THE CHALLENGE:

The COVID-19 pandemic hit the hotel industry hard: Amid widespread public health lockdowns that greatly impacted the hospitality industry across the US beginning in March 2020, business and leisure travel dried up.

Like many others, Island Hospitality—a premier hotel management and solutions provider with more than 70 hotels in its portfolio and thousands of employees—saw sales drop significantly at the height of the crisis. The company’s main focus is managing extended-stay and full-service hotels, and with a business reliant upon travel, they quickly recognized the need to pivot.

As Island Hospitality’s cash flow slowed and its business priorities shifted, so did its workforce needs.

OUR OBJECTIVE:

In the fast-paced, unpredictable environment created by the onset of the pandemic, Island Hospitality turned to its trusted employee benefits and employment team at McDermott—led by Todd Solomon, Lisa Loesel, Michelle Strowhiro and Chris Foster—to advise on how to minimize the impact of the pandemic on its workforce across multiple jurisdictions, and to ensure that employees from the C suite to hotel maintenance continued to receive benefits and insurance coverage to the extent possible.

THE OUTCOME:

As federal and local guidance rapidly evolved, the McDermott team kept pace to help Island Hospitality address the full scope of its challenges in real time during regular status calls with company leaders. Questions particularly centered on the employment landscape and the impact of COVID, government programs and tax credits Island Hospitality could leverage to minimize furloughs and layoffs, along with continuing employee benefits such as health coverage and retirement.

“Island Hospitality is an extremely employee-friendly operation, and the focus was always, ‘How do we protect our people within the confines of being able to run our business?’” said Todd Solomon on the McDermott employee benefits team.

In addition to handling rapid-fire questions around how to manage COVID issues in a larger workforce, the McDermott team addressed issues related to labor relations, corporate charitable giving, and employee benefits design and compliance.

MOVE FASTER:

With properties spread across the US, Island Hospitality needed the McDermott team to pivot quickly between jurisdictions to address the company’s workforce and benefits needs efficiently and accurately.

In the face of a global crisis with profound effects on the hospitality industry as a whole, the McDermott team made it a priority to treat Island Hospitality’s business as their own, responding to their calls at all hours of the day and serving as a rapid legal response team.

Learn more about our employee benefits & executive compensation offerings.

THE SITUATION:

On the spectrum of renewable energy projects, investments in solar and wind power are fairly common. But there’s an unsung hero in the renewable space: Anaerobic digestion converts organic waste, such as animal manure and coffee grounds, into byproducts that can be used to produce electrical power.

The few anaerobic digestion operations that exist in the United States are primarily in the development stage, and they present a rare and unique investment opportunity. Unlike traditional energy plants, which require operators to pay for coal, natural gas or other fuel to create electricity—or wind and solar facilities, which get their fuel at no cost from the environment—anaerobic digestion operators are paid to remove waste products to their facility for fuel. Among energy producers, they are fairly unique in generating revenue from both input (the fuel they use to create electricity) and output (the electricity produced).

THE CHALLENGE:

Private equity firm Irradiant Partners sought an opportunity to invest in the innovative emerging market of anaerobic digestion by providing one of the few industry players in the US, Bioenergy Devco, with development capital. Irradiant tapped a cross-practice McDermott team, led by Chris Gladbach and Jim Salerno, to help structure and close the deal.

OUR OBJECTIVE:

To help Irradiant achieve its business goals and invest in a more sustainable future, McDermott needed to close the deal rapidly while protecting the client from unnecessary risk. The short timeframe, coupled with the complexity of the deal structure and diligence, required a deep bench of skilled lawyers with experience in the energy industry and in executing platform development deals.

THE OUTCOME:

In close partnership with Irradiant, McDermott worked around the clock to successfully close the deal within an abbreviated period. During that time, the team handled diligence work, used their findings to calculate potential risks, developed a unique investment structure and successfully managed a number of complex legal and transaction issues.

Irradiant’s $100 million investment in Bioenergy Devco will support the development of multiple anaerobic digestion facilities, ultimately driving sustainable organic waste recycling and reducing greenhouse gas emissions in North America.

