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The dust finally is settling in the dispute between Gary D. Forsee andBellSouth Corp. After a months-long battle spread among three courts over whether Forseecould escape his employment contract to join competitor Sprint Corp.,arbitrator William H. Webster gave Forsee the go-ahead — with conditions — atabout 5:20 p.m. on Tuesday. Shortly before 11 p.m., Sprint announced Forseeas its new chief executive officer. But it’s not necessarily over yet. Webster’s decision leaves the door opento further arbitration between Forsee and BellSouth — arbitration that could,at least theoretically, force Forsee to leave Sprint for a period of months. Also, though Webster’s decision has no precedential value, it providesinsight into how one legal mind interpreted employment contract law in astate that disfavors such contracts. And, according to Forsee’s contract atBellSouth, he might be forced to pay his former employer’s legal fees.Webster, a partner with Milbank, Tweed, Hadley & McCloy in Washington and aformer head of both the CIA and the FBI, cast his decision in the Forseecase as potentially a matter of business life or death. The issue: confidential strategic and business information that Forseepossessed, that BellSouth wanted to keep private and that, at leasttheoretically, Sprint would love to have. Forsee, heir apparent to BellSouth CEO F. Duane Ackerman, was the company’svice chairman of domestic operations and its second-in-command. He also waschairman of the board at Cingular Wireless, a BellSouth affiliate. Forseespent three years and seven months at BellSouth. According to Webster’sopinion, during Forsee’s time there, his cash compensation topped $5 millionand his stock options at the time of granting were worth $20 million. His employment contract required, among other things, that he not revealBellSouth’s or Cingular’s confidential information and trade secrets. Italso contained a noncompetition clause (later removed from the arbitrator’sconsideration by a judge) that was designed to prevent him from working fora BellSouth competitor for 18 months after leaving. Forsee’s immediate desire to take the top job at Sprint obviously had histhen-employers worried. So they alleged that his disclosure of confidentialinformation would be “inevitable” and asked Webster to enjoin himpermanently from joining Sprint. Sprint, in a series of affidavits, shot back that it barely consideredBellSouth a competitor, that Cingular was losing market share and thatForsee’s knowledge of those companies was of “little, if any, value” to it. But Webster didn’t buy that. He wrote that Georgia didn’t recognize theinevitable disclosure doctrine and indicated he saw significant competitionbetween the companies. The wireless arena is volatile, he wrote, and industry analysts predict thatsome of the top companies won’t survive. If used by a competitor like Sprint, Forsee’s knowledge of highlyconfidential information about Cingular’s plans for consolidation, newbusiness initiatives and technology would cause Cingular “incalculable harm,” his order said. Webster didn’t grant the injunction, writing that there was no evidence thatForsee “abused or inappropriately disclosed” confidential information. The POWER OF REPUTATION Lisa L. Ballentine, a partner in the employment group at Smith, Gambrell &Russell, said this is a lesson for companies and business people. “Obviously, Mr. Forsee’s reputation and how he conducted himself played asignificant role in the determination. You can read that the outcome mighthave been different.” But according to one lawyer with years of experience in the employmentfield, Webster used a flawed rationale in his consideration of whether togrant an injunction. Webster’s opinion said that to get relief under the confidential informationclause in Forsee’s contract, BellSouth and Cingular didn’t have todemonstrate bad faith on Forsee’s part or show he’d misappropriatedconfidential information. To support that position, Webster cited Lee v.Environmental Pest and Termite Control, 271 Ga. 371 (1999). “In all due respect to Judge Webster, that is not the holding in Lee,” notedthe attorney, who asked for anonymity. First, in Lee, the court used the employee’s confidentiality clause as anonsolicitation clause — but there was no such clause in his contract. The contract defined customer names and account information as confidential;the court used that to stop Lee from soliciting customers from his formeremployer. Though the court upheld it, the agreement was arguably too vague underGeorgia law. It