Crain's Cleveland Business by Crain's Cleveland Business

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$2.00/OCTOBER 3 - 9, 2011

Private equity outfits beat odds Amid difficult climate, local firms notch investor commitments By MICHELLE PARK mpark@crain.com

If, as they say, the ability to raise funds separates winners from losers, it appears we have winners in our midst. A number of local private equity firms have closed this year on tens and hundreds of millions of dollars of investor commitments amid what some call the toughest fundraising environment in decades. “If you’ve been able to raise

money since the global financial crisis, odds are you are a survivor,” said Stewart Kohl, co-CEO of The Riverside Co., which in mid-September announced it had “bucked a continued challenging fundraising market” and raised $37 Kohl million more than it had targeted for its most recently closed fund. Others attracting investors include Linsalata Capital Partners in May-

field Heights, Resilience Capital Partners in Beachwood and Cuyahoga Capital Partners in Cleveland, according to firm officials and filings with the Securities and Exchange Commission. Riverside this year raised commitments totaling about $137 million; Linsalata, just shy of $295 million; Resilience, more than $162 million; and Cuyahoga Capital, nearly $85 million.

INSIDE: A closer look at the number of funds closed and aggregate capital raised in a five-state area. Page 8 The fundraising, however, is taking longer than it did before the recession, private equity insiders say. Whereas before the downturn, fundraising would require about a year, Riverside’s most recently closed fund took about a year and a half to raise, Mr. Kohl said. “Investors are far more cautious than they used to be about making commitments to illiquid investments,” See EQUITY Page 8

SEEING ROOM TO GROW

GCP to urge area flyers to utilize merged line Effort’s goal is to prove hub’s value at Hopkins By JAY MILLER jmiller@crain.com

Mike is a road warrior. He already has flown for business 25 weeks this year, only mildly off the pace from his peak flying days during 2004 to 2009, when he was in the air for work more than 40 weeks a year. And he prefers to fly on Continental Airlines. “Their customer service is amazing,” said Mike, who asked that his full name not be used because he isn’t permitted by his company to talk to media.

US Endoscopy finds opportunity with new building, entrance into urology market Story by DAN SHINGLER dshingler@crain.com

FILE PHOTO/MARC GOLUB

Continental’s service garage at Cleveland Hopkins International Airport

JANET CENTURY

US Endoscopy chief operating officer Tony Siracusa holds two products the company makes that go into endoscopes.

eople keep getting older, living longer and wanting their surgeons to be less intrusive when conducting procedures they need more often — and as a result, US Endoscopy in Mentor keeps getting bigger. The company is filling up its fourth building, this one 70,000 square feet in size, located on Heisley Road within a stone’s throw of its other three facilities.

EDITORIAL: Businesses should consider long-term bottom line when choosing travel options. Page 10

US Endoscopy bought the building at the start of this year and has been spending much of the time since refurbishing it to serve as a manufacturing and assembly plant. The new building once was a medical device plant for a competitor, C.R. Bard Inc., but it has been vacant for most of the last decade, said Tony Siracusa, US Endoscopy’s chief operating

But Mike can’t always fly his favorite airline. “We have to book our flights through a corporate booking engine, and if you’ve got a (price) gap of a certain amount, it won’t let you book the Continental flight if that’s a significantly higher price,” Mike said. “You have to take the lowest fare within a range.” As Mike’s case illustrates, the attention companies pay to the effect of business travel on their bottom lines is a key hurdle facing an emerging effort to ensure that the merged Continental and United airlines

See ROOM Page 19

See AIR Page 5

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SPECIAL SECTION

LEGAL AFFAIRS Lawyers and courts debate the use of social media in legal settings ■ Page 13 PLUS: ADVISER ■ JUDGING THE SYSTEM ■ & MORE

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9/29/2011

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

WORKERS WITH BENEFITS

COMING NEXT WEEK

The average costs for retirement and savings benefits — which include defined benefit and defined contribution plans — for private industry in June were $1.03 per hour worked, or 3.7% of total compensation, though the figures varied considerably by occupational group. Retirement and savings benefits costs were higher, in amount and as a proportion of total compensation, for union workers than for nonunion workers. Here’s data from the U.S. Bureau of Labor Statistics:

For some NE Ohioans, a reality check Some of the region’s small businesses are benefiting from the reality TV craze, and we ask how their fame has affected the bottom line.

Costs per Costs as percent of hour worked total compensation

Class of worker

REGULAR FEATURES Classified .....................22 Editorial .......................10 From the Publisher .......10 Going Places ................12 Letters .........................10

OCTOBER 3 - 9, 2011

List: Ad agencies ..........18 List: Marketing firms ....18 List: PR firms ...............19 Tax Liens........................9 Reporters’ Notebook.....23

All private industry workers

$1.03

3.7%

Management/professional

2.08

4.1

Natural resources/construction

1.60

5.1

Union

2.92

7.7

Non-union

0.83

3.1

Goods-producing industries

1.70

5.1

Service-producing industries

0.89

3.3

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editors: Joel Hammond (jmhammond@crain.com) Sports Kathy Carr (kcarr@crain.com) Marketing and food Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Manufacturing Tim Magaw (tmagaw@crain.com) Health care & education Michelle Park (mpark@crain.com) Finance Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

INSIGHT

Medicaid waiver could give Metro a healthy boost Hospital system says expanding coverage for poor could help offset operating losses By TIMOTHY MAGAW tmagaw@crain.com

JANET CENTURY PHOTOS

Crew members (pictured above and below) commandeer the kitchen at Five Guys in Warrensville Heights.

JUST WHAT THE CUSTOMERS ORDERED Lakewood franchisee of Five Guys burger chain hungry for more growth in Northeast Ohio

MetroHealth officials said they hope federal regulators will give Cuyahoga County the go-ahead to add roughly 26,000 people to its Medicaid rolls so that more dol- Moran lars can be infused into the money-losing health system, though it’s unlikely to see any cash from such a move anytime soon. Serving as the county’s safety net hospital has forced MetroHealth to stomach millions of dollars in unpaid health care bills, which officials cite as a big reason for the county-subsidized system’s budget

pen wide, Northeast Ohio: The double hamburgers and abundant fries of Five Guys should be available in several new locations near you by late 2012. Franchisee Wholesome Burger LLC of Lakewood plans to open seven or eight more stores in this region, plus a couple in Pittsburgh, for a total of up to 10 new stores over the next year, said co-CEO Raji Sankar. The growth will double the company’s work force to more than 600 employees, she said. Wholesome Burger already has signed leases for two of the coming locations: one in Steelyard Commons in Cleveland, which should open in January, and another in Cedar

See WAIVER Page 21

THE WEEK IN QUOTES “Everybody that I have talked to ... has said this is the toughest fundraising environment that they’ve experienced. I think it’s going to be very difficult until the economy improves.”

By MICHELLE PARK mpark@crain.com

woes. Expanding Medicaid to cover more of the county’s poorest residents — who typically are the most expensive to treat because they often use the emergency room for routine care or have neglected their medical needs — could “go a long way to reducing the financial pressures facing us today,” MetroHealth CEO Mark Moran said. “It won’t eliminate them, but it will significantly impact those pressures,” Mr. Moran said. The amount of uncompensated care provided by MetroHealth through the first eight months of

— Jeffrey Kadlic, managing partner, Evolution Capital Partners. Page One

“Anything occurring in cyberspace is not evidence. … We want to protect jurors’ decision-making process.” — Cuyahoga County Common Pleas Judge Dick Ambrose. Page 13

“What our plan will try to do is explain that hubs are more expensive, but that the return is better access (to air service) and more direct flights.” — Joe Roman, president, Greater Cleveland Partnership. Page One

“Today, many clients, whether it’s the person or their family or both, are looking for much more from a lawyer than just legal advice.” — Judith Lipton, former director of the law and social work program at Case Western Reserve Law School. Page 16

See BURGERS Page 20

Twinsburg supplier shifts its planned perch at old Chrysler site Distribution center moved away from hangout of endangered bats By STAN BULLARD sbullard@crain.com

Transformation of the former Chrysler stamping plant in Twinsburg to a modern business park is under way after the developer found a way around a time-consuming environmental hurdle presented by

the endangered Indiana bat. Twinsburg Industrial Properties LLC — the entity formed by Scannell Properties of Indianapolis and DiGeronimo Cos. of Independence to own and redevelop the plant — shifted a planned $7 million distribution center to a different part of the 167-acre site. The tenant will be

Vistar, a wholesale candy, snack and beverage supplier based in Twinsburg for 30 years. The new building will go up on Chamberlin Road on a parking lot on the west side of the plant instead of a 30-acre wooded area on the southwest side originally considered for the structure, said Larry

Finch, Twinsburg’s planning and community development director. The original site — land Chrysler held since 1957 for a potential expansion it never made — proved problematic. The U.S. Fish and Wildlife Service delayed tree-clearing on it until after November because the land may feed lactating Indiana bats. To remove the trees, the developer must win a U.S. Army Corps of Engineers permit governing how

wetlands on that site will be handled. Building on Chamberlin Road allows the project to proceed now, Mr. Finch said. He said the new site will use some land yielded by Twinsburg Industrial Properties’ ongoing demolition of about 4 million square feet of the complex. The switch allows Twinsburg Industrial to move immediately on constructing the 137,000-square-foot See VISTAR Page 20

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OCTOBER 3 - 9, 2011

Roetzel buys small Chicago firm Acquisition reflects latest trend in legal industry By MICHELLE PARK mpark@crain.com

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In another example of the continuing consolidation within the legal profession, a small Chicago law firm turned out the lights last week as Lewis, Overbeck & Furman LLP and is set to turn them on this morning, Oct. 3, as Roetzel & Andress LPA. Roetzel & Andress officially enters the Chicago market via its acquisition of Lewis Overbeck. Terms of the deal, effective Oct. 1, were not disclosed. The acquisition gives Roetzel a 13th location and adds eight lawyers, bringing its total to 210. Its largest offices are in Cleveland and Akron, where it is headquartered. Chicago is an attractive market for Roetzel because it’s a major business center, said Jeffrey Casto, the firm’s president. Roetzel was motivated to enter the market to serve existing clients and to acquire new ones, Mr. Casto said, and will gauge its success by footprint and revenue growth. “We’ve had a number of clients that have approached us about whether we were able to open an office in Chicago,” Mr. Casto said. The combination of Roetzel and Lewis Overbeck is one of dozens closed nationwide this year. As of Sept. 2, 40 law firm mergers and acquisitions had occurred in 2011, according to Altman Weil MergerLine, which tracks law firm combinations (primarily in the United States) as they’re reported to the press. At the mid-year point, the number of combinations was 28, up 47% from the first half of 2010, reported Altman Weil, a Newton Square, Pa.,

plan to grow, Mr. Emmitt said. “Chicago is a very difficult market, and we’ve not had the fortune or good luck that we’d hoped to have by growing organically or by merging with someone in the Chicagoland area,” he said.

Choosy about its partner Casto

Emmitt

firm that provides management consulting services to legal organizations.

Cracking a ‘difficult market’ This acquisition is the third for Roetzel since 2006. Talks between the two firms began last March via a search firm hired by Roetzel, said Tim J. Emmitt, who was managing partner of Lewis Overbeck and now is partner-in-charge of Roetzel’s Chicago office. Mr. Casto said Roetzel’s acquisitions have allowed the firm to diversify geographically and so better weather the economic downturn. It had considered acquiring other offices and firms in Chicago, but chose Lewis Overbeck because it was the best match, he said. Lewis Overbeck’s focus on business law is complementary to Roetzel’s, Mr. Casto said, and its expertise in ERISA (Employee Retirement Income Security Act) matters will afford Roetzel additional capabilities for clients that need it. Plus, the cultures of the firms fit because both are relationship-based, leaders of both firms said. Combining with another firm had been part of Lewis Overbeck’s strategic

Lewis Overbeck probably was approached about combinations 10 or 12 times since 1997, when Mr. Emmitt became managing partner, but each time turned up nothing, he said. At some point during those courtships, Mr. Emmitt said, it became clear that there was a cultural or philosophical difference between firms. “We didn’t have to merge,” he said. “We were very choosy about who we would go with.” The combination of Roetzel and Lewis Overbeck will result in a stronger practice for both firms, Mr. Emmitt said. “We have some areas of practice that they don’t … and vice versa,” he said. “So there’s some diversification that will be helpful.” Roetzel brings to Lewis Overbeck expertise in environmental, bankruptcy and creditors’ rights and securities law, among others. Plus, Roetzel has some “tremendous resources” that eight-lawyer Lewis Overbeck did not, Mr. Emmitt said. “We immediately get a terrific upgrade in terms of information technology,” he noted. Roetzel now has offices in Ohio, Florida, Illinois, New York and Washington, D.C. Both Mr. Casto and Mr. Emmitt say there are plans to hire more lateral talent in Chicago, though there is no set number for new hires. ■

Crain’s to publish directory highlighting food businesses “The Invisible Heroes” found some invisible money of yours last night. (At least it was invisible to your accountants.)

Call the area’s leader in private business accounting: 330.867.7350 Akron l 216.674.3800 Cleveland

Crain’s Cleveland Business on Oct. 31 will publish the Directory of Northeast Ohio’s Food Economy, a listing of companies that manufacture or produce food and beverage products. The directory also will include food distributors, food equipment manufacturers and educational and nonprofit organizations related to the food industry. (Restaurants are not included.)

To be part of the directory, a survey must be submitted. Send an email requesting a survey to Deb Hillyer, dhillyer @crain.com. Emails should include the company name, address, phone number and contact name and email address. Incomplete requests will not receive a response. The deadline to request a survey is Oct. 14.

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bined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2011 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Air: Leaders fear effect of losing hub status continued from PAGE 1

maintains its level of service in Cleveland by keeping Cleveland Hopkins International as a hub of the combined airline. In a matter of days the Greater Cleveland Partnership — the city’s chamber of commerce group — will unveil its plan to show the merged airline Cleveland’s value to its network. Earlier this year, GCP created an air service demand task force to come up with a strategy to secure the local hub. Joe Roman, GCP president, told Crain’s the idea is to mount a campaign to get businesses and casual travelers to book as much travel as possible on the airline, which will operate under the United name. Mr. Roman said convincing companies to add the value of retaining a Cleveland hub into their booking equations will be one of the goals of the task force. “What our plan will try to do is explain that hubs are more expensive, but that the return is better access (to air service) and more direct flights,” he said. “Then we’ll ask companies to consider policies that fit in with that new understanding.” It won’t be an easy sell.

