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Legal bills raise new questions about Atlanta airport contracts under Reed

Shortly after Kasim Reed became mayor, his administration hired his former law firm to handle sensitive legal issues at the city’s prime asset, Hartsfield-Jackson International Airport.

Paul Hastings LLP defended the fairness of lucrative contract awards when the Reed administration was accused of steering them to political donors; helped resolve the threat of a whistleblower lawsuit by fired airport general manager Miguel Southwell; and ultimately advised the city’s response to a federal corruption probe of his administration, including at the airport.

VIDEO: Previous coverage of the Reed administration/airport GM firing

The settlement involves a troubling admission about one specific $65K taxpayer funded payout.

» AJC's complete coverage: Atlanta City Hall bribery investigation


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Now, The Atlanta Journal-Constitution has found that two of the firm’s partners — both close associates of Reed — had financial interests that experts say could have disqualified Paul Hastings from defending the city against claims that some airport contracts were awarded unfairly.

Dennis Ellis, who co-founded LowCountry Restaurants, is an attorney for Paul Hastings LLP and works as outside counsel for the city of Atlanta. He attended Howard University School of Law with Kasim Reed and is a friend of the former mayor. Ellis also co-hosted a fundraiser for Reed. (The Atlanta Journal-Constitution)

The AJC’s investigation found that Paul Hastings partners William K. Whitner and Dennis Ellis fought legal challenges to lucrative airport contracts on the city’s behalf, according to hundreds of legal invoices obtained through the Georgia Open Records Act.

Whitner’s wife worked as vice president and general counsel for Concessions International, an airport concessionaire that won a disputed contract in 2011 and another in 2016. Ellis and celebrity chef G. Garvin founded LowCountry Restaurants, which in 2011 was awarded space on Concourse A.

Paul Hastings LLP partner Dennis Ellis co-founded the LowCountry restaurant concept with celebrity chef G. Garvin and licensed it to Hojeij Branded Foods, which won a contract in 2011 for a location on Concourse A at Hartsfield-Jackson International Airport in Atlanta. Ellis helped defend legal challenges to the contract award in 2012. CURTIS COMPTON/CCOMPTON@AJC.COM (The Atlanta Journal-Constitution)

The AJC’s findings raise new questions about how Atlanta’s former mayor handled the city’s obligation to create a fair and transparent contracting process at the airport, which for decades has faced allegations of insider dealing.

During Reed’s tenure, companies seeking airport business complained that favoritism influenced contracting. The AJC’s latest findings lend more weight to some of those complaints, representatives of airport contractors and experts said.

“How many times have we heard mayors say our airport is number one?” said Harvey Newman, professor emeritus at Georgia State’s Andrew Young School of Policy Studies. “If there’s a threat to that airport in terms of its operation, the honesty with which business is conducted down there, then that erodes public confidence in local government.”

Since Reed left office, revelations about his administration’s stewardship at the airport have prompted some state legislators to hold meetings on a potential takeover.

Reporting by the AJC and Channel 2 Action News showed that the administration kept secret a federal subpoena for airport contracts and may have diverted airport revenue to pay for legal fees associated with the federal grand jury probe.

Bids submitted by Concessions International were among those requested in the subpoena, and the fees paid to Paul Hastings from airport funds are among those under investigation by the Federal Aviation Administration for possible revenue diversion.

The AJC asked two experts in legal ethics to review Paul Hastings’ invoices, legal agreements, Georgia law and communications between the AJC and the city so they could offer an opinion about whether the attorneys’ financial interests at the airport presented a conflict of interest.

“Because Whitner and Ellis had such strong financial interests in the airport restaurant concessions, we will never know how those cases would have turned out differently if the city had not been represented by ethically compromised lawyers,” said Clark Cunningham, a professor of legal ethics at Georgia State University. “For example, lawyers who didn’t have a personal interest might have reported to the city that procedures were inappropriate or uncovered corrupt practices in 2012 and 2016 that may now be the subject of one or more federal investigations.”

At a minimum, the firm should have disclosed the conflicts of its attorneys in writing to the city, refrained from working on those cases and sought a waiver for other airport work, according to Kathryn Webb Bradley, a law professor and Director of Legal Ethics at Duke University Law School.

The city could produce no such documentation after the AJC requested it through the state’s open records law. In fact, Whitner in 2011 certified that Paul Hastings had no conflicts of interest — two months after his wife took her job at Concessions International.

“It looks like really, really bad behavior,” said Bradley.

Both experts assumed in their analysis that the attorneys’ respective private business interests at the airport were significant.

Headquartered in Los Angeles, Paul Hastings employs nearly 1,000 attorneys in 22 locations around the world. Since 2010, the firm has earned $10.9 million from the city for a range of cases — most of it related to the airport — with hourly fees of up to $950, according to billing records through May.