Because Bioenergy Devco’s anaerobic digestion facilities are in development and not yet operational, Irradiant’s investment demonstrated confidence in the company’s vision and management story, providing development capital on the corporate finance level to help propel the projects forward. However, the deal also featured aspects of project finance, with diligence review examining the state of Bioenergy Devco’s projects, stress testing their contracts and more. To accommodate the crossover between corporate and project finance, the McDermott team developed a unique investment structure for the transaction.

MOVE FASTER:

Deals of this size and complexity typically require four to six months to close. In Irradiant’s case, McDermott married principles of project finance and corporate finance—drawing on the experience and knowledge of a premier private equity practice, along with an energy and project finance practice that Law360 recognized as its Project Finance Group of 2021—to provide Irradiant with the legal sophistication and responsive, client-oriented team they needed to close the deal much more quickly.

Learn about our energy and project finance and private equity capabilities.

THE CHALLENGE:

Traditionally, the idea of a Fortune 50 company engaging a big law partner would bring to mind white male professionals focused solely on bottom-line objectives.

But recent movements advocating for change in the workplace have empowered passionate diversity, equity and inclusion leaders in both industries to change that image. In order to facilitate real progress, Meta and its McDermott legal team have come together with shared priorities to tackle historical barriers and systemic disparities.

OUR OBJECTIVE:

The in-house patent team at Meta entrusts McDermott patent relationship partner and Head of Patent Prosecution Ahsan Shaikh as their embedded patent counsel, not only to develop a data-driven patent strategy to prepare, file and obtain patents, but also to implement actions that measurably increase its inventors’ diversity.

THE OUTCOME:

To do so, the McDermott and in-house Meta teams apply key principles from a Gender Diversity in Innovation Toolkit developed by the Intellectual Property Owners trade group, to which Ahsan contributed. Drawing in part on the toolkit’s tactics, they developed an internal survey to identify how select employees engage with the patent program, as well as revising Meta’s internal invention submission form. Among other changes, they replaced potentially biased words such as “invention” and “inventor” with “solution” and “contributor.”

Meta also instituted a concept called hybrid brainstorming, which aims to eliminate bias issues that stem from the traditional patent brainstorming process. In hybrid brainstorming, participants anonymously and individually write down solutions to a key technical problem, then return as a group to comment on the most valuable of the still-anonymous ideas. This strategy puts the focus on participation and the merits of each idea, rather than the person sharing it, sidestepping implicit bias due to gender, race or ethnicity. It also empowers everyone in the room to offer their ideas without fear of judgment and regardless of seniority level.

Based on the success of the ongoing diversity in innovation collaboration, Meta partnered with McDermott to help support the United States Intellectual Property Alliance’s first Diversity in Innovation Conference in July 2021. McDermott assisted with speaker arrangements and produced the virtual conference from the back end, including 15 sessions over four days, for more than 200 highly engaged attendees. The conference advanced the idea of publicly reporting inventor diversity numbers, creating transparency for the issue of diversity in innovation and pressuring large companies toward greater innovation equity.

Meta not only fosters diversity in innovation internally with help from its McDermott counsel, it also recognizes diverse legal representation externally: Our Firm was identified as one of the top three (of 40 US firms) on the Facebook 2020 Diversity Scorecard and was ranked #1 on the accompanying patent diversity survey.

DIG DEEPER:

Independent of the diversity initiatives, Meta benefits from its McDermott team’s proactive and business-oriented approach to the patent lifecycle.

McDermott leverages legal skill, technical industry experience, a unique data-driven approach, computer science and engineering degrees, and a deep understanding of the market to help Meta protect and defend its intellectual property. For nearly every aspect of the company’s emerging technologies, the McDermott team has helped file a related patent.

In close partnership with Meta, the McDermott team’s work continues to center around patent strategy for the companies. In all aspects of the business, they have made inventor diversity—and the resulting novel innovations—integral to their success.

Learn more about our patent litigation and patent portfolio strategy and counseling capabilities.

THE SITUATION:

More than a century after the US Congress first passed the Sherman Antitrust Act, the Antitrust Division of the Department of Justice (DOJ) announced a new application of the law: Beginning in 2016, it intended to expand the Sherman Act into the labor markets and begin prosecuting, for the first time ever, non-solicitation or “no poach” agreements as felonies.