They want to help, but … Rob Turk, executive vice president of Professional Travel Inc. of North Olmsted, said he believes significant support for United exists among the 200 businesses that book travel through his firm. But he doesn’t see their loyalty necessarily overcoming bottom-line concerns. “As a whole (our business clients) attempt to support the Continental/ United presence in Cleveland because the community benefits from the hub status,” he said. “They want to do the right thing, but not at a significant cost increase to their budget.” However, Mr. Turk also noted that companies increasingly are segmenting their travel policies based on how much an employee travels, and frequent business flyers — the “road warriors” — may have more leeway to choose among carriers despite differences in ticket price. “Some companies are saying, ‘This group that travels frequently on the road, away from their families, we need them to be productive, we need them to travel efficient. If (United) is the best product, we’ll allow them to travel on that carrier,’” Mr. Turk said. That kind of latitude would work for Mike because, as a Continental Premium Elite flyer, he receives perks that make his traveling easier, and he thinks those perks can justify what might be a somewhat higher cost on a Continental flight. Mike said, for example, that while he may have booked a return flight to Cleveland for a Friday morning, a Continental service starts emailing him 24 hours before his planned departure to let him know of other, earlier return options that he can switch to without an additional charge. “If I can wrap things up a little early and get on a flight that gets me to my house by 1 a.m. Thursday night, that’s great,” Mike said, as he would avoid paying for another night’s hotel room.

Hub hubbub Business leaders here have been concerned that United could downgrade its service at Cleveland Hopkins as it streamlines the two airlines into a single company. Though the two airlines jointly are booking passengers, each airline will operate

under their own name until the merger is completed at the end of 2011. Cleveland Hopkins has been a hub airport for Continental for more than 20 years. Hubs are airports that airlines use as a transfer points to move passengers from smaller cities to larger cities. That setup results in hub city travelers enjoying more direct flights to more cities than travelers in nonhub cities. After seeing cities such as Cincinnati and Memphis lose hub status following airline mergers, business leaders here fear that fate could befall Cleveland, which is the smallest hub in the combined Continental/ United network. Robust air service often is considered important for the strength of a

regional economy because it can be a prerequisite when a business evaluates a community for a new or expanded plant or office operation. Also, partly because Cleveland Hopkins is a hub, United has more than 2,000 employees in Northeast Ohio. But retaining the hub will require keeping the new merged airline healthy at Cleveland Hopkins. “Every hub needs to earn its value every day,” Jeff Smisek, CEO of the merged airline company said in a speech in Cleveland last November. Communicating to area companies that their travel policies can have an impact on the hub’s future is central to the GCP task force’s job. “We have a lot of work to do,” Mr. Roman said. ■

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CRAIN’S CLEVELAND BUSINESS

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OCTOBER 3 - 9, 2011

Real estate services firm finds new home at PlayhouseSquare By STAN BULLARD sbullard@crain.com

Dwellworks, a provider of residential real estate services, plans to move its headquarters to downtown Cleveland from Warrensville Heights in a transaction that will enable PlayhouseSquare Foundation to turn on the lights at a long-dark structure originally built as an F.W. Woolworth Co. dime store. Dwellworks has agreed to lease the 15,000-square-foot second floor of the building at 1317 Euclid Ave. for about 40 employees, said Gene Novak, its chief financial officer and executive vice president. The company is now at 4700 Richmond Road in Overlook Court, an office park. “Being longtime Clevelanders,” Mr. Novak said of himself and Dwellworks CEO Robert Rosing, “we have a soft spot for downtown Cleveland and want to do the right thing for the region and for Dwellworks as a growing company.” Dwellworks plans to move its executive staff as well as its financial, human resources, property manage-

ment, information technology and marketing workers downtown. The company will keep its Warrensville Heights space as a home for its appraisal division. Opening the downtown location and retaining its suburban one will allow Dwellworks to have room to expand and to use up several years remaining on its 9,000-square-foot suburban lease. “It’s no fun to be crowded,” Mr. Novak said of Dwellworks, a 160employee company that also has offices in Detroit, New York City, Phoenix and Washington, D.C. Dwellworks was launched in 2007 when it bought the residential appraisal company that served Chicagobased Sirva Inc., a diversified residential real estate services provider that has a substantial presence in Independence. Both Messrs. Rosing and Novak were executives with Sirva prior to creating Dwellworks. Dwellworks provides third-party relocation companies with services that help foreign nationals move to the United States, as well as real estate and mortgage services. Mr.

Novak said helping U.S. executives move for long-term assignments abroad accounts for a smaller part, or about 20%, of Dwellworks’ business. Typically, third-party corporate relocation firms buy and sell houses for corporations and their transferred employees, but Mr. Novak said privately held Dwellworks does not engage in that business.

Right place, right time In Dwellworks’ case, a combination of leads and resources from the Downtown Business Development Center of Downtown Cleveland Alliance, the city of Cleveland and others helped the firm land downtown. Allen Wiant, the broker for PlayhouseSquare, said the deal was put in motion when Mr. Rosing mentioned last winter at a board meeting of the Global Cleveland economic development nonprofit that he was seeking new offices in the suburbs. Valarie McCall, chief of government affairs for Cleveland Mayor Frank Jackson, is on the same board and suggested Dwellworks add downtown to the sites it was considering.

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Dwellworks CEO Robert Rosing (left) and CFO and executive vice president Gene Novak are pleased with their firm’s expansion from Warrensville Heights to downtown Cleveland. Some irony went into the selling process for downtown. Chandler Converse, a managing director at CB Richard Ellis, was representing Dwellworks. That put him for the first time on the opposite side of the negotiating table from former partner and long-term tenant rep colleague Mr. Wiant, who now works for PlayhouseSquare Real Estate Services, the foundation’s property management and brokerage affiliate. Through a combination of funds from the city’s Vacant Property Initiative and a forgivable loan from the Citywide Business Grant Program, plus PlayhouseSquare’s ability to offer renovated space that benefits from federal and state historic tax credits, PlayhouseSquare and the city were able to trim 33% from the cost of renovating the building. Mr. Wiant said the savings made the Dwellworks deal competitive

with suburban alternatives. Mr. Converse, Dwellworks’ tenant rep, said its final rental cost is below some suburban alternatives, a feat. However, none of the parties would disclose Dwellworks’ rent or the total costs for the makeover of the building at 1317 Euclid, which had an asking rental rate of $17 a square foot. Sprucing up that building, which had languished for eight years before PlayhouseSquare bought it for $1.35 million last November, helps fill one of the last voids on the northern side of Euclid between East 13th and East 17th streets. The early 20th-century building adjoins the PlayhouseSquare-renovated Cowell & Hubbard Building, soon to be home to a Zack Bruell restaurant, and is just one building west of the foundation’s Idea Center and the Allen, Ohio and State theaters. Its first floor will be marketed for retail use. ■

DDR discloses third-quarter transactions DDR Corp. (NYSE: ON THE WEB Story from 500,000 square DDR) of Beachwood www.CrainsCleveland.com. feet of gross said it acquired three leasable area and shopping centers for $110 million range from 96% to 100% leased. and disposed of $59 million of what Tenants include Whole Foods, Petit called “non-prime assets” in the Smart, Best Buy, Old Navy and DSW. third quarter. The firm said it sold 10 non-prime Two of the centers the real estate assets and seven land parcels investment trust bought are in Charduring the quarter for aggregate lotte, N.C. DDR said it paid a comproceeds of $59 million. Year to bined $85 million for those properdate, DDR said it has generated ties. It also paid $25 million for a gross proceeds of $214 million Colorado Springs, Colo., center. from asset sales, of which the DDR said those centers total company’s share is $166 million.

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Rosetta lays off some local staff, still eyes 70 new hires By CHUCK SODER csoder@crain.com

Rosetta Marketing Group LLC has laid off a handful of employees at its downtown Cleveland office, even as it continues to fill new positions at the location. The digital marketing company, based in Hamilton, N.J., recently laid off about 20 people, “less than half” of whom worked at the Cleveland office, said Shade Vaughn, a spokesman for Rosetta, which employs 1,200 people, including about 450 in downtown Cleveland. The company also cut positions at its headquarters and at its office in New York City, Mr. Vaughn said. Rosetta intends to continue with plans to fill about 70 new positions at its Cleveland office, said Mr. Vaughn, a senior account supervisor for public relations firm Robert Marston and Associates Inc. of New York. Nineteen people have been hired at the office since that plan was announced in June. Rosetta’s original goal was to have the positions filled

by the end of this year, but Mr. Vaughn said the company is not “working against a definitive deadline.” Most of the people who were cut worked in the company’s health care business, he said. That portion of the business, however, still is hiring technical talent, he said. “What they’re trying to do is shift personnel toward more of those functions they need right now,” he said. In a written statement emailed to Crain’s Cleveland Business by Mr. Vaughn, Rosetta CEO Chris Kuenne said Rosetta has been pushing to expand its consulting practice and its work in several industries, including consumer products, retail, technology and companies that serve other businesses. “We will continue to invest in these and other business units that are fueling our growth while continuing to manage our business costs in an efficient and responsible manner,” Mr. Kuenne said in the statement. Rosetta last July was acquired by Publicis Groupe SA of Paris for $575 million cash. ■

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Mr. Kohl said. “It’s not that they’re just taking longer to say yes; they’re saying yes less often. That has significant implications for our industry.”

One tough environment Stephen B. Perry, co-president and senior managing director for Linsalata, characterized Linsalata’s progress as “moderately and pleasantly successful.” The firm filed with the SEC a first close in August for Linsalata Capital Partners Fund VI, which it began raising in late January. “I wouldn’t say it’s more difficult than we anticipated,” Mr. Perry said. “We knew that it’s a different market.” Mr. Kohl said institutional investors such as pension funds are investing significantly less this year in private equity than they did in peak year 2007, but are investing more than they did in 2010, which signals some recovery. Also, the sluggish and at times turbulent economy has rendered high-net-worth investors more hesitant to make illiquid investments such as private equity. Plus, investors haven’t gotten back as much money as they’d expected from previous private equity investments, and so have less capital to deploy, insiders said. “Everybody that I have talked to, even people who have been doing this for 30 years, have said this is the toughest fundraising environment that they’ve experienced,” said Jeffrey Kadlic, managing partner for Evolution Capital Partners. According to public filings, the Pepper Pike firm filed a first close of $10 million on a fund in January. “I think it’s going to be very difficult until the economy improves … until there’s some direction in terms of where people need to put their

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FUNDS CLOSED

CAPITAL RAISED

A look at the number of private equity funds closed in the East North Central region, which includes Ohio, Illinois, Indiana, Michigan and Wisconsin.

Year

Number

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Year

Number

2011 (to date)

2010

12.4

2009

17.7

2008

17.3

2007

2006

20.6

SOURCE: PREQUIN

money,” Mr. Kadlic said.

Bye, banks; hello, SBA In addition, banks, which formerly were big private equity investors, effectively are prohibited from such investing by recent financial reforms, meaning the millions they once contributed must be raised from other sources. “Locally, the deep pockets were always National City and Key, and they’re not in the fund-investing business anymore, and so it’s forced funds out of Northeast Ohio to fundraise,” Mr. Kadlic said. Linsalata lost a meaningful portion of its investor base to financial reform, Mr. Perry said. That said, all its institutional investors have reinvested, he said, albeit some in smaller amounts. Linsalata has been successful at raising funds because of its “very good track record,” Mr. Perry said. Riverside’s Mr. Kohl likewise attributed his firm’s success to its “consistently strong performance.” Riverside, he said, has closed three funds since Lehman Brothers went bankrupt in 2008. Riverside’s most recently raised fund, called the Riverside MicroCap Fund II, includes federal Small Business Administration funds. The SBA money has been available for some time, Mr. Kohl said, but this is the first time Riverside has accessed it. The firm’s first micro-cap fund totaled $250 million. With access to $150 million from the SBA, the newest micro-cap fund’s total deployable capital is $287 million. “I believe we could have just gone out and raised $250 million again, but then we wouldn’t have the advantage of this cheap, patient capital,” Mr. Kohl said. The SBA’s is “extraordinarily attractive” capital, with an affordable rate and a 10year repayment period, he said.

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Aggregate capital raised, in billions, by private equity funds in the East North Central region, which includes Ohio, Illinois, Indiana, Michigan and Wisconsin.

Another source of funds for Riverside’s latest micro-cap fund is Paragon Advisors Inc., a Shaker Heights company that handles investments and other services for high-net-worth families. Paragon had invested in previous Riverside funds, too. Terry Sullivan, Paragon senior managing director and president, said his firm chooses private equity investments based on returns and a given firm’s team. It considers the experience of a firm’s executives, how many funds they’ve raised and invested, and how they’ve worked through adverse conditions, he said. Families are more concerned about liquidity right now because of the turmoil across the globe and the

$10.9 billion

SOURCE: PREQUIN

slow economic recovery, he said. “Generally, the best opportunity is when most people are scared, so from our perspective we feel it’s a pretty good time to be investing,” Mr. Sullivan said. “But it’s hard to convince folks in an illiquid environment that they should make that commitment.” When fundraising takes longer than usual, it’s a distraction for fund administrators for a longer period of time, said Bart Shirley, managing partner for Cuyahoga Capital Partners LLC, which filed in late September a second close on its fund, Cuyahoga Capital Partners IV, which is just shy of $85 million. “We would all tend to prefer to focus on investing our funds and less on fundraising,” Mr. Shirley said. Cuyahoga Capital began raising this fund in February, and it’s gone a little slower than expected, he noted.

