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By now, Gary D. Forsee surely knows he’s not in Kansas anymore. Back in 1999, when the telecommunications executive wanted to leave ahigh-level post at a failing international venture of Overland Park,Kan.-based Sprint Corp. to join BellSouth, he and Sprint negotiated apeaceful end to his employment agreement, and he was off to BellSouthwithout seeing the inside of a courtroom. Now he wants to leave BellSouth and his job as vice-chairman of domesticoperations — the second most highly compensated post at the firm — to go back to Sprint as the company’s CEO. But Forsee was being groomed for the top spotat BellSouth, and his impending defection, along with an employment contractthat mandates he not work for a competitor for 18 months after leavingBellSouth, have spawned a tornado of litigation. Forsee’s attempt to leave has resulted in two suits in Fulton SuperiorCourt, an appeal that’s now before the Georgia Supreme Court and an ongoingarbitration before former CIA and FBI chief William H. Webster. The claims:Forsee can’t help but breach his duty of confidentiality and his promise notto compete with BellSouth if he joins Sprint. According to local lawyers whose practices encompass employment contracts,BellSouth may have an uphill battle enforcing some parts of its agreementwith Forsee. The problem: the contract is too broad and too vague. The dispute has pitted lawyers from two of Atlanta’s top firms against oneanother — Kilpatrick Stockton for BellSouth and King & Spalding for Forsee.And it’s led BellSouth and its affiliate Cingular Wireless, where Forsee isboard chairman, to sue Sprint in U.S. District Court for the NorthernDistrict of Georgia, claiming Sprint interfered with the employment contractthey signed with Forsee. The result, at least for now: a Fulton Superior Court temporary restrainingorder prevents Forsee from joining Sprint pending the outcome of hisarbitration. The TRO expires on Wednesday; it’s possible the arbitrationwill last longer. FAMILIAR TERRITORY This isn’t the first time Forsee has found himself embroiled in litigationover a job change. Back in 1989, when he was a vice president at AT&T inWashington, he attempted to leave the company to join Sprint. The problem: He led AT&T’s program for the federal government’s $12 billionFTS-2000 telecommunications network; at Sprint, which ran the networkjointly with AT&T, he also would oversee FTS-2000. AT&T sought a temporaryrestraining order from a federal judge in Virginia, arguing inevitabledisclosure of trade secrets if Forsee went to Sprint. The judge refused togrant the TRO, however, and Forsee was gone in a matter of weeks. His tussle with BellSouth is different. The dispute, which now has involvedfour courts, is bigger. The stakes — his ability to take Sprint’s top jobquickly, the potential effect on stock prices at Sprint, Cingular andBellSouth — are bigger. And the media coverage, which has spanned the globe,is bigger, too. But in the midst of all the hullabaloo, Forsee, like Dorothy in the “Wizardof Oz,” just wants to go home. As he said somewhat plaintively in anaffidavit filed early in the case, “I would like to return to my hometown ofKansas City, Mo., at this point in my life. If I am denied the opportunityto accept this position, it is highly likely that I will not have thischance again.” Sprint’s headquarters and Forsee’s hometown are only about a dozen milesapart. It’s a hometown he left, periodically, after graduating from theUniversity of Missouri-Rolla in 1972 with a Bachelor of Science in civilengineering. Over the years, he’s worked at Southwestern Bell; at AT&T inWashington and New Jersey; at Sprint in Overland Park; at Sprint jointventure Global One in Brussels, Belgium; and most recently at BellSouth inAtlanta. He’s spent the last 30 years rising steadily higher in thetelecommunications industry and now has reached that precarious pinnacle ofvalue: Companies are so willing to fight over him that he no longer has thefreedom to change jobs without a battle. FORSEE’S VALUE His value to Sprint is clear. He spent nearly 10 years working for Sprint. His posts included heading thecompany’s long-distance division, serving as interim CEO of Sprint PCS, itswireless division, and president of both its business services andgovernment systems groups within the long-distance division. By 1998, he was president and CEO of Global One Communications, a doomedventure