Tesco Fresh & Easy's Real Estate Law Firm McKenna Long & Aldridge Beefing Up Ranks With 11 New Hires Partly Because of the Grocer's Business Volume

[Photo Credit: Reno Tom for Fresh & Easy Buzz.]

The McKenna Long & Aldridge (MLA) law firm, which through its California real estate division is handling all of Tesco Fresh & Easy Neighborhood Market's property leasing and real estate development legal work for its stores in California, Nevada and Arizona, has hired 17 new lawyers for its Los Angeles office, 11 of which will work in the firm's real estate practice, in part because of the volume of business from Tesco's Fresh & Easy.

The new hires come from a boutique law firm in Los Angeles, which had a major real estate practice focus, that went out of Business on February 25.

McKenna, which has one of the top real estate practices in California and nationally in the U.S., acquired the small law firm, Brown Winfield Canzoneri Abram, after the firm went out of business and closed its doors for good on February 25. MLA acquired the firm the next day, according the law firm.

The attorneys joining MLA's real estate practice from the Brown Winfield firm include: Steven Abram, James Camp, Tony Canzoneri, Gordon Eng, Wendy Glenn, Geoff Mitchell, Bill Pham, Dennis Roy, and Mark Steres, all as partners; along with Ken Brown, senior counsel, and Donald Ries, of counsel.

"These lawyers are a perfect fit with our existing real estate practice and, with the stimulus bill emphasizing shovel-ready infrastructure projects that require our joint expertise, the timing could not be better," says McKenna's chairman, Jeffrey Haidet.

"The Brown Winfield lawyers are recognized leaders in public/private partnerships, real estate, eminent domain, environmental regulation, finance and land use - these are all issues that will be at the top of the list in today’s challenging environment."

McKenna Long & Aldridge is a U.S.-based international law firm which currently has about 470 lawyers and public policy advisors working for it. About 440 are lawyers. According to the firm, about one-third of those 440 lawyers work out its Los Angeles, San Diego and San Francisco offices, in California.

MLA has offices in: Los Angeles, San Diego; San Francisco; Washington, D.C.; New York City; Albany, New York; Atlanta; Denver; Los Angeles; Philadelphia; and Brussels, Belgium.

With the 11 new hires for its real estate practice, McKenna says it now has a total of 65 lawyers in its national real estate practice, with 30 of those real estate specialists working out of the three California offices mentioned above.

Most law firms with real estate practices on the west coast, particularly in California, aren't hiring or growing because of the current near-complete halt of commercial and residential development due to the financial-credit crisis and economic recession.

Unlike many law firm's though, MLA has a few big clients, like Tesco's Fresh & Easy, that are still relatively aggressive in their real estate acquisition and development activity despite the financial crisis and recession, in large part in Tesco Fresh & Easy's case because of the high-volume of new store sites it had in the pipeline already before the financial crisis and recession became full-blown.

McKenna also does a considerable amount of work, as a number of other law firms do, in the area of public-private partnerships, which includes real estate projects. The public aspect is government.

Since the U.S. Congress passed, and President Obama has signed, the nearly $1 trillion economic stimulus bill, which includes hundreds of billions for public-private development projects designed to create jobs and stimulate the U.S. economy, there has been a rush by law firms with real estate practices to get in on the ground floor of these so called "shovel ready" projects as they are lined up by the federal, state and local governments.

The stimulus bill-funded real estate and related projects will be contracted to private companies. And the projects, like all real estate development projects, will have a considerable amount of legal work involved in making them happen.

Since the commercial real estate business is so slow in California, the west, and throughout the country right now, law firms are hoping the stimulus-funded public-private projects can replace some of their lost revenues from the building and development halt brought on by the financial-credit crisis and recession.

McKenna has even created a special "Economic Stimulus" practice area as part of its gearing up for the potential big dollars involved in the public-private real estate projects to be funded by the stimulus money.

MLA also recently made a very high profile hire for its governmental affairs practice based out of Washington, D.C. The firm has hired the recently departed national chairman of the Democratic Party, former Governor of Vermont, and former 2004 Democratic candidate for President, Howard Dean, according to the law firm.

Dean, who is a physician, will be based in the firm's Washington, D.C., office as an independent consultant (not full-time with the firm), and will serve as a strategic adviser to its health care and energy clients, says Eric J. Tanenblatt, who heads McKenna's national government affairs practice.

Since health care reform is a major agenda item in President Obama's just-presented budget, it looks like the law firm made a good hire in that regard.

Doctor Dean ran for President in 2004, having health care reform as one of his top campaign issues.