‘Zombies’ lurk Though the fundraising market remains challenging, signs exist that it’s picking up, according to an investor outlook for the second half of 2011 by Preqin, a leading source of information for the alternative assets sector. At present, there are 83 private equity funds in the East North Central region raising capital, according to Preqin. The region includes Ohio, Illinois, Indiana, Michigan and Wisconsin, and the funds includes buyout, venture, mezzanine and other private equity funds. Altogether, the 83 are targeting an aggregate $16.4 billion from investors. As of late September, 31 funds in the region had closed and raised an aggregate $10.9 billion, according to Preqin. In contrast, in all of 2010, 47 closed funds in the region raised $12.4 billion. The latter amount was down 30% from 2009, when 52 closed funds in the region raised $17.7 billion. “While many are not investing at the same pace as in the years prior to the downturn, fund managers should be encouraged that the number of investors looking to make commitments is steadily improving,” the Preqin report said of institutional investors. Many insiders anticipate a shrinking of the private equity community as some firms fail to secure more funds. Some industry insiders have suggested that a quarter or more of all the nation’s firms may face that fate, Mr. Kohl said. Those firms that fail to raise new funds won’t go away overnight, though. Sometimes referred to as “zombies,” the firms likely will have a prior fund to invest and maintain and may own companies for years into the future. ■

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TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED Lad Technology Inc. 730 Beta Drive, Suite B, Mayfield Village ID: 34-1611134 Date filed: Aug. 30, 2011 Type: Employer’s withholding, corporate income Amount: $15,550 Green Thumb Florists Garden Center and Landscapers Inc. 11515 Lorain Ave., Cleveland ID: 34-1824632 Date filed: Aug. 9, 2011 Type: Employer’s withholding Amount: $9,765 Revol Wireless 5592 LLC 5592 Ridge Road, Parma

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ID: 26-3521538 Date filed: Aug. 23, 2011 Type: Employer’s annual federal tax return Amount: $9,473 Good Harvest Foods Market Inc. 14501 Industrial Ave. S., Maple Heights ID: 34-1943972 Date filed: Aug. 2, 2011 Type: Employer’s withholding, unemployment Amount: $9,473 YaYa Market Inc. 9901 Union Ave., Cleveland ID: 20-0344540 Date filed: Aug. 11, 2011 Type: Employer’s withholding Amount: $9,205 Buckeye Lawn & Landscaping Inc. 27145 Cook Road, Olmsted Township ID: 34-189781 Date filed: Aug. 11, 2011 Type: Employer’s withholding, unemployment Amount: $6,653 Kimmichs Growing Trends Inc. 22218 Lorain Road, Fairview Park ID: 34-1302387

Date filed: Aug. 9, 2011 Type: Employer’s withholding, unemployment Amount: $5,457

Type: Corporate income Amount: $5,399

NRC Management Inc. 2120 S. Green Road, South Euclid ID: 34-1960019 Date filed: Aug. 16, 2011 Type: Employer’s withholding Amount: $5,390

County Cork LLC 22901 Millcreek Blvd., Suite 360, Highland Heights ID: 34-1954256 Date filed: April 7, 2011 Date released: Aug. 2, 2011 Type: Employer’s withholding Amount: $79,281

Wirtanen Insurance Agency Inc. 23615 Lorain Road, North Olmsted ID: 34-1846529 Date filed: Aug. 25, 2011 Type: Employer’s withholding Amount: $5,379

Custom Transmission Inc. 15403 Chatfield Ave., Cleveland ID: 34-1626630 Date filed: Oct. 5, 2007 Date released: Aug. 30, 2011 Type: Employer’s withholding Amount: $34,955

LIENS RELEASED

Itek Systems Inc. 22700 Shore Center Drive, Suite 100, Euclid ID: 34-1874489 Date filed: July 13, 2011 Date released: Aug. 30, 2011 Type: Employer’s withholding Amount: $16,272

6506 Fleet Ave. LLC, K & S Food & Gift 6506 Fleet Ave., Cleveland ID: 34-1937990 Date filed: April 7, 2010 Date released: Aug. 2, 2011 Type: Employer’s withholding, failure to file complete return, partnership Amount: $9,091 Assad-Crea & Associates Inc. TA Assad & Crea Realty Group 6363 York Road, Suite 101, Cleveland ID: 34-1353791 Date filed: March 12, 2010 Date released: Aug. 30, 2011

Majestic Technologies Inc. 18035 Rockside Road, Bedford ID: 34-1477823 Date filed: May 4, 2011 Date released: Aug. 30, 2011 Type: Employer’s withholding, unemployment Amount: $27,718 Platinum Plumbing Inc. 5914 Ridge Road, Parma

ID: 52-2385110 Date filed: June 21, 2011 Date released: Aug. 16, 2011 Type: Employer’s withholding Amount: $20,055 Ross & Sons Inc. 4317 W. 130th St., Cleveland ID: 14-1944872 Date filed: Aug. 14, 2009 Date released: Aug. 23, 2011 Type: Employer’s withholding, unemployment Amount: $6,632 Sagamore Hills Animal Hospital Inc. 11844 Valleyview, Sagamore Hills ID: 34-1896297 Date filed: June 12, 2002 Date released: Aug. 23, 2011 Type: Employer’s withholding Amount: $17,884 Skroka Industries Inc. 21265 Westwood Drive, Strongsville ID: 34-1439293 Date filed: Nov. 19, 2010 Date released: Aug. 2, 2011 Type: Employer’s withholding Amount: $7,219 Westlake Bistro Group Inc. 23800 Detroit Road, Westlake ID: 26-1444384 Date filed: May 12, 2011 Date released: Aug. 23, 2011 Type: Employer’s withholding Amount: $16,336

UPCOMING EVENTS Crain’s Cleveland Business on Wednesday, Oct. 12 will continue its fall Ideas at Dawn business breakfast series with a panel discussion on the federal estate tax and how Northeast Ohioans can protect their assets.

Panelists includes representatives from Estate & Business Succession, Taft Stettinius & Hollister LLP, Meaden & Moore and PNC Wealth Management Group. For more information, visit CrainsCleveland.com/breakfast.

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OCTOBER 3 - 9, 2011

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Flight plan

reater Cleveland Partnership has a tough sell ahead. The chamber of commerce group must try to convince local companies that the lowest-cost option for meeting their employees’ air travel needs isn’t necessarily their best option if those businesses want to continue to enjoy the benefits that accrue from Cleveland Hopkins International Airport serving as a hub for the merged United-Continental airline. In this matter of short-term gain over potential long-term pain, companies would do well to listen to GCP’s pitch. Specifically, they should think about what air service would look like out of Cleveland if Hopkins no longer was a hub airport before forcing employees to book automatically the cheapest flight available. Travelers who use Hopkins as their primary airport don’t need to look far to see how fast air service out of a city can deteriorate once it no longer is a hub or otherwise suffers a change in its status with a carrier. In Pittsburgh, which lost US Airways as a hub carrier, large sections of its airport are unused and cordoned off. In Cincinnati, Chiquita Brands International Inc. is talking about moving its headquarters because of the sharp drop in air service that has occurred at its airport since Delta Air Lines combined with Northwest Airlines and gained Detroit as a hub. The fear in the Queen City is that other large employers could follow. To head off those horror stories in Cleveland, GCP sprung into action shortly after the planned combination of Continental and United airlines was announced. It created an air service demand task force to come up with a strategy for maintaining Hopkins as a hub, which it has been for Continental Airlines for more than two decades. As government reporter Jay Miller writes in a Page One story this week, the task force soon will unveil that strategy. Part of the plan will involve mounting a campaign to get businesses and casual travelers to book as much travel as possible on the airline, which will operate under the United name. GCP president Joe Roman said convincing companies to add the value of retaining a Cleveland hub into their booking equations will be one of the goals of the task force. “What our plan will try to do is explain that hubs are more expensive, but that the return is better access (to air service) and more direct flights,” Mr. Roman said. “Then we’ll ask companies to consider policies that fit in with that new understanding.” It will be interesting to see how willing businesses will be to take one for the team — as in all air travelers in the Cleveland market — by booking flights on United when the cost of travel on another carrier is less. Companies are extremely conscious of their bottom lines these days, and the $50 here or $100 there they may pay in higher ticket prices to support the cause could add up quickly. Of course, there is the other bottom line to consider. It’s the one that says United could shut down its hub here unless there is adequate use of its service. Business travelers would pay a price if United made that decision, and it could be more costly than any added expense they’re paying now.

FROM THE PUBLISHER

Frustration builds with D.C. crowd

poiler Alert: This will be a rant. nation’s budget, is merely frustrating Oh, I’ll try to offer some more and more Americans. Polls show thoughtful ideas, but really this is our disdain for Congress is at an all-time mostly about venting — about our high, and yet the fringe members of both national political leaders. parties continue their brinkmanship. Last week, we hosted an evening As I’ve written repeatedly in this space, reception for the nominees for this year’s both parties’ leaders should be ashamed CFO of the Year program, which has of how they pander to their most radical become one of Crain’s most elements. Sure, they use code popular events. Last year, we words like “shoring up the BRIAN were forced to stop selling tickets political base,” but it’s really TUCKER after 600 registered for the event, about ignoring the majority of which takes place this year at Americans in the political middle. LaCentre in Westlake on TuesSo my guest and I came up day, Oct. 25 (details at www with a great idea (using other .CrainsCleveland.com/CFO). people’s money, of course). Here the shameless plug ends Imagine if the leaders of a and the fuming resumes. So bunch of major corporations I’m standing at our reception, pitched in and bought full-page having a nice chat with one of ads in newspapers across the our guests, and the talk turned to the country, issuing an elegantly simple economy and current business condiwarning: Stop the nonsense or we pull all tions. Well, it didn’t take long for that our money from all of you. conversation to turn toward Washington Imagine the reaction from congressmen and the latest game of chicken our legiswho must do fundraising from the first lators played with our money. day they arrive in office. All political The dust-up over the funding for action committee funds and all personal federal disaster aid, a tiny slice of the contributions from company executives

would freeze until Congress and the White House regain their institutional senses. I understand that liberal Democrats and conservative Republicans believe their way is the best way. That’s politics, and disagreement — if it leads to compromise — can be constructive in governance. But they’re not compromising. The Republicans, forced into a corner by the success of their ultra-conservative Tea Party faction, are simply circling like sharks that smell blood. The administration is on the ropes, and the GOP senses a grand opportunity to make Barack Obama a one-term president. This president and his team have made their share of mistakes. But they also were the first Democrats in office to buck the powerful teachers’ unions to try to reform our failing public schools. Ours is a global economic problem, as evidenced last week by the American stock markets being whipsawed by every nuance in the European debt problems. Our best chance at recovery is to work together, and if the folks we sent to Washington won’t do it, we should throw them all out. ■

LETTERS

Repeal of care act would harm employers ■ I was disappointed by the cavalier nature of your Sept. 12 editorial, “Blah Blah.” I was especially disappointed by your suggestion to repeal the Affordable Care Act (ACA) as a solution to helping employers create new jobs. What evidence do you have that the ACA makes employers afraid to add people to their payrolls? Most employers want to provide health insurance for their employees because it helps them attract and retain the best employees. The ACA helps them be able to do that in many ways. For example, it provides tax credits to help an estimated four million companies with 25 or fewer employees buy health insurance for their employees for the first time. In the future, it will provide a way for employers who cannot afford to provide

full insurance coverage to opt out, pay a fee much less than the full cost of insurance and still be confident that their employees can secure insurance through exchanges. This will allow medium-size employers to recruit employees from jumbo employers. The impact on jumbo employers is minimal, beyond mandating more comprehensive coverage policies that will increase costs only 1% or 2%, all of which they can pass onto employees if they wish. By the way, medical costs for large employers are projected to increase only 5.2% in 2012, the lowest rate of increase since 1997. The ACA also gives an estimated 800,000 people the freedom to leave their jobs and be confident that they can get health insurance. Some of them will retire, some

will start new businesses. This will create 800,000 job openings that can be filled with unemployed people. Additional benefits of the ACA are: ■ reducing our federal deficit by $1.4 trillion over two decades; ■ extending the solvency of Medicare by a decade, providing health insurance to 32 million uninsured people; ■ allowing 39 million people with preexisting medical conditions to purchase affordable insurance; ■ allowing 25 million adult children to remain on their parents’ health insurance policy until age 27; ■ providing $11 billion to build more community health centers in poor neighborhoods; ■ providing free preventive services See LETTERS Page 11

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CRAIN’S CLEVELAND BUSINESS

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THE BIG ISSUE If you had control over the federal budget, what spending would you cut?

THURSDAY, OCTOBER 6, 2011 11:30 am Registration • 12 Noon Lunch & Program City of Pepper Pike

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I would cut some of the NASA programming. It’s billions of dollars used in NASA, and I believe we could use some of that expenditure right here in the states.

I’d probably go with the cost for prisons. I think a lot of money’s wasted in prisons. I am going to school to be a teacher, and I think more money needs to be put into education.

There are so many different aspects of the economy that are hurting right now and so many different programs, I don’t really know what I would cut. It’s beyond me.

Military. I think we have enough wars in our own country to resolve. We don’t have to leave here to go and find (them).

Moderated by TOM

BERES, Emmy Award-Winning Sr. Political Reporter, WKYC TV 3

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➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

Medicare knowledge lags among boomers LAVONNE KUYKENDALL InvestmentNews

Most baby boomers, even those past retirement age, say they don’t know much about Medicare, the federal health insurance plan for seniors. Their ignorance could end up costing them money. In a survey conducted by the National Council on Aging and insurer UnitedHealthcare, only 46% of seniors said they understand Medicare and how it works. About a third said the program either is confusing or they don’t understand it well. Fully 16% are at a complete loss about Medicare. When asked about some standard Medicare issues, the majority of seniors can’t get their facts straight. Only one-third could identify that Medicare Part A is the hospital

insurance component of the program, and only 23% responded that Medicare Part B is the part that covers doctor visits. Forget about Part C. Most wouldn’t even take a guess. The passage of the Patient Protection and Affordable Care Act of 2010 ushers in some more twists on coverage, which boomers and seniors also are confused about, according to the survey. One area where pre-retirees get into trouble is by not applying for Medicare on time. The government recommends applying about three months before a 65th birthday, even if the applicant doesn’t intend to use it for some time. Waiting too long can trigger a 10% premium penalty on Medicare Part B in some situations. For those on Medicare already, few know the passage of Obama-

care changed the annual open-enrollment period for those who want to change their coverage options. In previous years, open enrollment was between Nov. 15 and Dec. 31, but it will open a month earlier this year and end Dec. 7. Many on Medicare also lose money by not shopping around. Because the terms of the policies are standardized, the only real difference between competing policies is the price, yet people still don’t comparison-shop, which could save many of them money. ■ Lavonne Kuykendall is a reporter with InvestmentNews, a sister publication of Crain’s Cleveland Business.

