits. The small telephone companies were now looking at a demanding and complex litigation, facing all the firepower of a major international player.

But after two grueling years of litigation, the PUC denied Time Warner's petition. In a ruling of potentially national significance, the Commission rejected Time Warner Cable's arguments and upheld the Rural Exemption for the phone companies. The Commission found that termination of the Rural Exemption would harm the rural carriers' ability both to maintain service quality and to attract capital on reasonable terms in the face of such high-powered competition. In turn, the Commission determined this would not only cause undue economic harm on the small Maine phone companies, but also adversely impact the goals of universal service in their areas. While Time Warner may still compete, it must do so without the special accommodations it sought, because the Rural Exemption and the goals of universal service continue to have life in Maine.

Restoring Low-cost Web Access to Government Records

Preti Flaherty lawyers helped MacImage enforce Maine's Freedom of Information Act.

Restoring Low-cost Web Access to Government Records

For more than ten years, information services company MacImage of Maine had been providing 24/7 online access to deeds, property plans, and other documents recorded in Hancock County's Registry of Deeds. The service was used by thousands of people and generated more than $50,000 in revenue in 2007.

Then, inexplicably, the county cut MacImage off, blocking access to the data MacImage needed to keep its website current, and threatening to sue if the company wouldn't shut the site down.

Requests from the public to keep the RegistryofDeeds.com website up-to-date fell on deaf ears at the County. MacImage offered to pay for electronic copies of the County's records, which had not been required before. But the County refused, offering access in paper form only—which is useless to MacImage—at the prohibitive cost of $1.50 per page.

We believed it was a clear violation of Maine's Freedom of Information Act, which requires government agencies to provide copies of public records to anyone willing to pay the actual cost of copying them. Since the cost of copying the records in digital format is virtually nil, and since the County refused to provide those records at reasonable cost, MacImage had no choice but to sue Hancock County.

In a precedent-setting case tried in Maine Superior Court, our litigation team convinced the court that the County's fee schedule was illegal, that the actual cost of duplicating digital records was indeed nominal, and that the County must provide MacImage with those records at no cost. Our success in court restored low-cost public access to land records and also paved the way for our client to expand its business.

A Declaration of Energy Independence

Fox Islands Electric Cooperative of Vinalhaven, installed three 4.5-megawatt wind turbines, enough to supply power to two islands.

A Declaration of Energy Independence

To the people of Vinalhaven and North Haven, energy independence is no longer an abstract concept. The two islands off the coast of Maine are about to get all their power from something they have in abundance: wind. Instead of continuing to pay twice what the mainland pays for electricity, the residents of both islands will soon see their monthly bills go down substantially.

Our client, the Fox Islands Electric Cooperative of Vinalhaven, installed three 4.5-megawatt wind turbines, enough to supply power to both islands, with enough left over to sell back to the mainland grid via an undersea cable.

The Cooperative turned to us to help with the commercial negotiations, including those with the project's tax equity investor. We also advised on both state and federal energy regulatory matters.

With all the talk of renewable resources and sustainable energy, it is especially gratifying to see some of these ideas become an everyday reality. We believe this project can serve as a model for other communities with access to offshore wind, and it underscores our ongoing interest in putting Maine in the forefront of wind-powered energy.

Turning Oil Tanks into Art

Our IP Group helped create a design competition for the Art All Around project, protecting them from trademark issues.

Turning Oil Tanks into Art

Sprague Energy's tank farm is a lynchpin of the local economy, but it will never be anyone's favorite view of Portland Harbor. So when our pro bono client, the Maine Center for Creativity, approached Sprague about making art from those tanks, there was something in it for everyone. The arts' community would get 261,000 square feet of "canvas" to work with. Sprague would get to put a more appealing face on some of its oil tanks. And the people of Portland would get a considerable upgrade on their view of the harbor.

And so, the "Art All Around" project was born, and our Intellectual Property group was right in the thick of it. We helped create and administer the design competition that attracted 560 submissions from artists in 73 countries. We protected the organization from potential trademark issues, and gave them the means to use all artistic submissions for other purposes. We registered the Art All Around trademark and we even helped purchase the URL "artallaround.com," which had been owned by another organization.

The $20,000 prize was won by Jaime Gili, a Venezuelan artist now living in London, who is currently in the process of transforming the second of five tanks, making this the largest public art canvas ever created on an industrial site.

The project represents a unique collaboration between the public and private sectors, using corporate funding to join the energy infrastructure to the arts community. It all serves to position Portland as a vibrant economic hub that places a strong emphasis on the arts. We are pleased and proud to be a part of it.

A Push for the U.S. Bobsled Team

Preti Flaherty help make Olympic dreams a reality.

A Push for the U.S. Bobsled Team

It was one of the big feel-good stories of the Vancouver Olympics. The U.S. four-man bobsled team won a gold medal for the first time in six decades. But it might never have happened if a last-minute lawsuit hadn't successfully been fended off by our Sports Law group.

In the bobsled competition, where mere hundredths of a second can separate winners from losers, the three "push athletes" who sit behind the driver can mean the difference between a gold medal and no medal at all. The team needs nine of these push athletes to compete in the various events, and the U.S. Bobsled Federation uses a rigorous 12-part selection process to choose them.

So when four other push athletes who had been left off the team brought a claim challenging the Federation's selection criteria, it threatened to interrupt—at the eleventh hour—the precise timing and training regimen necessary for the team's success. As counsel for the nine "Affected Athletes" already on the team, we wanted to make sure this didn't happen.

The four plaintiffs proposed, as an alternative remedy, a race-off against our clients. We argued successfully that such a race-off on the eve of the Games would be not just unfair to the athletes on the team, but highly disruptive of the entire team's chances of victory. We were able to convince the arbitrator that the selection procedure was completely rational and should therefore be respected. As a result, our nine clients kept their places on the team. The rest is history.



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2009/10 Annual Report

Dear Clients and Friends of the Firm:

At Preti Flaherty, we always endeavor to stay a step ahead of the emerging challenges our clients face. In 2010, as our nation emerged from the worst of the recession, we sharpened that focus; most notably with the creation of a new Climate Strategy Group to help businesses, government and NGOs quickly and cost-effectively reduce greenhouse gas emissions. A prime example was helping solar power innovator GridSolar lay the groundwork for new "smart grid" technology in Maine—a big win for renewable energy and for Maine taxpayers.

Our new Sports Law practice also continued to grow last year, with a high-profile case for the U.S. Olympic bobsled team and a new sports law blog that has quickly attracted a big readership.

Meanwhile, the ripples of the economic crisis—specifically the bankruptcies of Chrysler and GM—are still being felt, and we're still doing our part to help our clients navigate those challenges: Our Bankruptcy and Franchising Groups worked with members of the Maine Association of Auto Dealers understand and, in some cases, appeal the termination of their franchise agreements.

Finally, we continue to take pride in the talent and achievements of our attorneys. In November 2010, Ann Robinson, Chair of our Legislative and Government Relations practice, was selected to be a co-chair of Governor Paul LePage's Transition Team, with specific responsibility for policy and regulatory review.

But none of this year's accomplishments would have been possible without the trust and partnership of our clients. On behalf of our entire firm, we thank you for placing your confidence in us, and allowing us to help you reach your goals in 2011 and beyond.

Sincerely,

Jonathan Piper, Managing Partner

Download a PDF version of the 2009/2010 Annual Report here.



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