that telecom sources agree wouldn’t have succeeded no matter who wasat the helm. By the time BellSouth contacted Forsee in 1999 about coming onboard as CEO F. Duane Ackerman’s successor, the handwriting was on the wallthat Global One would not prosper. But — sound familiar? — Forsee had an employment contract that barred him fromworking for a long-distance provider for 18 months after leaving Sprint. Atthat point, luck was with him. BellSouth didn’t yet have FCC approval forlong-distance operations, so to sidestep the Sprint noncompete clause, itcreated a position for Forsee that wouldn’t have long-distance oversightduties. As for confidential information and trade secrets, Forsee had been inBrussels with Global One and away from Sprint headquarters (and presumably,trade secrets) for more than a year. Documents Forsee filed in the BellSouthcase say that Sprint “took his personal commitment to honor hisconfidentiality obligations.” “They trusted him,” a source close to the issue said of Forsee’s departure.”They loved him. They wished him well and didn’t have anything big enoughfor him to come back to Sprint at that time. It made sense for him to leaveand everybody understood why.” Forsee still is valuable to Sprint, the source added, because he is not onlya broad-based telecom manager who knows long-distance, wireless,international and operations issues, he also has excellent human relationsskills. Forsee joined BellSouth in September 1999, and within about a year waspromoted to vice chairman, president and CEO of BellSouth International. InJanuary 2002, he became vice chairman of domestic operations, withresponsibility for all the domestic business, advertising and publishingendeavors of a company with $20 billion in annual revenue and 65,000employees. Less than a year after that promotion, in late December 2002, Sprintcontacted him to see if he’d be interested in coming back to Kansas — thistime, to head the company. PERFECT TIMING The timing of Sprint’s offer seems fortuitous in several ways. It alsoprovides indicators of why Forsee may have seen this as the moment to changejobs. Forsee declined comment through one of his lawyers at King & Spalding. First, while Sprint didn’t have a high enough position to offer him back in1998 when he left Global one, it now can offer him the CEO’s job in acompany with nearly $27 billion in 2002 revenue and 26 million customers inmore than 70 countries. Even a year ago, it appeared that Sprint Chairmanand CEO William T. Esrey and President and COO Ronald T. LeMay might be intheir positions for years to come. But on Feb. 5, The Wall Street Journalreported that both men had been asked to leave because they’d used aquestionable tax shelter set up by Ernst & Young. At BellSouth, by contrast, though Forsee was clearly being groomed for CEOAckerman’s post, based on Ackerman’s employment contract, it’s likely Forseewouldn’t have ascended to the top job until sometime around 2006. Still, it’s not as if BellSouth didn’t value Forsee. The company’s 2003proxy, released Feb. 28, gives financial evidence of that value; it alsoindicates the toll the litigation is taking on Forsee’s relations with thecompany. According to the proxy, Forsee’s overall compensation in 2002 was about $7.3million, second only to Ackerman’s more than $27 million. The breakdown: Forsee’s salary was $713,500. He received other compensationtotaling $184,500, including $31,000 for financial counseling and a companycar. He also held 102,000 restricted shares valued at $2.6 million as of Dec. 31.And he got 360,354 underlying options valued at about $3.8 million under theBlack-Scholes pricing method on their grant date. Under the terms listed inthe proxy, however, Forsee is not yet eligible to exercise any of thoseoptions. But in the column where his bonus should be listed, there’s merely areference to a footnote. The footnote simply says, “Amount not yetdetermined,” and refers readers to the company’s outline of its litigationwith Forsee. In each of 2000 and 2001, Forsee’s bonuses were nearly $1million. As BellSouth notes in one of its briefs to the Fulton Superior Court,”[Forsee] remains on BellSouth’s payroll and thus is being richlycompensated during the pendency of this dispute.” It’s unclear what his compensation at Sprint will be, but current CEO Esreyhas been paid handsomely. According to the company’s 2002 proxy, Esrey’scash compensation was $1.5 million, and he had stock options