LETTERS continued from PAGE 10

and better drug coverage for 38 million seniors through Medicare, and more than 40 provisions to help people improve their underlying health through wellness. One of these is creation of a National Prevention Strategy, with the first plan released on June 16. On a related point, it is important to point out that one of the reasons our economy has not turned around is the lack of rebound of the Consumer Confidence Index. As long as it is low, people are going to hoard their money. It is low in part because we have suffered through some very difficult times. It is also low because the Republican members of Congress and their companion media insist on criticizing every accomplishment of President Obama and telling the American people how bad things are. If they started focusing on the positive, their constituents would have a better and more accurate outlook and this would stimulate the economy. Do you disagree? We have a lot to celebrate, including preventing a depression, saving the auto industry, adding 2.9 million jobs through the American Recovery Act, taking out Bin Laden, ending discrimination against gays in the military, stopping the oil gusher in the Gulf, our president receiving the Noble Peace Prize, passing the

START treaty with Russia to reduce nuclear arms, passing the first comprehensive health care reform bill and much more. Quite frankly, I cannot think of any three-year period in which more positive things have happened. Can you? If your paper wants to make a constructive contribution to turning our economy around, focus more on what is going well. It’s contagious. Michael P. O’Donnell Editor-in-chief and president American Journal of Health Promotion

Throw the bums out ■ Regarding Brian Tucker’s Sept. 19 commentary, “With no middle ground, nation suffers,” dealing with the inability of our politicians to work together constructively: I’ve got a simple solution to the problem — vote the incumbents out. For all the time we have let them be there, they obviously do not understand the problem or are not willing to work for the people’s best interest. Rome burns while they fiddle! Of course, this is my opinion and I was stupid enough to vote most of them in. Edward Bond Strongsville

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GOING PLACES JOB CHANGES CONSTRUCTION GILBANE BUILDING CO.: Daniel Euclide to office engineer; Praem KanagaRaj to assistant project engineer; Dave Kleckner, Matt O’Donnell and Travis Okel to project engineers; Chris Kucharski to senior general superintendent; Bob Simunich to senior MEP superintendent. SKANSKA USA: Dan Korte to project executive.

EDUCATION NORTHEAST OHIO MEDICAL UNIVERSITY: Harry J. Sivec to consultant and trainer, cognitive behavioral therapy for persistent psychosis; Danelle R. Hupp to consultant and trainer, family psychoeducation.

ENTERTAINMENT HORSESHOE CASINO CLEVELAND: Karen Kaminski to vice president, human resources.

FINANCE OHIO COMMERCE BANK: Kelly Sherepita to senior associate, government lending.

FINANCIAL SERVICE DELOITTE SERVICES: Melissa

Pozniak to partner; Justin DiMare, Kevin Heckel, Matthew Kolman, Melissa Monaco and Brian Proctor to directors. SS&G: Brandon Morris and John Hollo to associates.

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HEALTH CARE AKRON GENERAL HEALTH SYSTEM: Dr. Jeffrey Courson to medical staff, Lodi Community Hospital. CLASSIC DIAGNOSTIC IMAGING LLC: Ed Lampman to director, business development. CLEVELAND CLINIC: Dr. Mark H. Meacham to medical director, Brunswick Family Health Center and Medina Hospital’s medical office building. METROHEALTH: Dr. Priya Pujara to medical staff, Internal Medicine and Pediatrics Department, Strongsville Health Center; Dr. Erol Beytas to medical staff, Department of Radiology, MetroHealth Medical Center.

INSURANCE HYLANT GROUP: Helen Golubski to executive assistant and office administrator.

LEGAL BENESCH: Daniel J. O’Brien to associate.

MANUFACTURING FABER-CASTELL USA: Rebecca Parkes to sales manager, craft market. MOEN INC.: Kevin Campbell to senior director, marketing, Wholesale Business Unit.

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INSIDE

16 SOCIAL WORKERS ROUND OUT FIRM EXPERTISE.

LEGAL AFFAIRS Reform initiative zeros in on judges Bar association works to advance qualified candidates to bench

M E T S Y S L A I C JUDI v. A I D E M SOCIAL of online

cons d n a s o r p nature rgue l a u f s t e r s u u o t c e Lawyers, tion’s pervasive, y e conca Ambros k ic D e communi dg devices Pleas Ju

ronic all elect d e t nd even a c s fi ers — a v r e s b o l istracfrom tria event d r p o t m ia — oom, rors fro the med hibit ju e courtr o h r t p e o t id a s d ut rm tions an ide info t was s t e u n r o e t y n n ga the I their sumaccessin tarnish his past t ld z u z o u c b t a s, tion tha fair and h tweet rve in a e s o g mer wit t in y in abilit . ies perta apacity ews stor ybern l d n ia partial c r a e s im ring in c d r e u t video c ic c v o n g o ial of c udge “Anythin to the tr ence,” J ell. id w v o e S t y o n n tho space is want to of the killer An id. “We a he walls s t e king , e s r o id te r s ion-ma Amb e Cen is c But in c ti e s d u J ’ s ty juror ga Coun ay for protect Cuyaho orld aw w a s a .” e 14 ace w ing the process DIA Pag cybersp s watch See ME r e h t . o e nd rder cas jurors a pital mu a c ATION le fi o ILLUSTR ommon C high-pr RAFFERTY y N t E R n U u LA ga Co Cuyaho

CARR Y AMES By KATH in.com kcarr@cra

By DAN SHINGLER dshingler@crain.com

t may or may not take a village to raise a child, but it definitely takes a community to produce good judges, and a number of efforts are under way to ensure that Cleveland and Cuyahoga County are communities that do just that. At the forefront of those efforts is the Task Force on Judicial Excellence — a year-old endeavor by the Cleveland Metropolitan Bar Association and the brainchild of Ulmer & Berne attorney Mike Ungar, then bar president — and another more recent effort by the bar association known as the Judicial Qualifications Committee. Such initiatives couldn’t have come soon enough, Mr. Ungar said. “Some of these judges we’ve had clearly had no business being on the bench. They just weren’t qualified to be there,” Mr. Ungar said.

“When you have the chief justice of Ohio pointing to Cleveland as a good example, that’s a good sign.” – Barbara Roman president, Cleveland Metropolitan Bar Association Former Cuyahoga County Common Pleas Judge Bridget McCafferty, sentenced to 14 months in prison for lying to the FBI, is one extreme example, he said. But other judges, while not as famously corrupt, still are not as competent as they should be, he said. To prevent those judges from ascending, at least via gubernatorial appointments, the qualifications committee culls through potential judge candidates, some of whom are put forth by political parties, and then it compiles a list of those most qualified. Those lists are provided to the governor, who occasionally is in the position to appoint a judge when one retires or leaves a position prior to an election.

Proof positive It’s already working, say the See REFORM Page 17

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LEGAL AFFAIRS

What do you look for in a law firm?

Media: Technology both used and misused in legal circles continued from PAGE 13

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While jurors and others in the courtroom adhered to the judge’s mandate in the notorious Sowell case, not all courtrooms have been as effective in controlling jurors’ online access. Local lawyers and others in the legal sector say social media and the ease of online accessibility through smart phones and other electronic devices have created numerous challenges to the legal process. Should jurors be required to hand over their gadgets during a trial? And if so, how do courtrooms prevent jurors from tweeting or posting to Facebook trial details after hours? “We can’t police jurors’ activity, but we hope they abide by the court’s rules of not accessing outside information” beyond the evidence presented in the courtroom, Judge Ambrose said. Meanwhile, lawyers extol some of the benefits of social media and are using the various platforms throughout legal proceedings that include jury selection to generate a more complete picture of a potential juror. “(Social media are) an evolving area,” Judge Ambrose said.

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land State University’s Clevelandfirm, said he routinely peruses Marshall College of Law said social media sites and conducts judges need to spell out to the jury Google searches to glean more clear instructions that forbid information about another party social media or other online access during discovery or about a potenat any time during the trial. Judges tial juror. also will need to seize electronic “The information has to be devices during trial to prevent that public though,” he said. “We can’t connectivity, he said. access private accounts.” As it stands, judges have broad Mr. Turek referenced a discovery discretion in how they command situation in which a plaintiff their courtrooms, and that alleged various debilitating injuries includes whether to permit smart because of a vehicular accident. phones, iPads and the like. The plaintiff had medical records “The whole issue is fascinating,” to support his injuries claim, but Mr. O’Neill said. those records’ dates corresponded The Ohio State Bar Association directly to the plaintiff’s same-day Jury Instructions Committee in 2010 Facebook posts, which discredited addressed the encroaching techhis testimony. nology by issuing jury instructions “His Facebook page may have that address electronic communisaid something like, ‘Me and my cations in civil and criminal trials. old lady are trailering bikes.’ I The instructions, to which a confronted him during deposition. judge may refer in establishing He was sweating like Nixon,” Mr. courtroom protocol, warn that if Turek said. “I nailed him with a jurors are caught using electronic medical record that matches a devices and social media while Facebook entry. That’s devastating serving on a jury, a mistrial could to a plaintiff.” be declared. The juror could be Still, social media use during disrequired to pay for the cost of the covery has the grayest color to it, first trial and with the most could be punpotential for “Some people click a button abuse, he said. ished for contempt of court. “It’s troubling and don’t realize what’s in A mistrial, to attorneys,” the public domain.” however, is not Mr. Turek said. – Markus E. Apelis the preferred Lawyers also vice chairman of the Young Lawyers use social media course of action, Section, Cleveland Metropolitan Bar to augment the Mr. O’Neill said. Association basic question“Judges are loath to declare naire potential mistrial for this candidates are kind of misconduct,” he said. “It’s required to fill out as part of the so expensive to impanel a trial and jury selection process. retry a case.” “We take laptops into the courtMr. O’Neill cites the U.S. Court room and do Google searches” on of Appeals for the Third Circuit’s the candidates, said Peter H. WeinAug. 23 decision in U.S. v. Fumo as berger, a personal injury attorney an example of judges’ reluctance and managing partner at Spangento declare a mistrial. berg Shibley & Liber in Cleveland. In that case, former Pennsylvania Socially awkward state Sen. Vincent J. Fumo, who There are some lawyers still was convicted of fraud, tax evasion uncomfortable exploring the vast and obstruction of justice, sought social media universe, so law firms to overturn the verdict in part are educating both their attorneys because a juror posted trial-related and clients on its benefits and information to his Twitter and challenges. Facebook accounts. “Because it’s so new, I think a The court refused to find a lot of law firms are taking as broad mistrial and agreed with the U.S. approach as possible,” said District Court, Eastern District of Markus E. Apelis, vice chairman of Pennsylvania’s determination that the Young Lawyers Section at the the juror’s postings were “nothing Cleveland Metropolitan Bar Assomore than harmless ramblings ciation. having no prejudicial effect.” Mr. Apelis, an attorney at CleveBut appeals court Judge Richard land-based Gallagher Sharp, last Nygaard added the following opinion April conducted a firm seminar on in the decision: “Courts can no how social media affects litigation, longer ignore the impact of social which attracted about 200 lawyers, media on the judicial system, the judges, clients and other represencornerstone of which is trial by tatives from a wide variety of jury. … The threat of either fining industries. jurors or holding them in con“Because it’s such a new and tempt of court due to Internet evolving area and affects what we misconduct may become necesdo in a very different way, it did sary to deter it and convey a public generate buzz,” Mr. Apelis said. message that the judicial system The seminar’s topics included cannot tolerate such behavior.” social media application in inforMaking it click mation gathering, claims handling Despite its pitfalls, the informaand settlement cases. tion digest that is social media also “The whole point was to educate is particularly useful to attorneys. our colleagues and clients,” he James J. Turek, chairman of the said. “Some people click a button trucking and commercial transand don’t realize what’s in the portation practice group at the public domain. It’s fair game for Cleveland-based Reminger law others to investigate.” ■

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LEGAL AFFAIRS

Business owners, take heed of new U.K. bribery law

.S. companies that do any business overseas must familiarize themselves with an extremely broad new anti-corruption law in the United Kingdom that can result in enormous financial penalties and significantly affect how multinational companies do business. The U.K. Bribery Act went into effect on July 1. It covers any company with business operations that touch the U.K., and the scope covers operations globally. Like the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act prohibits bribing foreign public officials, but the U.K. Bribery Act goes beyond the Foreign Corrupt Practices Act: it bans all forms of commercial bribery and punishes companies for failing to prevent bribery. ■ Commercial and public bribery: Companies and individuals can be prosecuted for giving and receiving commercial bribes and for bribing foreign officials if any part of the offense is committed in the U.K., or if a person with a close connection to the U.K. commits the offense outside of the U.K. Commercial bribery is a common and accepted practice in many areas of the world. A commercial bribe under the U.K. Bribery Act is a financial or other advantage that is intended to induce or reward the improper performance of a relevant function or activity. It also can be something offered with the knowledge or belief that the acceptance of the advantage would itself constitute the improper performance of a relevant function or activity. The “relevant function or activity” includes public functions and business activities. It is not always a clear-cut case of paying cash in exchange for an unfair advantage. A suggestion that a payment would help “grease the wheels” of a deal, lavish hospitality provided to customers or a vendor asking for payment to a third party not referenced in the vendor’s contract can indicate commercial bribery. Bribing a foreign public official requires intent to influence the official in his official capacity to obtain or retain business or for an advantage in conducting business. “Foreign public official” is defined extremely broadly and includes any individual who holds any type of government position or exercises a public function in a country or territory outside the U.K. Bribing a foreign official may include paying money to a consultant with the aim of obtaining certain government actions or paying unofficial “facilitation payments” or “inspection fees,” which are a common part of the local custom in some areas of the world. ■ Failing to prevent bribery: A company can be liable for failing to prevent bribery if it carries on a business or part of a business in the U.K., and any person — including a subsidiary — who performs services for the company in any capacity bribes another person intending to gain business or an advantage for the company. Unlike the offense of committing bribery, the liability exists regardless of whether the acts or omissions which make up the offense take place in the U.K. In other

words, the prohibited conduct can occur entirely outside of the U.K. and the company still will be liable. ■ Penalties: The potential penalties under the U.K. Bribery Act are astronomical for companies. They include the potential for unlimited fines and debarment from public sector contracts, as well as confiscation of any benefits derived from the offense. Individuals can face up to 10 years in prison along with fines and confiscation of benefits. ■ Avoiding liability: Avoiding liability under the U.K. Bribery Act begins with a company gaining a thorough understanding of how the

HEATHERKIMMEL JONATHANLEIKEN

ADVISERS law applies to it and what conduct is prohibited, and then taking measures to establish a compliance program to prevent such conduct.

A statutory defense is available only for failing to prevent bribery. Under the defense, a company must prove that it had adequate procedures in place designed to prevent associated people from engaging in bribery. The U.K. Ministry of Justice has issued some guidance on what companies should consider in establishing their procedures, including actual bribery risk, the commitment of top-level management to preventing bribery and conducting due diligence on outside vendors and suppliers. Compliance with the U.K. Bribery

Act now will be a cost of doing business for multinational companies. They should act quickly to ensure that they have the appropriate controls in place as the U.K. already is beginning to demonstrate its increased commitment to enforcing anti-bribery laws: On Aug. 31, U.K. officials announced that they filed the first charges under the U.K. Bribery Act against an administrative law clerk for requesting and receiving a £500 bribe — almost $800 — to alter a driving record. ■ Mr. Leiken is a partner in the international white collar criminal defense practice at Jones Day. Ms. Kimmel is an associate at Jones Day, focusing her practice on white collar criminal defense matters.