High-profile healthcare company DaVita and its former CEO, Kent Thiry, were the first to be targeted under DOJ’s new approach. They were each indicted on three counts of criminal conspiracy to allocate the market for employees by allegedly entering into non-solicitation agreements with three other companies.

THE CHALLENGE:

Because this was the first criminal “no-poach” trial ever prosecuted by DOJ, DaVita, Thiry and their defense team at McDermott found themselves in uncharted territory. Led by Jeff Stone and Dan Campbell on the trial side and former federal prosecutor Justin Murphy in antitrust, McDermott represented Thiry from the earliest days of the criminal investigation. Along with additional regulatory and litigation counsel from several other firms, the McDermott legal team communicated closely with its client in mapping out a path to success.

The stakes were high, posing an existential threat for both Thiry and DaVita. If found guilty, Thiry faced the possibility of substantial jail time and a large financial penalty. DaVita faced regulatory risk under Medicaid, Medicare and private insurance statutes—all of which threatened the company’s ability to continue operating.

OUR OBJECTIVE:

The legal team knew that it faced a high burden. The only acceptable outcome was to secure a “not guilty” jury verdict for both Thiry and DaVita on all three counts of criminal conspiracy. A conviction on even one count would be a failure.

THE OUTCOME:

The criminal jury trial lasted 10 days, including two full days of jury deliberations. At the end of the case, the jury acquitted Thiry and DaVita on all counts—a seminal decision that vindicated Thiry’s and DaVita’s rights, allowed both Thiry and DaVita to return to normalcy, and struck a serious blow to DOJ’s attempt to expand the reach of the Sherman Act.

Two aspects of the team’s legal strategy stood out:

First, the defense worked hard to shape the law of the case from the outset. They moved to dismiss the indictment in its entirety, contending that DOJ’s attempt to treat the alleged crime as a per se violation of law was unprecedented and unwarranted. Although the judge did not grant the motion to dismiss in its entirety, he did accept many of the defense arguments and required the prosecution to prove that the defendants acted with the specific intent to constrain the labor markets. That proved to be a near-fatal blow for the government. The government had hoped to apply a per se legal standard, in which the mere existence of any “no poach” or non-solicit agreement would constitute a crime. In ruling on the defense motion at the outset of the case, the judge concluded that although the case would survive the motion to dismiss because the indictment sufficiently alleged the per se standard, the government would bear a much heavier burden of proof at the trial itself: DOJ would have to prove that the defendants intended to allocate the market for employees. That ruling set forth a pathway to victory.

Second, the defense structured its trial strategy to navigate the pathway contemplated by the judge. The defense team wove the facts of the case into the nuances of the law laid out by the judge. By consistently hammering on these points, the defense convinced the judge to instruct the jury at the end of the case that DOJ had to prove beyond a reasonable doubt that the defendants acted with the intent or purpose to allocate the markets for employees, and in trying to achieve this end, they sought to “end meaningful competition.” It proved to be a burden that the government could not meet.

DIG DEEPER:

In developing the strategy of weaving the law and the facts together, the defense team adopted a multi-pronged approach:

Shaping legal precedent: The team used the lack of precedent in this area to inform their legal arguments, leaning on a deep understanding of antitrust law with a specific emphasis on the nuances of the per se standard. This antitrust experience proved critical to the ultimate victory and shaped every aspect of the case.

Mastering the facts: In advance of the trial, the team prepared relentlessly, working hard to uncover every fact encompassed in more than 1.8 million documents and approximately 75 witnesses that were interviewed by DOJ. This was particularly important given the scope of DOJ’s three investigations, in which a few of those witnesses were interviewed as many as 15 times.

Testing and staying on message: The team also focused on crafting a straightforward, simple message for the jury. Using careful research techniques and mock juries, the team tested different ways of communicating its themes to the jury, curating an approach that balanced the law, the facts and the equities. Without this preparation, the powerful defense message would have been lost in a morass of irrelevant facts presented by DOJ.

Learn about our Healthcare Defense and Antitrust capabilities.

THE CHALLENGE:

Artificial intelligence and machine learning have led a digital transformation in healthcare, expanding providers’ resources and improving the lives of people around the world. To continue pushing the boundaries of possibility in the industry, Merck proposed a plan to help accelerate innovative technologies for drug discovery and development—and bring those innovations to market.