potentiallyworth $74.4 million, as well as other unexercised options. Sprint has notyet filed its 2003 proxy. What makes Forsee worth $7.3 million — or more? According to Ned P. Zachar,director of telecom services research at consulting firm Thomas WeiselPartners in New York, that’s just what companies have to pay to attractsomeone at Forsee’s level. “There’s a limited number of people who have theskill-set and the capability to run these sorts of companies,” he said. Another big factor: Forsee has worked for Sprint before and knows itsbusiness and people. “It would be pretty hard to duplicate that experience,”Zachar said. “I know a guy who reported directly to him. He said he wassmart, he was sharp, he wasn’t a tyrant … to work for.” Despite Forsee’s status and pay, Zachar said, “I wouldn’t call him aluminary.” That’s not necessarily such a bad thing — as Zachar points out,many of the luminaries of the telecom business — such as executives atWorldCom and Global Crossing — recently have gotten themselves into trouble.Still, he ranks Forsee among the top 20 to 25 most highly respected peoplein the industry. THE LAST TO KNOW It’s clear that BellSouth wanted to keep Forsee — at least initially — afterlearning of his negotiations with Sprint. The awkward aspect: Apparently thepress knew before BellSouth management. On Jan. 29, according to an affidavit from BellSouth CEO Ackerman, Forseewas telling him about his discussions with Sprint when a public relationsmanager interrupted to say a Wall Street Journal reporter was on the phone”asking for comment on the news that Mr. Forsee had been offered thatposition by Sprint.” On Jan. 30, according to documents filed in the case, Ackerman told Forseethat the board wanted him to stay and offered him increased pay andresponsibility. But in his affidavit, Forsee said he told Ackerman “that thedecision to join Sprint was not due to any dissatisfaction with BellSouth,my compensation or my position.” As Forsee’s affidavit tells it, he spent Jan. 31 trying in vain to reachAckerman by phone and e-mail. At 6:43 p.m., Ackerman finally returned Forsee’s message — to tell him that the company would seek a TRO to prevent him fromjoining Sprint. According to the affidavit, the court had signed the TROhalf an hour before Ackerman called Forsee. Cingular then joined the fray and filed its own suit in Fulton SuperiorCourt. Cingular and BellSouth alleged that Forsee was breaking thenoncompetition portion of his employment agreement by joining Sprint — which,like BellSouth and Cingular, has long-distance and wireless services. They also alleged that because Forsee had been involved in high-levelstrategy, network, pricing and marketing meetings, some during the time hewas negotiating with Sprint, his joining the Kansas-based corporation poseda risk that he’d reveal trade secrets. They went so far as to argue thatbecause of his knowledge, it was inevitable that he’d reveal confidentialinformation. “It would be like the CEO of Coca-Cola defecting to PepsiCo, taking with himthe company’s marketing strategies and secret product formula,” BellSouthargued in its pleadings. BellSouth v. Forsee, No. 2003cv64870 (Fulton Super.filed Feb. 3, 2003). By early February, Forsee, BellSouth and Cingular had their arguments — andtheir lawyers — lined up. Forsee was represented by Michael C. Russ andWilliam A. Clineburg Jr. of King & Spalding; BellSouth is represented byKilpatrick Stockton’s Susan A. Cahoon, Matthew H. Patton and James F. Bogan;Cingular’s team of lawyers is J. Thomas Kilpatrick, Lisa H. Cassilly andEmily S. Sanford of Alston & Bird. On Feb. 5, Fulton Superior Court Judge Stephanie B. Manis found thenoncompete portion of Forsee’s agreement “void and unenforceable” underGeorgia law. It acted as a general restraint on trade, she wrote. Manis crafted a new TRO that didn’t include the noncompetition clause, andsent the parties to arbitration on the confidentiality and trade secretsissues. According to Manis’s order, the arbitration must be completed, andthe TRO will expire Wednesday. But BellSouth wasn’t willing to wait. It appealed Manis’s order, allegingthat she had invaded the exclusive province of the arbitrator by removingthe noncompetition clause from his decision-making authority. That’s anequity issue reserved to the state’s highest court, the Georgia Court ofAppeals found. On Feb. 21, it transferred the case to the Georgia SupremeCourt. In the meantime, arbitration continues