The firm collected at least $1 million for work compromised by the financial interests of its attorneys, Cunningham said. He cited state rules on attorney conduct that say: “A lawyer shall not … continue to represent a client if there is a significant risk that the lawyer’s own interests … will materially and adversely affect the representation of the client.”

“The extent of prohibited work may be much greater than $1 million,” Cunningham wrote in an eight-page analysis for the AJC. The conflicts of the attorneys were so significant that bar rules would have probably prevented the firm from even seeking a waiver from the city, Cunningham and Bradley said.

Whitner did not respond to the AJC’s questions, but his wife said she had no ownership or profit interest with Concessions International, and received no bonuses or commissions related to airport contracts.

Ellis issued a statement through a spokesman: “Mr. Ellis violated no Rules or laws, and any suggestions to the contrary are false.”

A spokeswoman for Paul Hastings wrote in an email that she could not answer the AJC’s questions due to “client privilege and confidentiality.”

“The opinion you are relying upon appears to be premised on a number of inaccurate assumptions about the facts and applicable law,” says the statement from spokeswoman Arielle Lapiano. She declined to identify those inaccuracies.

The city’s law department has wide latitude in selecting outside attorneys, who are not subject to the city’s procurement code or the city’s ethics policy.

But law department guidelines do address the issue: “The Firm will take reasonable measures to avoid any conflict of interest related to its representation of the City,” the policy says. It also states that firms “will promptly remedy any conflict that does arise or request the City Attorney waive the conflict.”

Attorneys from firms providing legal services also have to sign a “letter of engagement,” in which they certify there are no conflicts of interest.

Reed did not answer questions about the AJC’s findings, and instead issued a statement calling the AJC’s coverage of him and the three-year federal investigation into his administration “unfair and unprecedented.” He also inaccurately stated that the AJC paid for the legal analysis in this story.

“As Mayor, I relied on the expertise and thoughtful recommendations of the City Attorney for the selection of outside counsel,” Reed’s statement says. “As you are aware, Paul Hastings LLP is a leading, global law firm which has consistently delivered favorable results on behalf of the City of Atlanta.

“Any attempt to characterize either their work or the selection of the firm for professional services as improper clearly misses the mark.”

Reed and Ellis attended Howard University School of Law together and are close friends, according to people familiar with their history.

Reed launched both his legal and political career at Paul Hastings, winning a state House seat in 1998 shortly after joining the firm. He left the law firm in 2003 after winning a state Senate seat and joined the firm of Holland & Knight, where he worked until running for mayor in 2009.

Cathy Hampton was former Mayor Kasim Reed’s first city attorney for the City of Atlanta and served from 2010-2017. Hampton hired Paul Hastings LLP, Reed’s former law firm, to handle legal issues at the airport in 2010. (The Atlanta Journal-Constitution)

Whitner served on Reed’s mayoral exploratory committee in 2008, and the former mayor in 2011 named him to the Atlanta Fulton County Recreation Authority, which he chairs. Whitner also served on Reed’s search committee that in 2010 led to the appointment of Cathy Hampton as city attorney. It was Hampton who retained Paul Hastings to handle the city’s airport business.

Hampton declined to answer the AJC’s questions about how she handled the city’s relationship with the firm. She also declined to provide a statement.

“Cathy doesn’t have these documents in front of her and isn’t going to respond from memory on such detailed issues,” a spokesman wrote in an email.

Firm defends bid challenge

In January 2011, a year after taking office, Reed announced what he called one of the largest airport procurements in North American history. The city was seeking tenants for 27 retail and 125 food and beverage locations — contracts worth $3 billion.

Concessions International, one of the largest locally owned airport concessionaires with airport operations dating to the 1990s, was one of the prospective bidders.

Tanya Hairston-Whitner, spouse of Paul Hastings partner William K. Whitner, was vice president and general counsel for Concessions International from February 2011 to December 2016. Concessions International won contracts at the airport in 2011 and 2016. (The Atlanta Journal-Constitution)

A month after Reed’s announcement, the company hired Whitner’s wife, Tanya Hairston-Whitner. Her responsibilities included contract negotiation and managing airport relationships.

In April, William K. Whitner, a partner in Paul Hastings’ Atlanta office, signed two agreements outlining legal work at the airport. He signed a third agreement titled “Aviation General/Transactional Counseling,” but did not date the signature line. His signature certified the firm had no conflicts of interest. All the agreements identified him as the firm’s principal contact for the city.

The firm was thrust into a major dispute over airport contracts within months. In September, the city announced that it was throwing out the concessions bids and starting over because more than a third were incomplete.

