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Former mall owner CBL sued, accused of overcharging tenants for electricity

RACINE — A 21-state class-action lawsuit scheduled for trial in April alleges that former longtime Regency Mall owners CBL & Associates deliberately overcharged its commercial tenants for electricity for years.

The lawsuit, filed in federal court in Florida, claims that CBL’s tenants have been victim to a “criminal enterprise” in which CBL knowingly overcharged its mall tenants for electricity by up to 100 percent.

The lawsuit was filed in March 2016 by Hagens Berman and Buckner+Miles. A federal judge in Florida certified the class of small business tenants, denied CBL’s motion for summary judgment. The trial is expected to start on April 1 or very soon thereafter at the U.S. District Courthouse for the Middle District of Florida in Fort Myers.

CBL, which is publicly held and based in Chattanooga, Tenn., acquired Regency Mall in 2000. The current owners, Hull Property Group, bought Regency as a “failed mall” in December 2016, along with two other CBL malls. Hull has since put millions of dollars into renovations of Regency Mall and has also since bought the former Boston Store property, which was not part of the original purchase, although the mall continues to struggle with closures similar to other malls.

CBL spokeswoman Stacey Keating said Wednesday, “We believe this case is without merit and we will defend ourselves vigorously. We have already filed an appeal with the 11th Circuit Court of Appeals.”

The allegations

According to the 32-page complaint, CBL promised its small-business tenants that their electricity charges would not exceed what CBL was charged by local public utilities for the electricity the tenants actually used. But the suit states that CBL breached its own lease agreements, and state law, by inflating both the electricity rates charged and the amounts of electricity used by tenants.

In U.S. District Court Judge Paul A. Magnuson’s recent order certifying the class, he called CBL’s objections “specious” and denied CBL’s attempts to strike expert witnesses chosen by attorneys representing the mall tenants.

In Magnuson’s order he wrote that CBL hired Valquest to prepare estimates of electricity usage for its tenants, and based its tenant electricity charges on those surveys.

“According to plaintiff, CBL and Valquest intentionally engaged in a scheme to inflate both the usage and the rate for that usage,” the judge wrote. “Indeed, plaintiff cites to evidence that Valquest and CBL knew what they were doing was wrong and potentially illegal.”

The lawsuit details alleged racketeering and a conspiracy between CBL and Valquest, in violation of the Racketeer Influence and Corrupt Organization (RICO) Act, as well as violations of the Florida Deceptive and Unfair Trade Practices Act and Florida’s Civil Remedies for Criminal Practices Act.

The suit seeks relief for all individuals and entities that leased mall space from and paid monthly energy charges to CBL and whose electricity charges were determined based on a Valquest survey.


Gregory Shaver, For The Journal Times  

Future Gateway Technical College student pose for a celebratory photograph Thursday morning during a signing day event at Gateway Technical College's Kenosha campus. More than 380 high school students from 26 area high schools in Kenosha, Walworth, and Racine counties signed their national college letters of intent to attend Gateway Technical College during the ceremony. Of the students, 138 were from Racine Unified School District with 25 from Park, 55 from Case, 31 from Horlick, 13 from REAL School and 14 from Walden III. 


Local
Foxconn pushes back on report calling project 'chaotic' and 'ever-changing'

MOUNT PLEASANT — Foxconn Technology Group is on the defensive, again, after a report from Bloomberg Businessweek came out on Tuesday that was critical to the deal.

In the report, Bloomberg cites several anonymous sources, that claim the Foxconn development in Wisconsin is “a chaotic environment with ever-changing goals.”

Foxconn pushed back on the report saying it “attempts to paint a false picture of Foxconn Technology Group and its substantial investment in Wisconsin.”

“While relying largely on unnamed sources, anecdotes, and hearsay, the piece fails to give a balanced view of Foxconn’s project in Wisconsin,” according to the statement. “It omits much of the detailed information Foxconn shared with Bloomberg Businessweek containing highlights of the Wisconsin project, an outline of Foxconn’s partnerships throughout the state, and an overview of the company’s positive economic impact in Wisconsin.”

The statement lists the company’s $200 million investment in the state; $100 million pledge to the University of Wisconsin-Madison for the Foxconn Institute for Research in Science and Technology; a $100 million “Wisconn Valley Venture Fund” and several other connections to the state.

“We continue to make good progress on all fronts related to the Wisconn Valley Science and Technology Park, while simultaneously broadening our investment across Wisconsin far beyond our original plans to ensure the company, our workforce, the local community, and the state of Wisconsin will be positioned for long-term success,” according to the statement.

Other reports on Foxconn

This report comes on the heels of a fast paced week which started when Reuters reported last Wednesday that Louis Woo, special assistant to Foxconn CEO Terry Gou, said the company “cannot compete” making TV’s in the United States.

Foxconn did confirm that it was adjusting it’s plans for the development in Wisconsin and cites “global market environment” as one of the main focuses for the change.