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LEGAL AFFAIRS

Social workers bring own kind of savvy to law firms Employeesâ&#x20AC;&#x2122; elder care expertise augments service By EILEEN BEAL clbfreelancer@crain.com

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wo years ago, when thenhappily-employed Terry Fries-Maloy saw an ad for a social worker that Hickman & Lowder Co. had run online, she was intrigued. â&#x20AC;&#x153;I wondered why a law firm would be advertising for a social worker, so I threw together a onepage rĂŠsumĂŠ and applied for the position,â&#x20AC;? she said. The majority of Cleveland-based Hickman & Lowderâ&#x20AC;&#x2122;s work then and now focuses on elder and disability law, and today Ms. Fries-Maloy works alongside the firmâ&#x20AC;&#x2122;s lawyers as the firmâ&#x20AC;&#x2122;s care coordinator. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m still doing what I was doing before, only the settingâ&#x20AC;&#x2122;s changed,â&#x20AC;? Ms. Fries-Maloy says. â&#x20AC;&#x153;Depending on the needs of the client, I guide them through the health care maze and help them find the services and supports they need, and I do a lot of client advocacy.â&#x20AC;? In addition, points out Janet Lowder, co-founder of Hickman & Lowder, having a care coordinator has improved client rapport. â&#x20AC;&#x153;Because sheâ&#x20AC;&#x2122;s able to devote the kind of time to clients that wouldnâ&#x20AC;&#x2122;t be reasonable for us to provide and still bill for, communication with our clients has gotten much better,â&#x20AC;? Ms. Lowder said. â&#x20AC;&#x153;Partly thatâ&#x20AC;&#x2122;s because clients are more comfortable calling her than a lawyer, but itâ&#x20AC;&#x2122;s also because she knows the questions to ask.â&#x20AC;?

Taking it in-house Ms. Fries-Maloy isnâ&#x20AC;&#x2122;t the only social worker regularly working with a group of attorneys as a permanent part of a law firmâ&#x20AC;&#x2122;s staff. While itâ&#x20AC;&#x2122;s not necessarily unusual for lawyers to partner with social workers, some firms are seeing the benefits of bringing on social workers as employees. There are at least five small to midsize Northeast Ohio firms, mostly specializing in elder or disability law or estate planning, that have full-time social workers. Additionally, Todd Bartimole plans to add such a position to his Beachwood elder law practice. â&#x20AC;&#x153;Doing client assessments, figuring out the level of care they need, finding placements if needed, finding resources in the community, thatâ&#x20AC;&#x2122;s outside my area of expertise, and doing them is an ineffective use of my skills,â&#x20AC;? Mr. Bartimole says. â&#x20AC;&#x153;Having a social worker on staff who can do those things and spend time with my clients is going to make me better able to understand their situations and needs, and itâ&#x20AC;&#x2122;s going to make me a better lawyer (for them), too.â&#x20AC;? And it will do so cost-effectively for the client. Lawyers say the hourly billing rate for time-intensive client assessments and individualized services â&#x20AC;&#x201D; such as nursing home placement and co-

ordination of family meetings â&#x20AC;&#x201D; provided by the firmâ&#x20AC;&#x2122;s in-house social worker are billed at one-half or less of a lawyerâ&#x20AC;&#x2122;s hourly rate. Of course, the kind of care coordination and care management local legal firms are doing is â&#x20AC;&#x153;still an evolving area,â&#x20AC;? says Ms. Lowder. However, both she and Rachel Kabb-Effron, principal at Kabb Law Firm, which also specializes in elder law, say itâ&#x20AC;&#x2122;s an easy sell. And that marketing care coordination is all about relationship building. â&#x20AC;&#x153;(The social workers) are out in the community, visiting facilities and doing nursing home assessments, meeting with providers of community resources and programs, making client referrals â&#x20AC;Ś fighting the good fight,â&#x20AC;? she says.

Needs assessment While nurses have been working in lawyersâ&#x20AC;&#x2122; offices â&#x20AC;&#x201D; especially those doing personal injury and malpractice â&#x20AC;&#x201D; for at least two decades, the trend for social workers to do so is only five or six years old. And, says professor Judith Lipton, former director of the law and social work program at Case Western Reserve Law School, three things are driving it. The major one is the aging of the population. â&#x20AC;&#x153;More and more people are living longer with significant medical and other problems,â&#x20AC;? Ms. Lipton says. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s why youâ&#x20AC;&#x2122;re seeing (social workers) at firms doing elder law and disability law and estate planning.â&#x20AC;? The second one is that even lawyers who have historically dealt with older clients arenâ&#x20AC;&#x2122;t equipped with training, experience or, in many cases, inclination to deal with the very complex health care, disability, end-of-life and familyrelated issues that come with longer-lived and increasingly cognitively impaired clients. â&#x20AC;&#x153;Today, many clients, whether itâ&#x20AC;&#x2122;s the person or their family or both, are looking for much more from a lawyer than just legal advice,â&#x20AC;? she said. And finally, lawyers have become aware of the solution to the above: social workers. â&#x20AC;&#x153;(Social workers) have the kind of experience and detailed knowledge â&#x20AC;&#x201D; of aging and psycho-social issues, of public and community services, of long-term care options â&#x20AC;&#x201D; that lawyers who are increasingly doing more long-term planning need,â&#x20AC;? she said. And, while firms always have a job description written out and an hourly commitment they are looking for, due to the â&#x20AC;&#x153;evolvingâ&#x20AC;? nature of the position, those often change. â&#x20AC;&#x153;When we hired our first social worker, she was scheduled for 28 hours a week,â&#x20AC;? Ms. Kabb-Effron says. â&#x20AC;&#x153;Halfway into her first week, she went to full time because we realized what she could do, not just the assessments and planning and client contact, but the community outreach, too.â&#x20AC;? â&#x2013;

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LEGAL AFFAIRS

Reform: Judge4Yourself.com works to engage, educate voters Training programs a possibility continued from PAGE 13

committeeâ&#x20AC;&#x2122;s backers, as evidenced by the fact that Ohioâ&#x20AC;&#x2122;s two most recent governors, Ted Strickland and John Kasich, relied on the list to make three appointments. In the last year, Cleveland Municipal Court Judge Lynn McLaughlin Murray and Cuyahoga County Common Pleas judges Pamela Barker and Robert McClelland all were appointed to their benches by governors who got their names from the Judicial Qualifications Committee. Thatâ&#x20AC;&#x2122;s a big improvement over the way things used to be done in the state, said Jim Robenalt, who heads the task force and recommended the forming of the qualifications committee as one of its first orders of business last year. â&#x20AC;&#x153;They used to just go to the local party chairs and say, â&#x20AC;&#x2DC;Who do you want me to pick?â&#x20AC;&#x2122;â&#x20AC;? Mr. Robenalt said of the way previous governors had appointed judges throughout the state. Getting that process up and running required what might have been the greatest obstacle to reforming the old system, because it meant getting the heads of the local Democratic and Republican parties to both work together and to pledge to support the committee and abide by its rulings. So far, so good, Mr. Robenalt said, crediting Cuyahoga County Republican party chairman Rob Frost and his Democratic counterpart Stuart Garson with helping to make the whole process work on a bipartisan basis. The process worked so well that Ohio Supreme Court Chief Justice Maureen Oâ&#x20AC;&#x2122;Connor held the local efforts up as an example for other counties in Ohio to follow when she addressed the stateâ&#x20AC;&#x2122;s judiciary after taking office early this year. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s what gets me fired up â&#x20AC;&#x201D; itâ&#x20AC;&#x2122;s already working and everybody knows it,â&#x20AC;? said Mr. Ungar, who chairs the qualifications committee.

Plans of action But, while the committee plans to continue its work, the task force is just getting started, Mr. Robenalt said. After holding four public forums since it was begun, the task force has identified four areas that the bar association and the rest of the local legal community can address to improve the quality of judges in Cleveland and Cuyahoga County: â&#x2013; It will report to the CMBA and the public on the progress of the Judicial Qualifications Committee and suggest ways that entity might further improve. â&#x2013; It will report on an effort known as Judge4Yourself.com â&#x20AC;&#x201D; a website that provides voters with judicial ratings â&#x20AC;&#x201D; and how it can better inform voters on the qualifications of those running for the bench. â&#x20AC;&#x153;It is peculiar to judges, but they really get into ivory towers once

Itâ&#x20AC;&#x2122;s not enough to have outstanding candidates running for judge. Voters also need to know who those candidates are â&#x20AC;&#x201D; or arenâ&#x20AC;&#x2122;t. Enter the group Judge4Yourself or, as it hopes more and more voters come to know it, Judge4Yourself.com. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s really key that that becomes a household term, which is why weâ&#x20AC;&#x2122;ve actually changed the name of the coalition,â&#x20AC;? said the organizationâ&#x20AC;&#x2122;s chair and mastermind, Cleveland attorney Deborah Coleman. Prior to 2002, the organization was known as the Judicial Candidate Rating Coalition â&#x20AC;&#x201D; an apt name, but not one that lent itself to a website or, perhaps, a voterâ&#x20AC;&#x2122;s memory, Ms. Coleman said. Its efforts are part of a threepronged approach, spearheaded by the Cleveland Metropolitan Bar Association, to improve the quality

they are elected,â&#x20AC;? Mr. Robenalt said. â&#x2013; The task force also will report on how the bar association might be able to better prepare new judges with a sort of â&#x20AC;&#x153;judicial collegeâ&#x20AC;? that would help train them to preside on the bench, Mr. Robenalt said. â&#x2013; Lastly, the task force will issue a report on how judges can be better monitored â&#x20AC;&#x201D; including the possibility of doing midterm evaluations of judges â&#x20AC;&#x201D; even if they already have been elected, Mr. Robenalt said. The first report, on the Judicial Qualifications Committee, will come by the end of this year, followed by the other three over the next six to 12 months, Mr. Robenalt said.

of local candidates running for the bench, and ultimately the quality of the areaâ&#x20AC;&#x2122;s judges. The Task Force on Judicial Excellence is the primary driver of the efforts. It aims to get more qualified candidates to run in judicial elections while also studying ways to improve the quality of those elections and their candidates. Alongside the Task Force, the Judicial Qualifications Committee rates potential judges who might be appointed to open benches by the governor â&#x20AC;&#x201D; and it has already provided three candidates chosen by two state governors for the bench. Mike Ungar, one of the leaders of the CMBAâ&#x20AC;&#x2122;s overall efforts on judicial elections, said Judge4Yourself.com should be the entity most visible to voters. Judge4Yourselfâ&#x20AC;&#x2122;s other backers agree and say nothing in

nition meant more than real qualifications. While the work is far from done, the Cleveland Metropolitan Bar Association is very pleased with

the entire process is more important than having an educated electorate choosing judges who have the best qualifications and records for the jobs they seek. About 30% of voters in recent Cuyahoga County elections simply stopped voting when they got to the part of their ballot where judicial races are decided, Ms. Coleman said, adding that many who did vote probably still cast their vote along party lines or for a name they recognized â&#x20AC;&#x201D; rather than for a candidate whose record and qualifications were known to them. â&#x20AC;&#x153;In this county, people often donâ&#x20AC;&#x2122;t have a lot more information to go on,â&#x20AC;? she said. But they could â&#x20AC;&#x201D; if theyâ&#x20AC;&#x2122;d just check the Judge4Yourself.com website before elections. The organization is made up of

the CMBA and three other legal organizations, all of which rate the judges based on their performance, interviews and writing samples. Judge4Yourself.com then shows how the associations rated each candidate and provides an aggregate score similar to a grade point average. Though itâ&#x20AC;&#x2122;s made some progress over the years, the groupâ&#x20AC;&#x2122;s mission is far from fulfilled, Ms. Coleman said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s still a lot of work to be done. Until every voter in Cuyahoga County knows to check with Judge4Yourself.com before they fill out their ballot, weâ&#x20AC;&#x2122;re not there yet,â&#x20AC;? she said. Look for the groupâ&#x20AC;&#x2122;s judicial candidate ratings later this month online, before the upcoming November elections. â&#x20AC;&#x201D; Dan Shingler

what itâ&#x20AC;&#x2122;s seen from the efforts of both the task force and the qualifications committee to date, said current bar association president Barbara Roman.

â&#x20AC;&#x153;When you have the chief justice of Ohio pointing to Cleveland as a good example, thatâ&#x20AC;&#x2122;s a good sign,â&#x20AC;? Ms. Roman said. â&#x2013;

*R IRU LW :HÂˇYH JRW \RXU EDFN At Roetzel, our attorneys are like our clients - entrepreneurial, innovative and results oriented. Just ask Don Scherzer.

