Cybex International has received a mandatory notice from the Nasdaq exchange where it trades (CYB), noting it has fallen below the standards to remain listed.
The stock price has sunk below the Nasdaq’s minimum of $1 for 30 consecutive days -- a plunge taken immediately following the Dec. 7, 2010, jury verdict against it of $66 million in a product liability suit. As of Dec. 9, 2010, the company’s assets were listed as $88.64 million, with annual sales in 2009 hitting $120 million.
Not that a delisting notice affects day-to-day business in the short term. A company continues to operate and trade normally -- with the hope of recovering in the 180 days allowed by the exchange. Nasdaq rules state that a company’s price must meet or exceed the $1 minimum for at least 10 consecutive business days to not be threatened with delisting. For Cybex, that means a deadline of July 20, 2011.
“This doesn’t affect you at all day-to-day,” Cybex COO Art Hicks told SNEWS®. “It’s not really a concern. We don’t have to do anything today.”
Hicks said the only affect could be on a company’s attempt to raise money, which is not what Cybex needs to do now. He said the company has plenty of cash. Rather, the effort is going into a court hearing now slated for Feb. 17, as well as a subsequent appeal already planned by the company, he said.
The court and appeal process could take many months, he explained. A brief filed by Cybex on Jan. 25, 2011, stated its reasons for the judge to have the verdict reduced, including negligence by the plaintiff. New York State Supreme Court Judge Diane Devlin is expected to hear both sides of the case, and then take 30 days to rule on it. The court is also expected to do an additional analysis of the award.
“In the meantime, we will start the post-trial appeal process,” Hicks said. “We see no reason to wait on doing that.”
The case involved physical therapy assistant Natalie Barnhard (www.nataliebarnhard.com), an employee of Amherst Orthopedic Physical Therapy in New York. Barnhard became a quadriplegic after she allegedly pulled over on herself a Cybex weight machine -- the Eagle Leg Extension made since 1983. Barnhard vs. Cybex was filed in 2005, about five months after the late 2004 accident.
According to verdict papers obtained by SNEWS, the jury awarded $8 million for pain and suffering, $151,900 for lost earnings and benefits, and $1.69 million for medical expenses -- for time up to the verdict. For damages after the verdict and into the future, the jury awarded $25 million for pain and suffering, $1.8 million for lost earnings and benefits, $28.6 million in medical expenses, and $792,435 for care for potential children. The judgment is to be split with Cybex paying 75 percent and Amherst paying 20 percent, while Barnhard is to cover 5 percent.
“It’s certainly a big number,” Hicks said. But the number and the case are not just for Cybex to think hard about but also for the industry, he noted.
“It’s daunting to the industry. This could happen to anybody. We’re all in it together,” he said, calling the number “arbitrary.”
“As an industry, this is a critical issue,” he added.
Cybex, which carries a $4 million liability insurance policy, said the facts in the sad case are straight-forward: Barnhard was not using the piece correctly. With rising medical bills and long-term care needed, Hicks said she needs money and she wouldn’t want Cybex to go out of business because then the company could not pay any amount.
“If we have to pay something,” he said, “it has to be something we can afford.”
Judges are known to substantially reduce some huge jury verdicts like this one, according to legal experts. One legal expert SNEWS consulted noted that a company must be worth a “huge amount” to have this kind of verdict upheld. Trial judges, in fact, have total power to set aside a jury verdict.
“It doesn’t matter how large (the verdict) is,” the attorney said, “nobody ever pays it, and they’ll appeal for years.”
According to the plaintiff’s attorney in a statement, the award is believed to be the largest of its kind in the history of Erie County, where the incident occurred in Buffalo.
As of Jan. 27, the company’s price on Nasdaq had sunk to $0.72, down 7.69 percent on a volume of 20,200. Its 52-week high was $1.80 on Aug. 23, 2010. For most of 2010, its stock price had been wavering between about $1.25 and $1.80. Hicks noted Cybex could, for example, move to another exchange or do a reverse stock split to offset any problems.