Under Armour has joined members of its board and Sagamore Development Co. in seeking to dismiss a lawsuit that shareholders filed last year over Port Covington, a 235-acre waterfront parcel in South Baltimore set to become a $5.5 billion development anchored by Under Armour’s global headquarters.
Two shareholder lawsuits brought on behalf of Baltimore-based Under Armour allege that Kevin Plank, the company’s founder and CEO, wrongly enriched himself in pursuing the Port Covington redevelopment. The lawsuits were consolidated in May 2019.
The sports apparel maker and the other defendants filed a motion Tuesday in U.S. District Court in Maryland to dismiss the case. Besides Under Armour, defendants include Plank, board members and Sagamore — Port Covington’s owner and developer along with global investment banking firm Goldman Sachs. The Baltimore Business Journal reported the court filing Friday.
King had asked Under Armour’s board to review the purchase of parcels along the Patapsco River in South Baltimore by Plank’s private Sagamore Development Co. 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.
Before filing his lawsuit, King had requested an initial review in May 2017, as well as subsequent ones in January and March 2018. After each review, Under Armour’s board rejected King’s demand based on the recommendation of a review group made up of two independent directors and independent counsel. The review group had said it examined about 3,000 pages of Under Armour and Sagamore internal documents as well as press and media coverage from 2010 to now, and interviewed Plank and other directors and executives.
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King “is now asking the court to substitute his judgment for the business judgment of the board and to conclude that the board wrongfully rejected his demand,” the defendants argue, citing the board’s protection under a Maryland statutory rule that presumes that “in making a business decision, including rejection of a demand, a board ‘acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.’ ”
King had argued that the board was “conflicted” and that the internal investigation “was not independent and lacked good faith and reasonableness.”
Construction of the first phase of the Port Covington community, which has secured $660 million in public financing, began in May. The initial phase, to be built over the next two and a half years, will include 1.3 million square feet of offices, 337,450 square feet of retail, 976,667 square feet of residential and 285,000 square feet of hotel space. Weller Development is overseeing the project for the owners, and the entire project is expected to take 25 years to complete.
Several businesses already have committed to close to half the space in the first two office buildings. Three anchor tenants, all with a cybersecurity focus, will include DataTribe, AllegisCyber and Evergreen Advisors. A four-building development called Rye Street Market will include restaurants, shops, an open-air market and food hall, and a rooftop event space.
Under Armour, which unveiled plans in 2016 for a sprawling waterfront campus with three skyscrapers and a small stadium at the heart of the new community, now has one office building on the site but has delayed plans to develop the new headquarters. The property also includes the Sagamore Spirit distillery, owned by Plank, and Rye Street Tavern. The Baltimore Sun has a long-term lease on its facility there, which contains the news, business and printing operations of the newspaper and other publications.