didn’t define a geographical area where Lee couldn’tsolicit, didn’t limit the customers to those that Lee had dealt with as anemployee and prevented him from taking business from former customers whocame to him without being solicited. According to the attorney, the Lee court used a confidentiality agreement torestrict the plaintiff in ways that standard Georgia nonsolicitation lawwould not allow. A recent example: Pregler v. C&Z, Ga. Ct. App. A03A0119(Jan. 9, 2003), in which the court refused to enforce a nonsolicitationclause because it kept the employee from accepting business from formerclients he hadn’t solicited. The lawyer also pointed out a major difference between Lee and Forsee. Leeformed a competing company and solicited his prior employer’s customers;Forsee has done nothing of the kind. Webster based his decision that BellSouth didn’t need to show violation ofconfidentiality restrictions to get an injunction not just on the Lee case,but also on his view that Forsee was a “man of integrity.” The lawyer called Webster’s use of Lee and character as his basis fordecision a stretch. “Again, in all due respect to Judge Webster, that maynot be the law in Georgia or in most other states.” Based on that reasoning — flawed though it was, according to thelawyer — Webster didn’t grant BellSouth’s request for an injunction. CEO’S LIMITATIONS But he points out that Webster did issue a form of injunction by restrictingwhat Forsee can do at Sprint. For example, Webster ordered Forsee not to participate in planning sessionsabout Sprint competing with BellSouth or Cingular and said Forsee can’tdisclose those companies’ confidential business information. Every threemonths for the next 18 months — the same period Forsee’s employment contractprovided that he wait before joining a competitor — he must give his formeremployers a sworn affidavit saying he’s complied with his contract’sconfidentiality provisions. lso, for the next 12 months, Forsee’s prohibited from certain activities.He can’t participate in discussions about potential mergers, acquisitions orsales of assets involving specific, named companies. He also can’t makesales calls on BellSouth customers SunTrust Bank Corp., Bank America Corp.,SouthTrust Bank Corp. and Earthlink. Though what Forsee can and can’t do seems settled at least for now, there’sa hitch. In January, before sending Forsee’s case to arbitration, Fulton State CourtJudge Stephanie B. Manis ruled that the noncompetition clause in hiscontract was unenforceable. BellSouth appealed, and the issue of whether thearbitrator should have been allowed to consider that clause is before theGeorgia Supreme Court. BellSouth spokesman Jeffrey C. Battcher acknowledged that the court couldtake months to rule. By that time, Forsee will be months into his new job. So what’s the point? Battcher said it is “plausible” that if the high courtsends the noncompete to arbitration, an arbitrator could make Forsee leaveSprint, at least for a portion of his contract’s 18-month period. “That’s theoretically possible,” said Thomas D. Sherman, head of Lord,Bissell & Brook’s local corporate law department. Sherman said he givesWebster credit for fashioning an opinion that gives some clues as to what he’d do if the noncompete comes before him. Sherman’s read: Webster probablywouldn’t change the remedy or the restrictions he’s already imposed. MOVING COSTS More unfinished business: Forsee’s contract provides that he’ll reimbursehis former employers for reasonable attorney fees and expenses. In this case, BellSouth and Cingular used at least four partners from two ofthe city’s top firms: Matthew H. Patton and James F. Bogan III fromKilpatrick Stockton for BellSouth, and J. Thomas Kilpatrick and Lisa H.Cassilly from Alston & Bird for Cingular. That’s not including associates,support staff and expenses. Plus, Forsee’s got to pay his own lawyers, who include King & Spaldingpartners Michael C. Russ and Jeffrey S. Cashdan. And in the cover letter for his opinion, arbitrator Webster closed with theline, “Please let me know how you wish my fees and expenses to beapportioned between the parties.” The tab is likely to be high — partner fees at the three Atlanta firms rangefrom about $300 to $600 an hour; this case has been active since January.BellSouth’s Battcher won’t say how high legal costs might be. As for castingcosts against Forsee, he said, “A final decision on that has not been madeeither, but you can obviously determine that that is one of the options wehave from his employment contract.”

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