It’s unclear what role, if any, Paul Hastings had in that decision. Invoices from that time period, obtained by the AJC last month, were so heavily redacted it was impossible to understand the nature of the firm’s work.

Winners of the second round were announced in December 2011, and included contracts for Concessions International and Hojeij Branded Foods, which had a licensing agreement to operate Ellis’ LowCountry restaurant.

Losing bidders challenged the awards, arguing the city showed favoritism, and were unaware the attorneys defending the process had a financial interests in upholding the original awards.

Paul Hastings was one of the firms working on the city’s defense of those cases and submitted bills for work in February and March of 2012. Ellis, who works as a partner in Paul Hastings’ Los Angeles office, and Whitner are both on the invoices as having performed some of the legal analysis and review. Greenberg Traurig, another firm, represented the city in court.

Protesters alleged in a court filing that the city redacted so much information from the winning bids that they couldn’t file meaningful challenges. SSP America, a losing concessionaire, alleged that the winning proposals had “fatal errors” that were “consciously overlooked during the evaluation process in order to deliver a predetermined result.”

A Fulton County judge, however, ruled against the losing bidders’ request for an injunction on March 12, 2012, and Reed signed the airport contracts that very same day. In April, Reed proclaimed that the contract award process was the “most open and transparent … in the city’s history.”

SSP ultimately settled with the city.

Customers line up at the Shake Shack on Concourse A at Hartsfield-Jackson International Airport after it opened last month. The popular restaurant won a spot at the airport in a contract award from 2016. CURTIS COMPTON/CCOMPTON@AJC.COM (The Atlanta Journal-Constitution)

‘No preferential treatment’

Attorney Bill Hill, who represented SSP in 2012, told the AJC the appeals hearing officer hired by the city was permitted to “disregard all the evidence and say [the contracts were] in the best interests of the city.” Hill called the ruling “one of the most frustrating experiences I ever had.”

Robert Scholz, an attorney who represented losing concessionaires in a second challenge to the contract awards, said he thinks the process was fraught with “a certain degree of favoritism.”

“It was built into the process, and it always has been part of the process,” Scholz said.

Donata Russell Ross, chief executive of Concessions International, said in a statement to the AJC that the company received no favoritism.

“To our knowledge and understanding, Concessions International was never given any preferential treatment in regard to any concession contracts at the airport during Ms. Hairston-Whitner’s tenure with the company,” Ross said.

Ross and Hairston-Whitner disagree over what the company knew about William Whitner’s legal work for the city.

“When asked directly by me, Mrs. Hairston-Whitner advised the company that her husband did not do any work for the City of Atlanta related to the airport,” Ross’ statement said.

In response, Hairston-Whitner told the AJC: “I have never had the discussion Donata Russell spoke of with you. Until April of 2016, I reported to Anthony Joseph (President of CI) and Herman Russell, Sr. (Chairman of CI) until his death, and both gentlemen fully knew my husband represented the City on Airport matters.”

Airport bids, a political firing and a subpoena

In 2015, Atlanta solicited bidders for a small number of restaurant spaces on airport concourses. But the city’s handling of the process would turn out to have major consequences for the Reed administration and helped put the airport in the crosshairs of a federal corruption investigation.

As it had done in 2011, the city threw out the first round of bids, asserting 40 percent were “fatally flawed.” Concessions International was one of the bidders that resubmitted proposals in January 2016.

Miguel Southwell, right, then the general manager of Hartsfield-Jackson International Airport, talks with then-Atlanta Mayor Kasim Reed following an airport press conference in November 2015. KENT D. JOHNSON/KDJOHNSON@AJC.COM (The Atlanta Journal-Constitution)

In May, however, Reed fired airport general manager Miguel Southwell, plunging the airport into political turmoil. Reed blamed Southwell for long security lines.

Southwell fired back with explosive charges: his firing was the result of City Hall attempting to steer contracts to companies “other than the highest-ranked bidder” at the direction of “the second floor” or “the mayor.”

Southwell’s attorney, Lee Parks, demanded records for nine airport contracts, including those that Concessions International bid on in January.

The city’s law department enlisted the help of more than 30 attorneys from Paul Hastings, including Whitner, to respond to Southwell’s demands for records and fight his allegation of wrongful termination.

The attorneys’ work resulted in an agreement in September that allowed Reed and Southwell to walk away from their confrontation. But Southwell’s allegations resonated elsewhere: the U.S. Attorneys’ Office for the Northern District of Georgia.

Three days after a issuing a joint statement in which Reed and Southwell said that neither engaged in “civil or criminal wrongdoing,” federal prosecutors subpoenaed the city for many of the same contract records Southwell sought.

The details of that subpoena were kept secret by the Reed administration until the AJC published them earlier this year. Reed also kept secret a settlement with Southwell that paid him $147,000 from undisclosed sources. The AJC published details of the settlement in August.

