City of Atlanta settles appeal of verdict awarded to Corey Airport Services; Clear Channel still battles its portion of judgment

A series of personal conversations between Atlanta Mayor Kasim Reed and the owner of an Atlanta billboard company whose firm won a $17.5 million verdict against the city and others last year were at the heart of the settlement of a nine-year legal battle over allegations that political favoritism governed contracts at Hartsfield-Jackson Atlanta International Airport.

The federal jury's verdict last year in favor of Corey Airport Services found that the city; its longtime airport advertising contractor, Clear Channel Outdoor Inc.; and Clear Channel's minority partner, Beverly Hills businesswoman Barbara Fouch, had stripped Atlanta businessman Billy Corey's airport billboard company of a fair and impartial bidding process regarding the airport advertising contract.

"The mayor and Mr. Corey had individual discussions after the post-judgment rulings were handed down," said Mairen C. Kelly, an attorney with Fisher & Phillips and co-counsel for Corey with Jeffrey R. Harris and Darren W. Penn of Harris Penn Lowry DelCampo. "That started the ball rolling."

Last month, Corey joined Reed at a City Hall news conference to announce that the city, which had appealed the verdict, would pay Corey $3.9 million to settle the case.

Standing side by side with Corey at the podium, Reed said he hoped the settlement would bring an end to what he described as "a long and divisive episode" in the city's legal history that began during the administration of Reed's predecessor, Shirley Franklin.

"Settlement of this lawsuit is fiscally responsible and allows the city to put the suit behind it, particularly since the alleged conduct occurred long before the tenure of the current city administration and airport general manager," Reed said.

"Mr. Corey and I have been negotiating for quite some time," added Reed. "I believe this is the right thing to do. It is consistent with my vision of bringing divisive matters of previous administrations to a close."

At the news conference, Corey complimented Reed's leadership in negotiating the settlement. "Closing this chapter on litigation that originated long before Mayor Reed came to office allows Atlanta to open a new chapter at the airport," he said.

"This has been a long, hard battle for me," he continued. "The mayor and I have had many discussions about this."

While the mayor's announcement ended the city's involvement in the litigation, appeals by Clear Channel and Fouch remain alive, although Corey said at the City Hall news conference, "We hope to reach a settlement with Clear Channel soon."

Harris subsequently told the Daily Report, "We have not reached any kind of resolution with Clear Channel at this point or with Barbara Fouch" despite mediation following the trial. But, he added, "I'm hopeful that we can continue to talk … and resolve that case as well. … It's in everybody's best interest."

Clear Channel is currently liable for $8.5 million in punitive damages, Fouch for $500,000 in punitives. Both are also liable for the balance—minus the city's settlement—of the original $8.5 million in compensatory damages the jury awarded Corey Airport as well as the firm's legal fees, which Corey has signaled that the company intends to collect.

"We have the right to collect the entire remainder of the judgment from the other defendants," said Kelly.

King & Spalding partner John W. Harbin, whose firm is representing Clear Channel, declined to comment, referring calls to the company. Harbin's co-counsel, W. Ray Persons, could not be reached for comment. A Clear Channel spokeswoman said Thursday the company does not comment on pending or potential litigation.

Fouch's lawyer, Smith, Gambrell & Russell attorney Edward H. Wasmuth Jr., said that the city's settlement in the case will have no effect on Fouch's appeal. He said Fouch is appealing on the grounds that she did not engage in civil rights violations when in 2002 the city chose to award the airport advertising contract to her and her majority partner, Clear Channel Outdoor.

Fouch—a longtime friend of Atlanta's late mayor, Maynard Jackson—and Clear Channel's corporate predecessor jointly were awarded the airport advertising contract without a bid in 1980.

In 2002, the city for the first time solicited bids for the airport advertising business, and Corey Airport submitted a bid. When the city rejected Corey's bid in favor of Clear Channel and Fouch, Corey claimed the process had violated the city's own procurement rules and had resulted in a sweetheart deal that was rigged to go to Fouch.

As a result of the Corey Airport litigation, the city never formally awarded the 2002 contract to Clear Channel, leaving the terms of its 1980 contract largely in place on a month-to-month basis.

Corey Airport has claimed that allowing the Clear Channel contract to remain in place has cost the city more than $15 million in unpaid rent and interest and possibly millions more in unrealized or lost revenues.

Reed's decision to settle the long-running case relieves the city of what the mayor said could have been as much as $12 million in combined damages and legal fees to Corey Airport if the city lost its federal appeal. In addition, he said, the city has paid nearly $3 million to its own lawyers to defend the case. The city was defended by a team of attorneys from Alston & Bird led by partner Michael P. Kenny.

In settling the case, the city did not admit any wrongdoing, and city officials noted that the settlement should not be construed as an admission by the city that it had engaged in any improper conduct regarding the airport advertising contract.

With the case against the city resolved, Corey Airport is free to submit a new bid for the Hartsfield airport advertising contract, Harris said.

"There is now opportunity for a new day, a fresh start," he continued. "The city can rebid [the airport advertising contract]."

Reed confirmed at the news conference that the city soon will begin soliciting bids, claiming that this time, "the process is going to be different. … The level of openness and transparency around the process will be unprecedented."

The mayor also called the decision to settle the case "the right one."

Harris attributed the settlement agreement to a "positive relationship" with a new legal team at City Hall that included the active participation of the mayor, a partner at Holland & Knight in Atlanta when he was elected in December 2009, and a new city attorney, Cathy Hampton, who was hired last September.

"Over a period of a couple of months, we all worked together and hammered out an agreement," Harris said. "We tried to make it clear … that if there was any desire to try to resolve the case, we were open to discussing it. At some point, there was a discussion between the mayor and Mr. Corey. It started the process."

"They did exactly what you would hope and expect a good group of public servants to do," he continued. "Look at it from a fresh perspective and do what's in the best interests of the city. … They were able to do that because they were new. They were not involved in any of the stuff in the past."

Kelly said that the settlement negotiations initiated by Reed and Billy Corey were the first time the city had ever approached Corey Airport with a settlement proposal.

Harris said that Corey also had concerns that if the city determined to solicit bids for the airport contract, if the case remained unresolved on appeal, the firm might be barred from participating. "It was in everybody's best interest to try to address all these issues before issuing the new advertising contract," Harris said. "We wanted the slate to be clean."

Corey Airport, he said, will "absolutely" enter a bid for the airport advertising contract. "That's all he ever wanted to do was bid on the thing and have a fair shot at getting it," Harris said. "We have every expectation that he's going to have that fair shot now."