As national chairman for the Democratic party, Howard Dean is credited with helping to create the national strategy that helped get President Obama elected, along with electing more Democrats to the House and Senate, where Democrats hold a majority in both bodies.

Before Dean became party chairman, past Democratic candidates for President tended to run a "blue state" regional strategy. Candidate, and now President, Obama campaigned in most all of the "red," or traditional Republican, states, winning a number of them.

From the first day he took office as party chairman in 2005, Dean advocated and created the party strategy for a national rather than "blue state" Presidential campaign for 2008, something Obama and his team agreed on and based the successful campaign on both independently of and in cooperation with Dean and the national party.

And in terms of the 11 new real estate attorney's (out of the total 17 new lawyer hires) hired by McKenna Long & Aldridge for its California real estate practice, it looks like major client Tesco Fresh & Easy will get some added legal expertise on its account. But -- can they help Tesco Fresh & Easy Neighborhood Market sell more groceries?

California State Appeals Court Cuts Tesco's Fresh & Easy A Big Break; Overrules Judge's Ruling on Distribution Center Environmental Review

The 800,000-plus Tesco Fresh & Easy Neighborhood Market distribution center pictured above includes 500,000 square feet of roof top solar energy panels, as you can see in the photograph. Tesco says the massive solar panel array and system provides about 70% of the building's total energy needs. One doubts this "green" aspect of the distribution center would need an "environmental review," since the impressive roof top array and solar energy system is among the largest of any commercial building in the U.S

A California State Appeals Court in Riverside County, California last Thursday overturned a Riverside County Superior Court judge's previous ruling that the 820,000 -to- 850,000 square foot Tesco Fresh & Easy Neighborhood Market distribution center in the Southern California county would have to undergo a new series of environmental impact studies and reviews. That ruling was made by Riverside County Superior Court Judge Thomas Cahraman in 2008.

The Riverside-based appeals court ruling was first reported yesterday (Friday, February 20, 2009) by Lou Hirsh in the Press-Enterprise, a daily newspaper that covers Southern California's Inland Empire region, where Riverside County is located. [You can read the report here.] The Inland Empire region comprises Riverside County and San Bernardino County.

The Tesco Fresh & Easy distribution center is located on land that once was a U.S. Air Force base and is now the Meridian Business Park, located off of Interstate 215 in Riverside County.

Fresh & Easy Buzz verified the ruling with the appeals court yesterday. We also reviewed a summary of the appeals court's ruling.

The original ruling against Tesco was made by a judge in response to a lawsuit filed by a non-profit citizen, health and environmental organization in Southern California called Health First. The United Food & Commercial Workers (UFCW) union, which is attempting to organize Tesco Fresh & Easy store-level employees, was supportive of the Health First lawsuit.

When the Fresh & Easy Neighborhood Market distribution center was built in 2007 it didn't go through an environmental review process separate from the one that the entire Meridian Business Park development went through. Tesco was given approval to take this route by the local March Joint Powers Authority, a government agency that is responsible for all development on the former U.S. Air Force land. The authority approved Tesco's plans for the distribution center.

However, Health First argued that projects the size of the Tesco Fresh & Easy distribution facility need to go through separate, individual environmental impact reviews. Lawyers for Tesco and the March Powers Authority disagreed. As a result, Health First filed a lawsuit; the lawsuit the Superior Court judge agreed with.

Tesco and the March Powers Authority then appealed that judge's ruling to the Riverside-based state appeals court, which ruled in favor of the two parties on Thursday, overturning the judge's decision and ruling against Health First's lawsuit on the appeal. [We reported on the appeal on April 16, 2008 here: Tesco and Riverside County March Joint Powers Authority File Appeal Over Fresh & Easy Distribution Center Environmental Review Court Order.]

The appeals court decision isn't final yet though. Health First's legal counsel has the right to offer oral arguments against the appeal to the court.

If Health First decides to go this route then Tesco's and the March Powers Authority lawyers also will make rebuttal oral arguments. If that happens then the court will either uphold its ruling after completion of all the oral arguments or reconsider it.

As it stands right now, the appeals court's decision is set to become final in March if Health First decides not to further pursue the case further by offering the oral arguments.

The appeals court's decision is an extremely positive one for Tesco because had the court agreed with the previous judge's decision, the company would have had to temporarily close the Riverside County Fresh & Easy Neighborhood Market distribution center and pay to have a complete environmental impact report conducted on the facility, which could take as long as a year to do. Further, it's possible that such a review would end up requiring Tesco to make numerous expensive changes to the facility or even close it all together.

