A federal court in Maryland has dismissed a lawsuit that shareholders filed against Under Armour and its founder over Port Covington, planned as a $5.5 billion mixed-use development and future global headquarters for the sports brand.
U.S. District Court Judge George L. Russell dismissed the lawsuit Monday. It alleged company founder and former CEO Kevin Plank wrongly enriched himself in pursuing the 235-acre waterfront development in South Baltimore. The lawsuit had been consolidated in May from two shareholder lawsuits. It also named board members and Sagamore Development Co., Plank’s real estate firm, as defendants.
In June, Under Armour joined members of its board and Sagamore in seeking to dismiss the lawsuit filed in U.S. District Court.
The court agreed with the findings of a review group, appointed by Under Armour’s board, which investigated but found no evidence to support shareholder claims. Shareholders accused Plank of steering the company into disadvantageous agreements with Sagamore and harming stockholders.
One of the plaintiffs, Scott King, had asked Under Armour’s board to review the purchase of parcels along the Patapsco River in South Baltimore by Sagamore as early as 2012. King alleges Plank used inside knowledge about the apparel maker’s need to expand from its current Locust Point headquarters and schemed to acquire substantial land, both to sell to Under Armour and to keep as an investment.
But the governance review process found that Under Armour, which announced in 2016 that it would relocate to Port Covington, paid fair market value in a $70 million deal to buy a headquarters site from Sagamore. The real estate firm had purchased the land for about $35 million in 2014. Under Armour said it purchased the land at fair market value at no profit to Plank.
In an opinion issued Monday, the court found that the board’s investigation was conducted “reasonably and in good faith.”
Under Armour has since put plans on hold to move its corporate headquarters from Locust Point and build in Port Covington after years of rapid growth stalled, starting in late 2016. Sales growth had slowed and the company’s stock price tumbled amid store closings by key retailers, intense competition and changing demand for athletic apparel.
The impact of the novel coronavirus pandemic this year is another blow to Under Armour as well as other retailers and businesses that have had to shut down. An analyst said last week that the brand faces a “significant” setback in its three-year-old turnaround effort because of disruptions caused by the outbreak, including the closure of its stores earlier this month.
Despite Under Armour’s slowdown, development at Port Covington had been proceeding, led by Weller Development, which is overseeing the project for Sagamore and new partner Goldman Sachs Urban Investment Group. Construction is underway on a $600 million to $700 million first phase of offices, shops and apartments.
Businesses that had committed to nearly half the space in the first two office buildings include cybersecurity-related firms DataTribe, AllegisCyber and Evergreen Advisors. A four-building development called Rye Street Market is planned to include restaurants, shops, an open-air market and food hall, and a rooftop event space.
Baltimore Sun Media is a tenant at Port Covington with a long-term lease on its printing plant and business and news offices there.