before Webster. Also, the GeorgiaSupreme Court, as of press time, still was considering whether Manis shouldhave removed the noncompete clause from Webster’s consideration. Forsee’s employment contract says, in essence, that he can’t accept aposition with a competitor that involves the same or similar duties heperformed for BellSouth or its affiliates unless he waits 18 months afterleaving. The contract also lays out the geographic area in which Forseecannot compete with his former employer and outlines his duty not todisclose trade secrets or confidential information. In consideration, Forsee got 100,000 shares of BellSouth common stock at apar value of $1 per share, due to vest over three years. So far, none ofthat stock has vested; the first 33,333 shares are scheduled to vest thisOctober. CONTRACT IS TOO BROAD Forsee’s contract defines confidential information, in part, as anything”relating to the Company’s business or to Affiliated Companies’ businesseswhich derives economic value, actual or potential, from not being generallyknown to other Persons and is the subject of efforts that are reasonableunder the circumstances to maintain its secrecy or confidentiality … .” A. Craig Cleland, of counsel with labor and employment firm Ogletree,Deakins, Nash, Smoak & Stewart, said, “One of the things that would concernme is who are these affiliated companies and did he work for them?” The contract, however, doesn’t list BellSouth’s affiliated companies. Itdefines them only as entities BellSouth owns directly or indirectly in whichit has at least 10 percent of the voting power of the stock, or of thecapital or profits. It’s definition of confidentiality is broad too, according to TerrenceMcQuade, a principal at Withrow, McQuade & Olsen. “Most of the information which a company provides to an employee is nottechnically a trade secret,” McQuade said. “So if you define confidentialinformation broadly enough, the employee who’s leaving to go to anothercompany could actually be in violation of that agreement just by sitting ina meeting and saying, ‘You know, when I worked over at XYZ Co., we wentafter that market niche and it wasn’t a good niche. We shouldn’t go afterthat.’” BellSouth has taken its argument a step further, alleging that it’sinevitable that Forsee will disclose confidential information at Sprintsimply because he knows so much about BellSouth’s business. McQuade questioned whether the inevitable disclosure doctrine has beenadopted in Georgia, and he said one of the dangers of that doctrine for anemployee is that it’s so easy to violate. “Even if he doesn’t believe he’sdisclosing information, he’s utilizing that information every day just bythinking, and going to work for a new company,” McQuade said. FEW TRADE SECRETS REMAIN Forsee’s legal team recently has made the argument that he doesn’t have theconfidential or trade secret information Sprint wants. His lawyers filed amotion on Feb. 21 in Fulton Superior Court, seeking a suspension of the TROthat’s keeping him from joining Sprint. In an affidavit filed in support of the motion, Liane Pelletier, Sprint’ssenior vice president of corporate strategy and development, said that thetelecom industry was regulated so heavily that reporting requirements to theSEC and the FCC, and the resulting public documents, mean there is littlereal confidential information and few trade secrets. Pelletier also indicated that BellSouth was only a tiny blip on Sprint’sradar screen of long-distance competitors, saying, “Sprint can say withassurance that knowledge of BellSouth’s strategies is of little, if any,value to it.” The affidavit acknowledged that Cingular and BellSouth were wirelesscompetitors, but said, “Sprint competes against five other nationalproviders of wireless communication services and would not alter its ownmarketing plan to compete with a single provider, in particular Cingular,which is currently losing market share to other providers.” In an interview, Zachar, of Thomas Weisel Partners, also said there are fewtrade secrets in the telecom industry. “I think from a technology and operational standpoint, that’s absolutelytrue,” he said. “It’s not like they have new products hooked up in thebackground, like the new Coke.” But there are areas where Forsee’s knowledge could be both confidential andvaluable to Sprint, he added. “From an M&A perspective, what’s the company’sM.O.? Where do they want to sell? Do they want to sell? Do they want