Getting them in the system All these efforts are aimed at more than just culling the wheat from the chaff though, Mr. Robenalt said. The real goal, he said, is to get more wheat planted. In other words, he simply would like to get more qualified candidates to run for judge in the first place. That wonâ&#x20AC;&#x2122;t happen if the oldboys system is in place though, Mr. Robenalt contends, and it can only take place if good, honest candidates think they can be elected on their merits. â&#x20AC;&#x153;Now, it really is not a vigorous election system, because the best people wonâ&#x20AC;&#x2122;t jump in,â&#x20AC;? Mr. Robenalt said. Thatâ&#x20AC;&#x2122;s evidenced, he said, by how often judges can reach the bench simply by winning a primary election. In the last election cycle, only seven of the 20 contested benches even had two candidates in the general election, he said. But that will change if the system changes too, he contends. He points to Judge McClelland as an example of someone on the bench because of the task force and committee who, while appointed for his first term, should be an excellent candidate to keep his bench seat in the next election. Mr. Robenalt described Mr. McClelland as a very good lawyer, well-equipped to be a good judge, but someone who likely would not have run in a system in which the deck was stacked in favor of political operatives or in which name recog-

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

OCTOBER 3 - 9, 2011

LARGEST ADVERTISING AGENCIES RANKED BY NUMBER OF FULL-TIME EMPLOYEES(1)

Name of firm Address Rank Phone/Web site

Full-time local employees

Representative clients

Specialties

Top local executive Title Creative director

1954

Kay Jewelers, McDonald's, Jared the Galleria of Jewelry, Champion Windows, Southwest General, Collection Auto Group, Max-Wellness, Live Nation, Feld Entertainment

Advertising, media planning, buying, strategic planning, public relations, media relations

William J. Stern president, CEO Steve Romanenghi

1940

Goodyear, Dunlop and Kelly Tires brands, KraftMaid Cabinetry, Integrated marketing: strategic planning, Carter Lumber, Tremco, LP Building Products, Choice Hotels, Akron research, branding, advertising, media, General, Liquid Nails, Simonton Windows, City of Akron digital, PR

Jack DeLeo chairman, CEO Nick Betro

Doner 1100 Superior Ave. East, 10th floor, Cleveland 44114 (216) 687-8521/www.doner.com

1937

ADT, DuPont, Arby's, Sherwin-Williams, The UPS Store, Owens Corning, Things Remembered, UnitedHealthcare, OhioHealth, Purell

Strategic planning, branding retail activation, integrated creative

Jennifer Deutsch, exec. vp, general manager Mark Masterson

Brokaw Inc. 425 W. Lakeside Ave., Cleveland 44113 (216) 241-8003/www.brokaw.com

1992

Vitaminwater, Smart Water, Fuze, Trek, Fazoli's, Great Lakes Brewing Co., FirstMerit, University Hospitals, Cleveland Hopkins International Airport, RTA, The Cleveland Museum of Art

Creative development, research/strategy, digital media, in-house production, PR/ events/guerrilla advertising

Tim Brokaw Gregg Brokaw co-CEOs Steve McKeown

Liggett Stashower 1422 Euclid Ave., Suite 400, Cleveland 44115 (216) 348-8500/www.liggett.com

1987

AkzoNobel, Boral, Catholic Community Foundation, Henkel Corp., Hospice of the Western Reserve, Knauf Insulation, Radiator Specialty Building brands for brands that build Corp., Robert Bosch Tool Corp., ShurTech Brands, SmithBucklin

David Moore, managing ptnr., president; Steve Veres, managing ptnr., COO

Innis Maggiore 4715 Whipple Ave. NW, Canton 44718 (800) 460-4111/www.innismaggiore.com

1974

Alside, Aultman, Bank of America, Gerber Foods, Goodyear, Guidestone Financial, Nickles Bakery, Republic Steel, RTI, Shearer's Foods

Strategic brand positioning and execution

Dick Maggiore president, CEO Jeff Monter

9Threads 57 E. Market St., Akron 44308 (330) 867-7337/www.9threads.com

2005

COSE, Cleveland Clinic Foundation, Case Weatherhead School of Management, Gojo, Kent State University, Paolucci Law

Strategic marketing and custom content Leslie Sutula services that blend emerging and traditional co-founder, vp media David Sutula

WRL Advertising 4470 Dressler Road N.W, Canton 44718 (330) 493-8866/www.wrladv.com

1954

Best of Ohio's Amish Country, Mercy Medical Center, Quickdraft, Roca Tile, Stark County District Library, Stark State College of Technology, The Canton Ballet, Windsor Laurelwood

Website design and programming, multimedia, broadcast, print, branding, traditional/Internet marketing, PR

C. Todd Locke president Bob Isenberg

AMG Advertising & Public Relations Inc. 2530 Superior Ave. East, Suite 601, Cleveland 44114 (216) 621-1835/www.accessamg.com

1973

Bendix, Honeywell, Nestle, Paytime, Parker Hannifin, SherwinWilliams, West Development Group, Lubrizol, federal government

Strategic marketing planning, branding, creative development, media planning and placement, public relations, social media

Anthony M. Fatica president Anthony M. Fatica

Melamed Riley 1375 Euclid Ave., Suite 410, Cleveland 44115 (216) 241-2141/www.mradvertising.com

2004

The MetroHealth System, Vitamix Corp., FMC Corp., Arizona Tile, Branding, research, strategic planning, CMI, Ohio University, Marketplace Events, RGH, Shoes & Clothes for creative, production, media planning and Kids buying, interactive solutions

The Marshfield Group 11241 Exmoor Drive, Concord Township 44077 (440) 974-8448/www.marshfield.com

1979

Caravona-Czack, Holz Rubber, Holmbury Inc., John Palmers Bistro 44, Dyson, MEACO, Tecmark, Concord-Painesville JEDD, Concord Township, Lake County General Health District

B-to-B marketing: advertising, brand Thomas A. Mitchell development, crisis communications, direct president, CEO mail, website development SEO, SEM Mary Riddell

ST&P Marketing Communications Inc. 320 Springside Drive, Suite 150, Fairlawn 44333 (330) 668-1932/www.stpinc.com

1992

Sales promotions, consumer, sales incentives, merchandising, fulfillment, advertising, media

Stern 29125 Chagrin Blvd., Suite 300, Pepper Pike 44122 (216) 464-4850/www.sternadvertising.com

Hitchcock Fleming & Associates Inc. 500 Wolf Ledges Parkway, Akron 44311 (330) 376-2111/www.teamhfa.com

Year founded

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. Business lists and The Book of Lists are available to purchase at www.crainscleveland.com. (1) Numbers as of June 30, 2011. Malone Advertising (now JWT Action), number 1 on the 2010 Advertising Agency list with 225 employees, did not submit a survey.

Sarah Melamed president Rick Riley

Richard Kenney COO Russ Kern

RESEARCHED BY Deborah W. Hillyer

LARGEST MARKETING FIRMS RANKED BY NUMBER OF FULL-TIME EMPLOYEES(1)

Name of firm Address Rank Phone/Web site

Full-time local employees

Year founded

Representative clients

Specialties

Top local executive Title

Rosetta Marketing Group LLC 629 Euclid Ave., 15th Floor, Cleveland 44114 (216) 896-8900/www.rosetta.com

408

1988

Otsuka America Par Inc. OAPI, Research in Motion, Apple, United States Mint, HTC, Citizens Bank, Nationwide, Safeguard Properties, Purdue Pharma

Consumer products, retail and technology, health care, financial services, B2B and emerging markets, travel and hospitality, mobile

Mark Taylor managing partner

Fathom 8200 Sweet Valley Drive, Suite 100, Valley View 44125 (216) 369-2220/www.fathomdelivers.com

120

1997

Key Bank, American Greetings, Eaton, LifeLine Screening, Mead, Cub Cadet, Cleveland Clinic, Bissell, UsedCars.com

Full-service online marketing: B2B & B2C, health care, IT/software, education, manufacturing, home improvement services, government

Scot Lowry president, CEO

Marcus Thomas LLC 24865 Emery Road, Cleveland 44128 (216) 292-4700/www.marcusthomasllc.com

118

1937

Nestle, MTD, Diebold, Tarkett, Ohio Lottery, Swagelok, Akron Children's Hospital, Truseal, Bendix, Johnsonite

Integrated marketing, strategic services

James B. Nash managing partner

Adcom Communications Inc. 1370 W. Sixth St., 3rd floor, Cleveland 44113 (216) 574-9100/www.adcom1.com

115

1989

Local and national brands

Research, advertising, social influence, content strategies, web and app development, email marketing, PPC, videos

Joe Kubic CEO

HMT Associates Inc. 151 Orchardview Road, Seven Hills 44131 (216) 369-0109/www.hmtassociates.com

2002

Kraft Foods, Post Cereal, Gallo Wines

Shopper marketing, consumer promotions, event marketing

Patti Conti president, CEO

Home Team Marketing 812 Huron Road, Suite 205, Cleveland 44115 (216) 566-8326/www.hometeammarketing.com

2001

Farmers Insurance, Verizon Wireless, American Family Insurance, ONDCP, U.S. Army, National Guard, University of Cincinnati, U.S. Marines, Nationwide

Delivering integrated marketing campaigns into high Peter Fitzpatrick schools and state high school athletic associations president, coacross the country founder

thunder::tech 3635 Perkins Ave., Studio 5, Cleveland 44114 (216) 391-2255/www.thundertech.com

1999

Munchkin Inc., AC Milan, I-X Center, Cedar Point, Grecian Integrated marketing agency servicing local and Delight, Prestolite Performance, DDR Corp., Lube Stop, national brands with advertising, PR, digital and Horsburgh & Scott, PolyOne design services

Jason Therrien president

WhiteSpace Creative 24 N. High St., Suite 200, Akron 44308 (330) 762-9320/www.whitespace-creative.com

1994

American Greetings, SummaCare, Team NEO, Kichler Lighting, City of Charlotte, Davey Tree, The Will-Burt Co., Guilford Technical Community College

Keeven White president

OuterBox Solutions Inc. 453 S. High St., Akron 44311 (866) 647-9218/www.outerboxdesign.com

2004

Ace Hardware, ABB, Groupe SEB, Waxman, Vandorn Full-service web development and eCommerce web Justin Smith Demag, Sportcraft, Home Products International, Action design firm specializing in SEO, branding, custom CEO Door development and online marketing

Point to Point Inc. 23240 Chagrin Blvd., Suite 200, Cleveland 44122 (216) 831-4421/www.pointtopoint.com

1982

Sherwin-Williams, COSE, Fauquier Health, United Way, FlavorSeal, Schindler Elevator, Dayton Children's Hospital, FireRock, Oswald Cos.

Creative, account and brand planning, media, Goren analytics, interactive, SEO, mobile app development Mark president and social media

BFL Marketing Communications/GRA Group 1399 Lear Industrial Parkway, Avon 44011 (216) 875-8860/www.bflcom.com

1955

New product and brand launch specialists for Dennis J. Pavan home, outdoor and business products and services; president, CEO, strategic marketing, web design, print, broadcast BFL Marketing

Insivia 2020 Center St., Cleveland 44113 (216) 373-1080/www.insivia.com

2003

Positively Cleveland, Microsoft, Cleveland Clinic, CRESCO, Team Wendy, Rohrer, American Roll Form, Lilly Tremont

Integrated strategic marketing. Think-strategic planning, usability, market research. Design-web, print, environmental. Engage-e-marketing, PR.

Knox Marketing Inc. 1730 Akron Peninsula Road, Suite 201, Akron 44313 (330) 929-7700/www.knoxmarketing.com

1998

We serve 20+ health industry clients - Summa Health Marketing and brand advertising, corporate identity, Rollin K. Godding III System, Humility of Mary Health Partners, Steris, Parker media planning/buying, interactive/web, TV and president Hannifin, Adena radio, in-house editing, health care

Market research, strategic planning, social media, websites/flash, video online games, advertising/ promotions, direct marketing packaging

Andrew Halko CEO

RESEARCHED BY Deborah W. Hillyer

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OCTOBER 3 - 9, 2011

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

LARGEST PUBLIC RELATIONS FIRMS RANKED BY NUMBER OF FULL-TIME LOCAL EMPLOYEES(1)

Name of firm Address Rank Phone/Web site

Full-time local employees

Year founded

Representative clients

Specialties

Top local executive

1952

A.Schulman, AkzoNobel, Cedar Fair, Diebold, Energizer, Forest City, GE Lighting, Kelly Services, KeyBank, Lubrizol, NetJets, PG&E, UnitedHealthcare

Investor relations, crisis communications, customer communications, media relations, digital communications, transportation

Scott Chaikin chairman, CEO

1994

Calfee, Downtown Cleveland Alliance, Gunlocke, Huntington National Bank, Hylant Group, Lincoln Electric, Moen, Sherwin-Williams, Vitamix, Walter & Haverfield

Media relations, marketing communications, digital, business and reputation management, crisis communications, creative services

Rob Falls president, CEO

Akhia Public Relations & Marketing Communications 85 Executive Parkway, Suite 300, Hudson 44236 (330) 463-5650/www.akhia.com

1996

AmTrust Financial Services, GE Lighting, Diebold, Wausau Paper, Smithers-Oasis, GrafTech, Simon Roofing, Parker Instrumentation, Quanex Cos.

Strategic marketing, product launches, brand development, trade shows, media relations, social media, customer programs

Janice S. Gusich president

Stevens Strategic Communications Inc. 1991 Crocker Road, Suite 500, Westlake 44145 (440) 617-0100/www.stevensstrategic.com

1976

Eriez, GMi Cos., Cleveland Vibrator Co., Ross Environmental, Cleveland Furniture Bank, Lancaster Colony, Brush, King Nut, Ohio Semitronics

Integrated marketing communications, corporate and crisis communication, media training, social media, research

Edward M. Stevens president

Landau Public Relations 700 W. St. Clair Ave., 4th floor, Cleveland 44113 (216) 696-1686/www.landaupr.com

1983

MeadWestvaco, Daimler Trucks North America LLC, Giant Eagle, Kichler Lighting, Things Remembered, Fund For Our Economic Future, Cleveland Plus Marketing Alliance

Corporate communications, media and community relations, product marketing support, crisis management

Howard Landau president

Fleishman-Hillard Inc. 1350 Euclid Ave., Suite 200, Cleveland 44114 (216) 566-7019/www.fleishman.com

1999

Public relations and digital communications

Greg Connel, senior vp and partner, general manager

Fahlgren Mortine 1100 Superior Ave, Suite 1600, Cleveland 44114 (216) 298-4646/www.fahlgrenmortine.com

1962

Albert M. Higley Co., Associated Estates, Cliffs Natural Resources, Kent State Univ., Kidde, Leggett & Platt, Materion, McDonald's, Scentsy, Sherwin-Williams

Advertising, branding, design, digital, investor Aaron Brown relations, marketing communications, media vice president, managing planning/buying, media relations, social media director

PR 20/20 812 Huron Road, Suite 780, Cleveland 44115 (800) 920-1623/www.pr2020.com

Inbound marketing agency and PR firm specializing in content marketing, PR, social media and search

Paul Roetzer CEO

Roop & Co. 3800 Terminal Tower, 50 Public Square , Cleveland 44113 (216) 902-3800/www.roopco.com

1996

KeyBank, Fisher & Phillips, Ohio Aerospace Institute, RPM International Inc., Sports Construction Group, Cleveland Thermal LLC

Marketing communication, public relations, financial communication, graphic design

James J. Roop president

Highland Public Relations 935 W. Market St., Akron 44313 (330) 996-4140 /www.highlandpr.com

1993

Cleveland Marathon, Akron Zoo; Akron City Council; Lorain Public Library System; Kent State Athletics; Buckingham, Doolittle & Burroughs; Coleman Professional Services

Communications plan development and implementation of integrated marketing, advertising and PR campaigns for nonprofits

Robert Zajac president

Sweeney 20325 Center Ridge Road, Cleveland 44116 (440) 333-0001/www.sweeneypr.com

1986

Acuity Brands, Cleveland Animal Protective League, Care Services, Color Guild, Digitexx, Diabetes Daily, Homax, Insurance Board, KSU, Lithonia Lighting, Plaza Group, Yube

