Jury Decision Leaves Cybex In Tough Spot
In October 2004, Natalie Barnhard, a physical therapist at a clinic in New York, was using an exercise machine made by Medway-based Cybex International Inc. to stretch.
Tragically, the more than 600-pound piece of equipment fell on top of her, leaving Barnhard a quadriplegic.
The injury prompted a suit, and last week, a New York jury handed down a $66-million verdict against Cybex. The company has promised to appeal the decision.
In a letter to shareholders, John Aglialoro, chairman and CEO, vowed to "exercise all legal remedies" to overturn the verdict. The company maintains that the accident was not the fault of the company, but rather was due to the equipment being used incorrectly. He went on to say that the jury's award is an example of a United States legal system that has "run amok" and something that makes it difficult to operate a business in the United States.
"It's difficult to express the sense of injustice that management and employees of our company feel about the unfairness of this award," Aglialoro wrote.
Legal Concerns
The jury ruled that Cybex is responsible for 75 percent of the award ($49.5 million), with the clinic and the victim also being held partially responsible for the remainder.
The jury's decision comes at a difficult time for Cybex, which reported a $1.1-million loss during the first nine months of the year. That's an improvement over the same period in 2009, when the company reported a $3.4-million loss. The day after the settlement news broke, the company's stock dropped more than 36 percent to trade at $0.82 per share.
A spokesperson for the company said Cybex will ask the judge to vacate the decision and will appeal the ruling.
James Donnelly, a partner at Worcester-based law firm Mirick O'Connell, who is not involved in the case, said there are typically two reasons a judge would grant a motion to reverse or reduce a verdict: either there was a problem with the trial, or the judgment was excessive.
Even if the judge does side with Cybex, there is only so much he or she can do.
"A judge can't completely overrule a damage award by a jury, but he can, in substance, say this is too much," Donnelly said.
Such a decision by the judge is completely subjective and if the judge does decide to reduce the penalty, Barnhard's lawyers can appeal that decision. Furthermore, Donnelly said when judgments are reduced, it's unlikely to see the damage amount drop by more than 50 percent.
"That would still leave a pretty big number (for Cybex)," he said.
About $31 million of the award is the estimated medical costs Barnhard will require for the rest of her life, which include nursing care and a wheelchair, according to her lawyer.
The company only has about $4 million in available insurance coverage to cover the claim, the company announced in a press release. That represents less than 10 percent of Cybex's responsibility related to the judgment.
And still there is a final possibility: settlement. Donnelly said that even though the jury has already decided the case, Cybex lawyers could negotiate a deal with Barnhard's attorneys in which the company would agree to stop appealing the decision and would commit to paying a certain amount of money.
Michael Law, one of Barnhard's attorneys, said there have been no recent discussions of a settlement.
Cybex manufacturers exercise equipment at its 120,000-square-foot headquarters and production facility in Medway. The company has about 558 employees, according to its most recent annual report. Equipment from the company begins at around $1,600 and ranges up to more than $8,000.
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