tomerge? There is a more proprietary aspect to that for at least some periodof time.” The noncompetition covenant in Forsee’s agreement says, in part, “Whileemployed by Company or an Affiliated Company, and during a period ofeighteen (18) months after the termination of such employment, Executiveagrees not to provide services … in competition with Company or anyAffiliated Companies to any person or entity which provides products orservices identical to or similar to products and services provided byCompany or Affiliated Companies in the same market(s), whether as anemployee, consultant, independent contractor or otherwise, within theTerritory.” “There’s one state in the union that dislikes noncompete agreements andcovenants more than Georgia, and that’s California,” said Ogletree, Deakins’Cleland. “If you want a noncompete agreement to be enforceable in Georgia,you have to be very careful in drafting it.” That’s because Georgia’s constitution prohibits general restraints on trade,and overbroad noncompete clauses have been interpreted as restraints ontrade, he explained. McQuade pointed to the noncompete clause’s territorial restrictions, whichwould keep Forsee from working in parts of 34 states and 14 foreigncountries. “That effectively prevents him from seeking a job in the sameindustry. It seems to me that’s what the touchstone of all these things is.Can the person work effectively in another job when they leave?” he said. “Ithink it’s way too broad.” Manis, obviously, thought so too, because she declared the noncompete clauseunenforceable. That raises the question of how a company like BellSouthcould use an employment contract that’s apparently so open to challenge. AIMING AT INTIMIDATION “Every law firm can draft one of these things and can draft a legal one,”said Irwin W. Stolz Jr., with Winburn, Lewis, Barrow & Stolz in Athens, Ga. “Butwhat the law firm generally does is put in there what the client wants, andsometimes the client says, ‘We want to make this as tight as we can even ifwe have to go overboard.’” The result, according to Stolz, is to intimidate the employee into acceptingthe restrictions. Speaking generally and not about Forsee in particular, hesaid, “Just the fact that the employee signed it, he’s agreed to all thesethings, and the employer had a big powerful law firm draft this. I would besurprised if it didn’t have some sort of a terroristic effect, if that’s nottoo strong a term, on the employee, and on a future employer.” BellSouth did, at least to some extent, have a “big powerful law firm” drafta precursor to its employment agreement with Forsee. The irony is that lawfirm, King & Spalding, is the one that’s now representing Forsee in hisdispute against BellSouth. As early as Feb. 5, BellSouth attempted to get Forsee’s King & Spaldinglawyers disqualified from the case. According to BellSouth’s briefs, Forsee’s counsel, Clineburg and another K&S lawyer, helped BellSouth craft itsemployment contracts back in 1998. BellSouth offered the proof, attachingbilling statements showing the company paid King & Spalding $5,822 for theadvice. But Forsee didn’t work at BellSouth in 1998. “In 1999, however, BellSouthand Forsee executed an employment contract containing a restrictive covenantof the same type and purpose discussed and evaluated by BellSouth and King &Spalding in 1998,” BellSouth’s brief says. “Thus, BellSouth is nowlitigating the enforceability of a restrictive covenant against the veryfirm that advised BellSouth on means to improve restrictive covenants and onthe likelihood that such covenants and restrictions would be upheld underGeorgia law.” As of press time, the issue still was pending before Manis. Forsee’s future also is pending, caught between BellSouth and his desire togo home to Missouri and Kansas. “What does it behoove BellSouth now to keep Forsee?” asked R. David Simmons,an executive compensation consultant with Watson Wyatt in Atlanta. “He’s notan asset. He’s clearly tainted merchandise … . The objective now is to nothave him go to Sprint and to not have him go knowing what he knows.” It’s probably inevitable that Forsee eventually will go to Sprint. Thecompany is fighting for him and has indicated it will wait for him. Thequestion is when he’ll go, and the answer rests not in some figurative legalruby slippers he and his lawyers can click together, but in the hands of ajudge and an arbitrator.

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