Strategic marketing and public relations firm; consumer, retail, health care, insurance, environmental, franchise specialty practices

James B. Sweeney CEO

Lief Karson Communications 23533 Mercantile Road, Suite 118, Beachwood 44122 (216) 831-3767/www.liefkarson.com

1993

Professional public relations and marketing communications counsel for restaurant, hospitality, interior design, furniture and retail

Lilli Lief Harris Crickett Karson managing partners

Hennes Paynter Communications 2841 Berkshire Road, Cleveland 44118 (216) 321-7774/www.crisiscommunications.com

1989

Consol Energy, Akron General Health System, Bellefaire, Great Lakes Construction, KSU, KeyBank, MetroHealth, NASA, Riverside, RTA, Westfield Insurance

Crisis communications, media training and litigation communications

Bruce Hennes, managing partner; Barbara Paynter, partner

The Fairmount Group 2460 Fairmount Blvd., Suite 207, Cleveland Heights 44106 (216) 229-5220/www.thefairmountgroup.com

2006

Thompson Hine, Fairport Asset Management, Microsoft, BET Marketing and communications strategy Networks, Planned Parenthood of Northeast Ohio, Cleveland development, brand and reputation Metropolitan School District, Ohio Citizen Action management, process/project management

The Oppidan Group Inc. P.O. Box 24399, Cleveland 44124 (216) 771-9988/www.oppidangroup.com

1988

and community relations, issues Volunteers of America of Greater Ohio, NewBridge Cleveland Media Andrzejewski management, litigation communications, crisis Tom Center for Arts & Technology, Nature Stone president and business recovery communications

Dix & Eaton 200 Public Square, Suite 1400, Cleveland 44114 (216) 241-0405/www.dix-eaton.com

Falls Communications Terminal Tower, 50 Public Square, Fl 25, Cleveland 44113 (216) 696-0229/www.fallscommunications.com

Dawn Hanson president

RESEARCHED BY Deborah W. Hillyer

Room: Other med device firms can follow lead Employee continued from PAGE 1

officer. Its interior showed the signs of its stint as a paintball battleground and Halloween haunted house when US Endoscopy took it over, he said. But it had everything necessary to house the clean rooms, specialized air flow, employee washing facilities and other special needs of the medical device business. To help staff the new place, Mr. Siracusa said the firm will hire about 40 people over the next few months. Some others, from US Endoscopy’s existing payroll of 375, will move from nearby operations, including the company’s other 55,000-square foot manufacturing plant. To help keep the new plant busy, the company plans to expand into a whole new market: urology. It’s beginning to develop and make tools used in traditional and new urology procedures the same way it did in the endoscopy field, Mr. Siracusa said. In the meantime, its existing business continues to grow. The private company does not disclose its revenues, but Mr. Siracusa said volumes are up 12% to 15% over last year, which itself was a good growth year for the company. US Endoscopy doesn’t make endoscopes — the devices that snake through the human body’s existing pathways to peer into and operate

in things such as stomachs and intestines. It makes tools that go on the end of the devices. So, when a doctor snips a polyp, seals a blood vessel or removes a foreign object, he or she often is using a net, needle or forceps made by the company. Imagine a tiny butterfly net that can snatch a swallowed dime from a child’s belly and you’ll get a pretty good picture of one of US Endoscopy’s more common products. All told, the company ships out about 15 million little devices a year, Mr. Siracusa said, all from its Mentor facilities. But it’s only beginning to enter the urology market, where it markets under the brand name US Urology, Mr. Siracusa said. “It could even be bigger (than endoscopy) — the urology market is bigger now,” Mr. Siracusa said.

Stepping up in scale The overall medical device business keeps getting tougher, though, Mr. Siracusa said, as more competitors ship products to the United States from overseas. Even his former competitor, C.R. Bard, moved its production in Mentor out of the country, Mr. Siracusa noted. To compete, US Endoscopy must sell better products and have a better on-time delivery record — even though it currently delivers 99.6%

of all its products on time, Mr. Siracusa said. In an era where hospitals try to keep their own inventories low, that’s vitally important, he said. The company also works hard to make sure its products are durable and reliable. Even though the products most often are used once and thrown away, they are used inside the human body, and the failure or breakage of a part can have dire consequences for both patient and doctor, he said. Baiju Shah, CEO of BioEnterprise, a Cleveland-based economic development group focused on life sciences, said US Endoscopy is an example of a good company that has found and secured a growing market for its products. More important to Mr. Shah is that the company is an example of what BioEnterprise hopes is in store for the other, smaller companies his organization supports. “US Endoscopy is a little further down the road, but when a company gets to the point that they start selling significant nationally, they start really gearing up and adding scale,” he said. Mr. Shah said the niche served by US Endoscopy is particularly strong because its products are used in non-invasive procedures. More of those procedures are being devel-

oped, he said, and both doctors and their patients are demanding them. “They’re in a sector that is growing very fast,” he said. “Patients and clinicians want minimally invasive procedures because of the faster recovery times, less risk involved and overall better outcomes.”

retirement funds highest since 2Q ’08

Employees benefit

By PENSIONS & INVESTMENTS

In the meantime, the company seems to be reaping the benefits of its reputation as not only a good vendor, but also a good employer. Mr. Siracusa seldom complains about trouble finding employees. Perks that include on-site, companyprovided day care are among the reasons he’s able to attract and keep talented people. The company is active in work force development efforts, such as Lake County’s Alliance for Working Together (AWT), a consortium of a few dozen local manufacturers who work with Lakeland Community College and other local schools to develop manufacturing employees. “They are a very proactive company and they offer a lot to their employee,” said Rich Peterson, vice president of Mentor-based Astro Manufacturing and Design and also a member of the alliance. “We in the AWT have a lot of respect for Tony and this company.” ■

The 100 largest U.S. public employee retirement systems had a combined $2.8 trillion in assets as of June 30, 1.3% higher than three months earlier and 17.6% higher than a year earlier, the U.S. Census Bureau reported Thursday. The second-quarter asset total was the highest since the second quarter of 2008 and marked the seventh consecutive quarter with year-to-year increases and the fourth consecutive quarterly increase. All major categories tracked by the Census Bureau — stocks, bonds, U.S. and international securities — saw overall gains over the same quarter in 2010, adding $414 billion to the systems’ holdings. Employer contributions, which rose 21% over the same quarter in 2010, offset a 3.2% decrease in employee contributions, resulting in a 12% overall increase in contributions. ■

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Burgers: Local talent pool a draw continued from PAGE 3

Center in Cleveland Heights, for which an opening date is not yet set. The growth slated in the next year is greater than in any other year to date for the local franchisee of Five Guys, a chain known for its no-frills approach, red and white decor and simple menu of hamburgers, hot dogs and french fries. Formed in 2004 by Ms. Sankar, co-CEO Randhir Sethi and chairman Joseph T. Gorman, former chairman and CEO of global manufacturer TRW Inc., Wholesome Burger today operates 11 locations. Nine of the stores are in Northeast Ohio and two are in Pittsburgh. In all, three franchisees operate a total of 14 Five Guys in Northeast Ohio. Wholesome Burger operates the most stores in the region.

Mr. Gorman’s favorites The partners didn’t have food industry backgrounds before they opened their first location in Pittsburgh in 2005 (they opened their first Northeast Ohio store in Strongsville in 2007). Ms. Sankar previously founded and sold a technology company and founded a media company. Mr. Sethi had served as vice president of business development of a software company and had worked in investment banking for KeyCorp. Ms. Sankar and Mr. Sethi, who had worked together before, met Mr. Gorman through a mutual friend. Most of the two dozen companies in which Mr. Gorman is invested are high-tech companies — not surprising given his longtime connection with TRW, which was involved in the aerospace, defense and space businesses, among others. “Now, would I have ever

APARTMENT BUILDING OWNERS

dreamed that I’d be in the fast-food business?” Mr. Gorman said with a chuckle. But, he added, Five Guys is a “hard-to-miss” product and a fast-growing chain, and he’s also investing in Ms. Sankar and Mr. Sethi, whom he called “sticklers on quality and training.” (For the record, Mr. Gorman alternates between two Five Guys favorites: a single hamburger and a bacon cheese dog.) The three partners thought the food industry has a great business opportunity, Ms. Sankar said, and decided to join an established restaurant concept rather than draw up their own. They chose Five Guys because “people who knew about it just fell in love,” she said. Wholesome Burger is considering new sites in Green, Medina, Mentor, Middleburg Heights and Parma, Ms. Sankar said. Once a lease is signed, it takes eight to 10 weeks to open a location, she said. “We have so much experience behind us,” Ms. Sankar said. “We know exactly what needs to be done. Now it’s just a matter of executing strategy. “I would love to see us continue to expand,” she added. “Our goal is to be No. 1 in our space: If anybody in Northeast Ohio thinks about a burger, I want them to think Five Guys.”

Quality over speed Wholesome Burger’s expansion in this market is driven by Northeast Ohio’s size and the strength of the brand, Ms. Sankar and Mr. Gorman said. It’s adding more stores in Northeast Ohio than in Pittsburgh because this region is larger, Mr. Gorman explained. He cited the larger cities — Cleveland, Canton and Akron —

Vistar: Twinsburg sweetens deal continued from PAGE 3

warehouse it has agreed to build and lease for Vistar, a unit of Richmond, Va.-based Performance Food Group.

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and the sizable suburbs. “We’re growing about as fast as we think we can with quality,” Mr. Gorman said. “We could put up all 10 stores very quickly here and in Pittsburgh, but it takes time to hire the right people. You can’t move too fast, or quality suffers.” Also driving the expansion here is the success enjoyed by Five Guys and other fast-casual restaurant concepts, such as Chipotle Mexican Grill and Panera Bread, and the “incredible” talent pool here, Ms. Sankar said. While she declined to share revenue figures, she said she’s “very happy with the results we’ve had in Northeast Ohio.” Creating 300 to 350 jobs, including 40 new management positions, is important to the partners, especially in these economic times, Ms. Sankar said. “Our mission is to grow as many future leaders as we can,” she said. Today, there are more than 850 Five Guys locations coast to coast, including 140 that opened in 2011. About 100 more are expected to open by year-end, said Mary McLeese, Five Guys brand manager, who works out of the corporate headquarters in Lorton, Va. Five Guys currently is “sold out” in the United States and Canada, meaning it’s not selling more locations for franchise development, Ms. McLeese said. Most of its growth is occurring on the West Coast, which is still a fairly new market for the brand, she said. According to the Five Guys website, franchisee costs include a $25,000 franchise fee per restaurant, a $50,000 development fee per restaurant, $200,000 to $500,000 for build-out costs, and royalty and marketing fees. ■

Frank Lutch, Vistar president, said the company has outgrown its leased Dutton Drive property and needs room to expand to accommodate planned acquisitions. The new distribution center is 50% larger than Vistar’s current 90,000square-foot home and will be able to hold more inventory, with 30foot ceilings instead of the 22-foot ceilings in its building now. Vistar considered existing buildings but decided a build-to-suit project would be more efficient, Mr. Lutch said. It also considered other building sites in Macedonia and Twinsburg. As part of the project, the company will install a 15,000square-foot freezer, which is 150% larger than its current 6,000-squarefoot freezer, Mr. Lutch said. “We stayed within a 10-mile area so we would not disrupt employees,” Mr. Lutch said. “Twinsburg has been good to us for 30 years, and we hope it can be for another 30.” The suburb sweetened the deal for the candy distributor and the developer by providing a property tax abatement that will begin at 75% and slide to 25% before ending in 10 years.

Mr. Finch said the incentive will save Vistar and the developer about half the increased property taxes, or a total of $600,000 over a decade. “We were absolutely concerned about losing this company to another city,” Mr. Finch said. That is a big worry in a community that lost 1,000 jobs when Chrysler shut the stamping plant in July 2010 after Chapter 11 bankruptcy reorganization and the federal government’s takeover of the automaker. Vistar will move into the new building by early to mid-summer of 2012, depending on “how winter weather treats us,” Mr. Finch said.

Ringing in the new Terry Coyne, executive vice president of Grubb & Ellis Co. and broker for Twinsburg Industrial, said demolition of the existing building began last week. “This is a great way to kick off the new park,” Mr. Coyne said. He said Twinsburg Industrial plans to devote new construction at what it is calling “Cornerstone Business Park” to projects it will own and lease to tenants. Mr. Coyne said the developer plans to retain about 800,000 square feet in the existing complex and may sell parts of that space to individual companies. Tim Elam, a Scannell vice president managing the Twinsburg project, did not return three calls. ■

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Waiver: Program’s application process can be onerous continued from PAGE 3

this year totals about $195 million, up 14% from $171 million during the like period in 2010, according to unaudited financial data released last week. MetroHealth also is feeling the effects of a 10% cut this year in its county subsidy, declining government reimbursements and slipping revenue from inpatient stays. To date, the health system’s total operating revenue is up only 3.5% from a year earlier, while its operating expenses have increased 7.5%. MertoHealth is in talks to obtain on the county’s behalf a waiver from federal regulators to expand Medicaid coverage to non-disabled Cuyahoga County residents between the ages of 18 to 65 with incomes of up to 100% of the federal poverty level, which is about $10,890 for a single person, according to John Corlett, MetroHealth’s vice president for government relations and community affairs. Mr. Corlett also is a former director of Ohio’s Medicaid program. The move would expand Medicaid coverage to those who don’t meet the typical guidelines for coverage. Children or the disabled normally are covered under Medicaid, but the waiver would extend coverage to a large portion of the remaining uninsured population that MetroHealth currently serves. Because MetroHealth is a public entity, it could use its $36 million county subsidy to draw about $64 million in additional federal matching funds to finance the Medicaid expansion. The federal government matches local Medicaid dollars — typically state funds, or in this case MetroHealth’s county subsidy — at differing rates throughout the country depending on the each state’s per capita income. If the feds approve the measure, Cuyahoga County would be the first county in Ohio with such an arrangement. “It would allow Metro to expand the value of its county subsidy by more than doubling it and do it in a way that would expand coverage in a substantial way,” said Bill Ryan, president of the Center for Health Affairs, an advocacy group representing area hospitals. “It’s a neat idea, and there are a lot of nuts and bolts that need to be tightened down about how it might work.”