But Foxconn stated it is still committed to its goals of 13,000 jobs and $10 billion of investment in Wisconsin.

Then, last Thursday, the Nikkei Asian Review reported that Foxconn was planning to “scale back” on its operations in Wisconsin and blames Gov. Tony Evers for the reduction.

Foxconn released another statement saying “all interaction to date with Gov. Evers and his team have been constructive and we look forward to further discussions as we continue to invest in American talent and broaden the base of our investment within the state of Wisconsin.”

Foxconn also denied it was scaling back operations in Wisconsin.

Last Thursday, The Journal Times reported that a White House official said the administration would be “disappointed” if Foxconn reduced its investment in Wisconsin.

Last Friday, Foxconn released a statement saying that Gou had been having conversations with President Donald Trump to assure him of the company’s plans moving forward in Wisconsin.

“After productive discussions between the White House and the company, and after a personal conversation between President Donald J. Trump and Chairman Terry Gou, Foxconn is moving forward with our planned construction of a Gen 6 fab facility, which will be at the heart of the Wisconn Valley Science and Technology Park,” according to that statement. “This campus will serve both as an advanced manufacturing facility as well as a hub of high technology innovation for the region.”


High-school
Wrestling: Halter family files lawsuit against WIAA

Hayden Halter is going to court to keep his wrestling season alive.

The Waterford High School wrestler and his family filed a complaint in Racine County Circuit Court on Thursday night in hopes of restoring Halter’s eligibility for Saturday’s WIAA Division 1 regional meet at Pewaukee.

Halter, a state champion wrestler at 106 pounds last season and ranked No. 1 at 120 pounds by Wisconsin Wrestling Online this season, was disqualified from competing individually for the remainder of the season after the Southern Lakes Conference Tournament at Elkhorn last Saturday.

Halter received two unsportsmanlike conduct penalties in the 120-pound championship match against Union Grove sophomore Cade Willis.

The Halter family hired Jeremy P. Levinson, an attorney for Halling & Cayo S.C. based in Milwaukee. Levinson said on Thursday that he’s optimistic the case will be heard Friday.

“We filed tonight so that when we call the Racine Court Friday morning, they will know exactly what we are talking about,” Levinson said. “It’s all going to depend on how busy the court is. But there is a good chance that it gets heard tomorrow.”

Levinson described Halter as a “rock-star wrestler” and said that the WIAA should have never issued a disqualification.

“He got a goofy suspension,” Levinson said. “And this alleged one-game suspension, in reality, is more like a three-game suspension because he wouldn’t be able to compete at sectionals or state.

“My biggest question for the WIAA is, ‘Why can’t you let him compete provisionally?’” he added. “There’s a provision in the WIAA rules that allows for the undoing of an athletes accomplishments; if we are overruled in this case, then just strip him of his title if he ends up winning it all.”

In the complaint, a copy of which Levinson provided to The Journal Times, Halter asks the court to issue a temporary restraining order on the WIAA and allow him to participate in all meets for the rest of the season.

“I think we have a very compelling case,” Levinson said. “I’ve reviewed the video several times and I don’t think Hayden did anything wrong. I’m hopeful that the judge who oversees this can see that this isn’t worth suspending a kid over.”

The complaint says Halter’s actions at the SLC meet were “in no way disruptive, disrespectful, flagrant, vulgar, or otherwise ill-mannered or unsportsmanlike.”

On the other hand, the actions of the referee of the match — Michael Arendt, the athletic director at St. Catherine’s High School and a former teacher and coach at Union Grove High School — were “arbitrary, capricious, and contrary to the standards promulgated by WIAA and NFHS (National Federation of High Schools),” the complaint said.

The complaint also said that Waterford wrestling coach Tom Fitzpatrick attempted to have Halter serve his suspension by preparing to compete in a junior varsity match at Lake Geneva on Tuesday, Feb. 5. Halter made weight and was eligible to compete in the meet, but sat out, therefore serving his suspension, the complaint said.

But the WIAA deemed that insufficient and told Halter he was barred from a second match — the regional match on Saturday — the complaint said.

Levinson said he expects the WIAA to cooperate if a hearing takes place.

“I spoke with the WIAA’s lawyer and he indicated that he would intend to appear by telephone conference if the hearing happens tomorrow,” he said.

Fitzpatrick said talks with the WIAA were quiet on Thursday. “We didn’t hear a lot from the WIAA,” he said. “I think it’s going to come down to this injunction. We are hopeful that this all works out for Hayden.”

If the disqualification stands, Halter could wrestle again if the Wolverines win the regional team title at Pewaukee on Saturday.

Halter would be allowed to wrestle at the Division 1 team sectional dual meet scheduled for 7 p.m. Tuesday, Feb. 12, at Mukwonago. The winner of that meet would be one of eight Division 1 teams to qualify for the state team tournament March 1-2 at Madison.


Halter