The company decided to launch a new venture called the Merck Digital Sciences Studio (MDSS), which would support promising biomedical startups and entrepreneurs with direct investment, access to powerful Azure Cloud computing and opportunities to pilot their technologies in collaboration with discovery and clinical scientists at Merck.

OUR OBJECTIVE:

To build a successful, bespoke program from the ground up, Merck needed a legal partner to coordinate with investors and collaborators, manage relationships, determine governance, draft the necessary documents and help with ongoing administration once the program was operational.

Led by Todd Finger as part of a wide offering of life sciences- and healthcare-related services, a McDermott team partnered closely with Merck to design and bring MDSS to life.

THE OUTCOME:

MDSS launched in June 2022, with an expectation of fielding 15-20 applications to fill 12 available spots. Within a few months, the program had more than 150 applicants.

Throughout the year prior to the launch, the McDermott team worked with Merck to orchestrate this entirely new, custom-tailored venture with the six companies and investors involved. Shaping the program and aligning the interests of all parties in the legal agreements and documentation required creative thinking and careful relationship management.

MDSS is a collaboration between Merck and the New Jersey Innovation Institute (NJII), a highly regarded innovator in healthcare and life sciences, which aims to provide MDSS with a pipeline of talented entrepreneurs. Another party, Microsoft, will deliver technology support for MDSS through Azure Cloud computing. In addition to working with Merck, NJII and Microsoft, the McDermott team coordinated with several investors: the Merck Global Health Innovation Fund, Northpond Ventures and McKesson Ventures.

McDermott remains involved in the program post-launch, participating in regular operations meetings with Merck as they select the first cohort of participants and get MDSS up and running.

GO FURTHER:

In addition to supporting digital healthcare innovation, the MDSS initiative will allow Merck and its partners to invest in promising startup companies, operating with the companies and with each other in a coordinated, effective way.

Learn more about our venture capital and healthcare capabilities.

THE CHALLENGE:

In every aspect of our lives, including payment for products and services, consumers increasingly expect a convenient, hassle-free experience.

With that in mind, Volkswagen Financial Services spent years designing and refining a digital payments platform specifically to serve the needs of auto industry consumers, distributors and suppliers. It seamlessly handles payments from the initial purchase and leasing to parking, fueling and in-vehicle entertainment purchases.

To expand this sophisticated e-payments platform into other industries, German-based Volkswagen Financial Services sought a joint venture with global banking giant J.P. Morgan.

OUR OBJECTIVE:

A German McDermott team led by Clemens Just, with significant contributions from Isabelle Mueller, navigated across time zones and cultural nuances in negotiating terms for the joint venture with J.P. Morgan’s US-based team and their external lawyers. They emphasized respect and collaboration, not confrontation, to facilitate a seamless transaction and preserve a good working relationship between Volkswagen Financial Services and J.P. Morgan.

THE OUTCOME:

Fueled by a cross-practice, cross-border effort, the deal successfully closed after more than 18 months of drafting documents, negotiating terms and securing regulatory and antitrust approvals in multiple jurisdictions—including Luxembourg’s Commission de Surveillance du Secteur Financier, the German Ministry of Economics and Technology and antitrust authorities.

The joint venture represents a victory for both parties: Volkswagen Financial Services’ existing platform gives J.P. Morgan a strong starting point for accelerating its digital payments capabilities and entering the automotive industry. And with a nearly 75% majority stake in the company, J.P. Morgan will use its considerable industry know-how, regulatory support and other resources to help grow the Volkswagen platform and enter new markets.

Through previous work with Volkswagen Financial Services and other clients, the McDermott team came into the deal process with a strong understanding of the industry and market conditions. Their direct, pragmatic approach to the joint venture and focus on clear, frequent communication and building trust with J.P. Morgan’s representation helped drive the successful outcome.

GO FURTHER:

McDermott’s international footprint equipped the team to deliver timely legal advice and business-focused solutions from dedicated US and German offices across practices, including high-octane corporate, commercial, IP, data protection, regulatory and antitrust groups. A team leader serving as Volkswagen’s single point of contact coordinated efforts with more than a dozen lawyers throughout the process, handling a variety of legal and cultural complexities, anticipating roadblocks and taking the deal across the finish line.

Learn about our Mergers & Acquisitions and FinTech capabilities.