On Friday, Reed issued a statement saying prosecutors had “conducted a thorough review of Mr. Southwell’s claims and found no wrongdoing on the city’s behalf.”

 The U.S. Attorney’s Office declined to comment.

Tarnished legacy

Then-Atlanta Mayor Kasim Reed speaks during his final workday at Atlanta City Hall last year. Bonuses given out in the final days of his administration were determined to be illegal, according to a pair of city investigations. ALYSSA POINTER/ALYSSA.POINTER@AJC.COM (The Atlanta Journal-Constitution)

Recent legal invoices show Paul Hastings remains heavily involved in the federal corruption investigation, which has increasingly drawn a tighter net around Reed and some in his inner circle.

Reed’s deputy chief of staff pleaded guilty to accepting bribes and is cooperating with the corruption investigation. Adam Smith, the city’s former procurement chief, is serving 27 months for taking bribes. At his sentencing in January, he said he lost his moral compass in the Reed administration.

Recent subpoenas have requested the spending records of city-issued credit cards held by Reed, members of his office, and for the eight officers in his security detail. Federal prosecutors also want to see all eight years of Reed’s travel records and his daily calendars.

In June, City Council attempted to put restrictions on hiring outside attorneys, limiting firms to no more than $50,000 in business without approval from City Council. But the ordinance was watered down considerably in negotiations with Mayor Keisha Lance Bottoms’ law department before Bottoms ultimately vetoed it, citing concerns about a provision requiring council’s approval to file lawsuits.

While legal experts expressed alarm about Paul Hastings’ conflicts of interest, it’s unclear how city officials regard them.

Former mayoral spokeswoman Jenna Garland told the AJC in February that William Whitner’s legal work for the city was not compromised by his wife’s employment with Concessions International.

Garland wrongly asserted that “Paul Hastings’ work was completely unrelated to Concessions International.”

“Regardless, we do not hold firms or attorneys at a disadvantage for their marital relationships,” she said.

Current Atlanta City Attorney Nina Hickson declined to comment, saying she could not characterize decisions made before her tenure.

Meanwhile, state lawmakers continue to hold meetings on wresting control of the airport away from the city.

GSU’s Newman said the revelations about Paul Hastings will give them more ammunition — and further tarnish Reed’s legacy.

“It’s deeply troubling,” said Newman, “which is not to say he didn’t accomplish some remarkable things as mayor of the city of Atlanta. It’s just that there appear to be some areas where personal relationships, friendships — whatever — led to errors in judgment.”


 

Atlanta: one city, multiple investigations

  • Federal grand jury: U.S. prosecutors are examining a litany of issues from former Mayor Kasim Reed’s administration: public works contracting; airport procurement; credit card spending by Reed and other officials; bribery involving Reed’s former deputy chief of staff and former procurement chief; and Reed’s travel records.
  • Georgia Bureau of Investigation: GBI investigators have submitted evidence to Georgia’s Attorney General about how former Reed officials complied with Georgia’s Open Records Act, following AJC/Channel 2 Action News reporting on how officials delayed or sought to interfere with timely production of public records, a misdemeanor.
  • Federal Aviation Administration: Prompted by the AJC’s reporting, the FAA is investigating whether city officials improperly diverted airport revenue to pay legal bills for outside legal work that was not related to the airport. Diversion of airport revenues is against FAA regulations and can lead to suspension of federal aviation grants.


How we got the story

The AJC requested copies of invoices from the city of Atlanta’s outside lawyers nearly a year ago, but received none of them while former mayor Kasim Reed remained in office. The city provided the records, many of which were heavily redacted, after Mayor Keisha Lance Bottoms was sworn into office in January. Review of the records led to a story in July about how much money the city had spent responding to the federal corruption investigation at City Hall. The AJC’s analysis of the invoices also found that law firm Paul Hastings LLP billed millions of dollars for work at the airport. Acting on tips, the AJC also began looking at the relationships and outside business interests of two Paul Hastings partners who worked on city of Atlanta legal issues at the airport. The AJC shared the findings with two legal experts, who offered opinions about whether the firm had conflicts of interests because of the financial interests of partners William Whitner and Dennis Ellis. The AJC shared the expert opinions with Whitner, Ellis, Paul Hastings and Mayor Reed. Reporters sought interviews with Whitner, Ellis, former city attorney Cathy Hampton, Reed, airport concessionaires, and other experts. In most cases, interview requests were denied and reporters were instead provided statements. Whitner did not respond to requests for comment. The AJC’s reporting also built on previous reporting on contracting at the airport, the federal corruption investigation and the city’s policies regarding the hiring of outside attorneys.

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