The facility is Tesco's only one. All of the about 112 Tesco Fresh & Easy stores in Southern California, Nevada and Arizona receive fresh foods and grocery products from the Riverside County distribution center.

Had Tesco been forced to shut it down, even temporarily, it would have had to find an alternative way to distribute products to its stores. Such an alternative would be very expensive and disruptive for the grocery chain, particularly because the distribution center also includes a kitchen facility where the grocer prepares and packages all of the fresh, prepared foods items sold in the stores. It would be near impossible to find an alternative to the kitchen based on the centralized way in which Tesco's Fresh & Easy operates its prepared foods program.

Tesco also pre-packages most of its fresh produce and meats at the distribution center. The pre-packaged fresh foods are then shipped that way to the stores. This centralization process also would have made it difficult and expensive for the grocery chain to find an alternative had it been forced to close the facility.

Based on the appeals court ruling on Thursday, it's likely that even if Health First goes forward with the oral argument phase, that the court will uphold its Thursday ruling. As of yesterday, Health First had not indicated to the Riverside-based appeals court if it plans to go forward with the oral arguments.

Tesco and Riverside County March Joint Powers Authority File Appeal Over Fresh & Easy Distribution Center Environmental Review Court Order

Inside Tesco's (above) Riverside County distribution center in Southern California.

According to court documents filed in Riverside County in Southern California, lawyers for Tesco and a regional governmental body called the March Joint Powers Authority are appealing a court ruling which rescinded the authority's previous approvals of Tesco's huge 850,000 square foot distribution center which is in Riverside County, along with the company's U.S. corporate headquarters

The court ruled the approvals were invalid after the filing of a lawsuit in 2007 by a group called Health First, which is opposed to some environmental impact aspects of the distribution center.

Tesco opened the huge distribution center in November, 2007 at about the same time its first stores opened in Southern California. The Riverside County DC remains open and currently serves the 61 Fresh & Easy grocery stores operating in Southern California, Arizona and Nevada.

However, the Riverside County Superior Court earlier this month ordered the March Joint Powers Authority, which approves permits for facilities like the Fresh & Easy distribution center in the county, to submit a plan for obtaining environmental approvals for the facility within 90 days, which would mean doing so by no later than early June, 2008.

Riverside County Superior Court Judge Thomas Cahraman first ruled in November, 2007 in the civil suit filed by Health First that the Tesco Fresh & Easy Neighborhood Market distribution center was not exempt from state of California-required environmental reviews.

The March Joint Powers Authority had granted Tesco its permit for the facility based on an environmental plan it reviewed for the Meridian Business Park, which the Tesco facility is a part of. The business park is located on property that once was home to a former air-force base which the U.S. federal government closed. Judge Cahraman ruled however that the Tesco Fresh & Easy distribution center needed its own, separate environmental review and impact statement.

According to the court documents filed on April 8, 2008, Tesco and the March Joint Powers Authority are appealing the most-recent court order that Tesco's Fresh & Easy distribution center must go through an environmental impact review to California's Fourth District Court of Appeals, which is located in the city of Riverside.

If Tesco and the March Joint Power Authorities lose their appeal, it could mean a costly environmental review process for the distribution center, which could result in potential distribution and supply chain problems for the start up, small-format, convenience-oriented grocery chain.

Tesco has already experienced some supply chain problems, including stores having out-of-stocks of fresh, prepared foods, because of general production and logistics problems involving the distribution center.

Tesco CEO Sir Terry Leahy said nothing about the appeal of the court's ruling yesterday in a conference call with analysts as part of the retailer's reporting of its fiscal year annual sales and profit.

Additionally, CEO Leahy taped a four minute public relations-style question and answer session with a gentleman who asked him questions about Fresh & Easy USA. The interview was webcast yesterday as part of the company's sales and profit report communications efforts.

In the video webcast, Tesco chief Leahy didn't mention--nor did the "interviewer" ask him--anything about the Riverside County distribution center situation or the filing of the appeal regarding the court order that Tesco and the March Joint Powers Authority file a plan for an environmental review for the facility by June, 2008.

The distribution center environmental review issue has come up before in the U.S. press. However, Tesco's Fresh & Easy USA has said they believed they had the environmental review situation under control. However, that doesn't appear to be the case.

There is no date set as of yet when the Riverside-based Fourth District Court of Appeals will hear the case.

Additionally, no court order has been filed which prohibits Tesco from continuing to operate the Riverside distribution center and servicing its stores.