No quick fix MetroHealth has been vocal in recent weeks about its budgetary problems as it struggles to break even for the year. The health system instituted a hiring freeze last month and revealed plans to cut back on consulting contracts and other discretionary expenses after announcing that it stood to finish the year with a $6.3 million operating deficit. Last week, MetroHealth officials announced plans to eliminate about 450 positions from a 6,500-person payroll, as well as a decision to cut skilled nursing services at its health center in the city’s Old Brooklyn neighborhood. The Medicaid waiver wouldn’t offer an immediate influx of cash, though Mr. Corlett estimates that if all goes according to plan it could be in place by mid- to late-2012. The proposal to expand Medicaid locally essentially would jump the gun on the federal health care overhaul, which is set to expand the Medicaid program widely in 2014. Although Ohio Medicaid director

John McCarthy supports MetroHealth’s proposal, he said it could be difficult to administer such a program for just a single county because it’s unclear who would determine eligibility. If the state were to handle the administrative work, Mr. McCarthy said those changes could take a long time to implement. One of the possible solutions, he said, is contracting the work to an outside vendor to issue the eligibility cards. Mr. McCarthy said another possible issue is corraling enough money from the federal government to cover all the folks who are eligible. “Is it worth it to do all these changes in a short period of time

“The fact of the matter is it’s not going to be approved this year — period. I would fall out of my chair if it’s approved this year.” – Bill Ryan, president, Center for Health Affairs just for Cuyahoga County?” Mr. McCarthy asked. Mr. Ryan of the Center for Health Affairs, who also served as the state’s Medicaid director, cautioned that applying for a waiver from the feds is an arduous process that often involves seemingly endless back and forth.

“The fact of the matter is it’s not going to be approved this year — period,” Mr. Ryan said. “I would fall out of my chair if it’s approved this year.”

Ultimate impact unknown Mr. Corlett said it was too early to determine the exact financial benefit to the system if the plan takes hold. That’s because caring for fewer uninsured patients likely would affect MetroHealth’s allotment of state dollars that are distributed to health care institutions that provide a disproportionate share of charity care in their markets. Mr. Corlett said there would be provisions in the waiver that would

allow the newly insured to seek emergency care from health care providers outside of the MetroHealth system, but the bulk of the medical care would be provided through MetroHealth’s primary care network. The newly insured, he noted, would be enrolled in MetroHealth’s “partners in care program,” where each patient is assigned a medical team to help manage his or her care. Last year, 40% of MetroHealth’s uninsured patients were enrolled in the program, and the health system saw fewer emergency room visits and cheaper hospital bills compared to those not enrolled in the program. ■

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THEINSIDER

THEWEEK SEPTEMBER 26 – OCTOBER 2 The big story: Young biomedical companies in Northeast Ohio will get first crack at a $100 million fund targeting firms that want to break into the Chinese market. A new group called the Cleveland Bio Fund will manage the new fund, which is financed by Newsummit Pharmaceutical Group, a Chinese investment firm backed by Sequoia Capital and other venture capital firms. Newsummit is ready to begin making investments: It Zai already has secured $30 million. Newsummit partners also met with 12 local biomedical companies seeking investment, said Eddy Zai, CEO of the Cleveland Bio Fund.

It all adds up:

Chalk up a few more jobs in downtown Cleveland to Sherwin-Williams Co., which is adding to its ranks here with a little incentive from the state of Ohio. The Ohio Department of Development approved a $1.7 million job-creation tax credit for SherwinWilliams in exchange for the company bringing 110 new jobs to the city. The jobs will come from the paint maker’s business support units at its various foreign subsidiaries, which SherwinWilliams is consolidating at its headquarters in Cleveland. They’ll be added to the 2,010 jobs Sherwin-Williams already has in Cleveland.

Every bit counts: MetroHealth, the countysubsidized health system, announced that former Cuyahoga County commissioner Tim Hagan was no longer on the payroll as of Sept. 30. Mr. Hagan was hired in January to work three days a week as a senior adviser to the health system for a $90,000 salary. According to a statement from the health system, Mr. Hagan has been “instrumental in helping with a number of initiatives” at MetroHealth. The system announced last month it was facing a $6.3 million operating loss for the year.

Nice try:

Mining company Cliffs Natural Resources Inc. of Cleveland said it’s seeking to sell and to idle operations at its renewaFUEL biomass production plant in Michigan. The company will take a $30 million pretax charge, primarily noncash, in the third quarter of 2011. The plant in Marquette, Mich., was constructed to produce high-energy, low-emission biofuel cubes from sustainably collected wood and agricultural feedstocks. Cliffs bought renewaFUEL in 2007. However, the plant “has not performed to design capacity, nor at a production level that justifies continued operation,” Cliffs said.

Let’s talk: Timken Co. said it entered into “early discussions” with the United Steelworkers of America Local 1123 about their current labor agreement, which expires in September 2013. The agreement covers about 2,000 employees represented by the USW in Canton. Timken, a maker of bearings and steel, is considering a $225 million investment at its Faircrest Steel Plant in Canton. This and that: The Austen BioInnovation Institute in Akron secured a $500,000 grant to help finance an initiative aimed at aligning the city’s social service agencies and health care providers to reduce health care costs and to curb chronic disease. … InfoCision Management Corp. of Akron opened an office in Fort Erie, Ontario, Canada, that initially has 35 workers and expects to hire 65 more in the next 12 months. … The Cleveland Foundation awarded a $1.5 million grant to Case Western Reserve University’s School of Medicine to recruit faculty and to expand research support for the school’s efforts to discover new ways to prevent or reverse a number of diseases, including cancer and cardiovascular disease.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Radisphere’s sphere of influence grows ■ You may not have noticed, but Radisphere — which has raised more than $50 million in venture capital over the past five years — technically is headquartered no longer in Northeast Ohio. The core of the company, which provides remote and on-site radiology services to hospitals, remains in Beachwood, where about 50 Radisphere employees work. However, at some point between January and July, the official headquarters became Westport, Conn. That office, which opened in 2008, houses 20 to 25 people, including top executives and administrative staff, said chief financial officer Steve Kaminsky. The change was a technical one, said Mr. Kaminsky, who added that he wasn’t sure exactly when it happened. Radisphere named that office its headquarters because Mr. Kaminsky and chief operating officer Steve Black already lived nearby, Mr. Kaminsky said. CEO Scott Seidelmann splits time between the two offices. Westport also is home to one of the company’s largest investors, Oak Investment Partners. Mr. Kaminsky said it is a coincidence that Radisphere hired executives who lived so close to the investor. Regardless, the company’s growth for the foreseeable future will take place in Beachwood, he said. For instance, Radisphere is in the process of finalizing a

MILESTONE

lease on a new office in Beachwood that would be 50% larger than its current office in the suburb. — Chuck Soder

Let’s wait and see how this ball bounces ■ Sports Construction Group, the Brecksvillebased builder of natural and turf fields for clients across the United States, may have impressed a potential customer last week. The San Francisco 49ers practiced last week at Youngstown State University’s new Watson and Tressel Training Site, the fields of which were built by Sports Construction. The 49ers did not want to fly across the country and back after playing in Cincinnati Sept. 25 and then in Philadelphia at 1 p.m. this past Sunday, so they took refuge in Youngstown. The 49ers have ties to the eastern Ohio city, as former team owner and shopping mall developer Ed DeBartolo Sr. was a Youngstown native. His son, Ed. Jr., ran the team for 20plus years, but after legal troubles ceded control of the franchise to his sister, Denise DeBartolo York, the current owner. Ed DeBartolo Jr. donated $750,000 to the YSU facility, where the 49ers liked what they found last week: The complex uses the same turf, Shaw Sportexe, as the 49ers’ practice facility, the Marie P. DeBartolo Sports Center in Santa Clara, Calif. Sports Construction counts 10 NFL teams — the Niners not among them — as clients, as well as many baseball teams, colleges and high schools, including Bay Village and Cleveland Central Catholic.

This power outage has lasted 10 years

Thomas Hager, managing partner, Schlabig & Associates Ltd.

Certified public accounting firm Schlabig & Associates Ltd. will mark its 50th anniversary early next year. It’s a business that has grown slowly but steadily over the last half century. Started in Akron in 1962, Schlabig moved in 1978 to its current offices at 525 Wolf Ledges Parkway and three years later opened a second office in Kent. It acquired Ravenna’s largest CPA firm in 1988, and in 2007 consolidated its Portage County operations in a new 5,400-square-foot office at 2275 state Route 59 in Kent. The firm currently has about 20 employees. To broaden its range of services and its geographic reach, Schlabig in 2009 joined the BDO Seidman Alliance, a nationwide association of independently owned local and regional CPA firms. “Our affiliation with BDO Seidman brings us the reach and resources of the world’s fifth-largest accounting firm and extends our knowledge base globally to serve area businesses that have established overseas operations,” said Thomas Hager, Schlabig’s managing partner. For information, visit www.schlabig.com. Send information about significant corporate anniversaries to managing editor Scott Suttell at ssuttell@crain.com.

For landlord and tenant, one hand washes the other ■ Hey startups, looking for an investor? If so, Lance Hill has some advice: Talk to your landlord. The CEO of Within3 Inc. said the social media company has a great relationship with Doug Petery, the owner of Within3’s building in Cleveland’s Flats, partly because he invested in the company. “It’s a good move,” Mr. Hill said. Within3 — which develops custom social media sites for hospitals, drug companies and other health care organizations — pays the same rent any other tenant would, Mr. Hill said. Even so, the relationship has helped Within3 ensure that it has space to grow. The company, which has about 50 employees, started on the third floor at 2401 Superior Viaduct and now takes up the second floor, too. It has the basement on reserve. Mr. Petery said he made “a considerable investment” in Within3 because he thinks the sites it builds are innovative. Mr. Petery, who made his money when he was owner of die maker Flasche Models & Patterns Inc. of Cleveland, said he will do all he can to help the company succeed. So what happens if it fills up the rest of the open space in the building? “I guess I’ll have to look for another building to buy,” he said. — Chuck Soder

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

THE COMPANY: Schlabig & Associates Ltd., Akron THE OCCASION: Its 50th anniversary

Perhaps the Niners will keep the firm’s business card around for construction at a planned stadium in Santa Clara that will replace the team’s current home, Candlestick Park, in 2014. — Joel Hammond

■ Talk about a lost decade for manufacturers in Ohio. The Dayton Daily News reported that industrial electricity consumption in the state “dropped by 28% from the year 2000 to 2010, a precipitous decline largely attributable to off-shoring and plant closures, economists say.” Here comes the heavy math part. “The industrial drop from 74 million megawatt hours to 53 million megawatt hours in 2010 is equal to an average decline per year of 1.9 million megawatt hours, an amount that could supply 160,000 households for a year,” according to the newspaper. “It was 49 million mega-watt hours in 2009, federal figures show, a multi-decade low.” Ohio’s decline outpaced the nation, as the Daily News reported that U.S. industrial electric consumption in the past decade fell by 9.6%, according to figures from the U.S. Energy Information Administration.

These cities are shaking the rust off the belt ■ The 21 metropolitan areas of the Great Lakes, including Cleveland, Akron, Toledo and Youngstown, “are among the most resilient areas coming out of the recession,” The AtlanticCities.com reported based on new data from the Brookings Institution. “Twelve of the region’s metropolitan areas were ranked among the top 40 metros in the U.S., determined by measurements of employment, unemployment, gross metropolitan product and housing prices,”

according to TheAtlanticCities.com, an excellent offshoot of The Atlantic focused on urban areas. For instance, the website notes that between the second quarter of 2010 and the second quarter of 2011, “job growth in manufacturing was at more than 5% in Akron, Grand Rapids, Madison, and Toledo. Detroit and Youngstown, the two postertowns of Rust Belt decline, saw manufacturing job growth rates of 10% and 19%, respectively.” While the results are encouraging, “they don’t mean their employment problems have been solved,” according to the story. Detroit “has only regained about 16% of the manufacturing jobs it lost (and) Youngstown has regained 30%.” Also, TheAtlanticCities noted, “just like the rest of the largest 100 metropolitan areas... housing prices have continued to fall in the (Great Lakes) region. This mixed bag of increases and declines is an indication of the complexities of recovery.”

Write it down: Paper’s endangered in health care ■ Dr. Farzad Mostashari, the man leading the federal government’s effort to digitize health records, made his case with a Cleveland-related anecdote in a short Q&A with Businessweek.com. He responded this way to a question about the urgency of moving to electronic health records: “In the New England Journal of Medicine this month, there’s a study involving 27,000 patients with diabetes in Cleveland,” Dr. Mostashari said. “Out of every 100 patients in paper-based practices, how many do you think got the basic standard of care? Seven! Among those using electronic records, it was 51%. Doctors want better information about who needs care and what they need. You can’t get that from paper charts.”

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599

DUE AT SIGNING: $4,795 + TAX, TITLE AND FEES $0 SECURITY DEPOSIT BASED ON $53,375 MSRP

2006 - 2010 RANGE ROVER SPORTS

0.9

% APR* Up to 24 months APR finance or special lease rates now available

LAND ROVER SOLON 6137 KRUSE DR., SOLON 1-866-210-6707

www.landroversolon.com LAND ROVER SOLON

* Up to 24-month financing is available at 0.9% APR. Program valid through October 10, 2011. Eligibility limited to Pre-Owned 2006-2010 model-year Land Rover Range Rover Sport vehicles. Out-cycled service loaner vehicles are not eligible. Not all buyers will qualify for participating lender’s financing. See Land Rover Solon for qualification requirements and complete details. ©2010 Jaguar Land Rover North America, LLC.

www.landroversolon.com

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6137 KRUSE DR., SOLON (440) 542-0601 www.jaguarcleveland.com

CLEVELAND

* Jaguar Platinum Coverage includes all factory recommended scheduled maintenance for 5 years or 50,000 miles, whichever occurs first. Wear and tear items are limited to brake pads, brake discs, brake fluid changes and wiper blade inserts based on factory specified wear limits or intervals. All work must be performed by an authorized Jaguar dealer. For complete details on Jaguar Platinum Coverage, including warranty and maintenance coverage and exclusions, please visit your local Jaguar dealer. ** * With approved credit. 39 month lease. Total due at signing $4,795. Includes $4,196 down payment, $0 security deposit plus tax, title and fees extra. Customer responsible for excess wear and tear. 10,000 miles per year, 30¢ per mile over. Expires 10/10/11. Jaguar Platinum Coverage includes all factory recommended scheduled maintenance for 5 years or 50,000 miles, whichever occurs first. Wear and tear items are limited to brake pads, brake discs, brake fluid changes and wiper blade inserts based on factory specified wear limits or intervals. All work must be performed by an authorized Jaguar dealer. For complete details on Jaguar Platinum Coverage, including warranty and maintenance coverage and exclusions, please visit your local Jaguar dealer.

6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com