Slammed by worried customers' calls and appalled by alleged lies in a press release issued by attorneys for the plaintiff in a personal injury lawsuit it lost, defendant Flex Fitness told SNEWS it has met with its attorneys and will counter with its own legal actions in the wake of a $16.3 million jury verdict against the company.
Harold Leon Bostick, then 31 and a first-year law student, sued Flex in April 2001, charging that a defective and dangerous design on the company's Smith machine in the Gold's Gym in Venice Beach, Calif., caused him to have a crushing spinal injury and be rendered a quadriplegic. A jury in a Los Angeles Superior Court awarded Bostick $16,274,966 in damages after a 23-day trial that concluded July 25. An additional punitive phase concluded July 28, awarding $1.
"There are numerous untruths in the releases I've seen, and we're addressing them," Flex Founder Mark Nalley told SNEWS, just returning to his office after a nearly three-hour meeting with several attorneys.
Steven Smith, the plaintiff's attorney with Smith, Chapman & Campbell, told SNEWS later: "None of this matters; the jury spoke on what happened."
Charges of lies from both sides
The release, dated July 28 and sent over news and business wires by the plaintiff's legal firm from Santa Ana, Calif., stated, for example, that Flex removed safety stops on the Smith machine, and that the stops were removed because of fears of reduced sales, although the company was aware a debilitating injury could occur -- both of which Nalley said were "absolutely, unequivocally, not true." Smith called Nalley's denial "a lie."
Also left unstated in the release was mention of an Aug. 26 court hearing in which a judge is scheduled to decide if Flex will indeed be responsible for the entire amount or a much lower amount, according to court reports and jury verdicts obtained by SNEWS. Other actions that day could include one for a new trial or the filing of an appeal. That omission left readers to infer Flex must now pay the jury's nearly $16.3 million verdict for damages -- $3.3 million for economic and $13 million for non-economic.
"There's a whole lot that's shaking out between now and August 26," Smith pointed out.
The plaintiff's release also noted that Gold's Gym settled out-of-court for $7.3 million on July 18, according to court documents. Not available are details of an out-of-court settlement with Life Fitness that occurred several months ago -- estimated by some insiders as between $130,000 and $170,000. Life Fitness' Smith System was also in the Gold's Gym, along with four other Smith machines; according to Nalley and Flex President Dan Block, plaintiff Bostick and witnesses in the gym could never state clearly which of the six machines he had actually been using.
"The main issue is, whose machine was it," Nalley said.
Countered Smith for his plaintiff: "That's nothing shy of a story made up by Flex."
Bostick allegedly testified in court that he was a beginner who knew nothing about weight-lifting and shouldn't be assumed to have knowledge about the machines. In counter, Nalley and Block said their firms found past photos of Bostick competing in a body-building competition.
"He's not a beginner," Nalley said, "and he knows about Smith machines."
Smith said that Bostick, already having earned an MBA and now entering his last year of law school, had entered the novice division of a competition a decade ago when he was in the Marines -- coming in last. "It doesn't matter if you're a novice, intermediate or advanced," Smith said, "when you go to a machine, you expect it to function safely."
Flex also said that Bostick was lifting 455 pounds and collapsed because it was more weight than he could handle and tore both quadriceps muscles in the muscular failure. It was the collapse, they claimed, that caused the spinal injury. "It doesn't matter," Smith said. "You can use 50 pounds and tear muscles."
Legal actions planned
To make matters more complicated, insurance companies are bound by law to protect their clients, Nalley explained, but when the plaintiff's attorneys went to Flex's insurance company Atlantic Mutual about 18 months ago asking for a $1 million settlement (the amount of the company's policy, Block said), the insurance company declined. Nalley explained that if that happens, damages won over and above the policy amount must be paid by the insurance company.
Flex plans to sue its insurance company for lack of protection and misrepresentation, Nalley said.
In addition, Flex is evaluating the alleged lies in the public statements made by the plaintiff's attorneys, and representatives are considering responses.
"This is a chess game," Nalley said. "This whole case has been really bizarre."
Industry call to action?
One of Nalley's biggest points now is that the fitness industry is not united in any way -- as for example the automobile industry is, he said -- which could help companies work together on legal and legislative issues that affect them all, like this one.
"This should be a wake-up call," Nalley said. "This should cause manufacturers and dealers to unite and get legislation, like the automobile industry has. This industry is naked. There are no overseeing governing bodies to protect it.
"Manufacturers don't get together and talk about important issues like these," he added, calling this an opportunity to get a group together before anyone else has to go through similar cases.
Interestingly, Smith also sees the case as an industry call to action, but in a different way. He says this should serve as a message that companies need to be more responsible so all consumers can be safe.
SNEWS View: When we first saw the release, we were shocked over the very statements that Nalley claims are outright lies -- removed the stops because the company didn't want to impact sales??!!? But, in contrast to other industry news services that simply ran the press release as is, SNEWS knows there are two sides to every story and went after them -- only to find out there were a lot of alleged holes in this one that may still take a long time and a lot of money to get plugged up. And we expect a lot more tit-for-tat and two-way charges of untruths along the way. A Smith machine is a standard piece of gym equipment; no, we can't speak exactly to the ones in the Gold's but, as Nalley pointed out, this one has been sold for 13 years with "an unblemished record," so it does cause you to scratch your head a bit â€¦ and to question the legal system. About the release's statement that the jury found Flex "acted with malice and oppression," a SNEWS legal source said, "Holy sh--, how do you get malice and oppression out of a company that makes weight-lifting equipment?"
We certainly agree with Nalley that this is yet another incident that points toward the real need for one unbiased non-profit fitness industry alliance (as we wrote in our GearTrends fitness magazine out in late July) that represents everybody and every company without bias in matters that include legislative, legal, promotional and business. This is an unfortunate and convoluted case that has a lot of facets -- particularly unfortunate for Flex since the verdict came four months after it was sold to a Chicago-area real estate developer. We assume 26-year-old Flex will survive, but dealing with this matter will consume an inordinate amount of time that it could be investing in business and products. Look to SNEWS for additional reports -- both sides, of course -- as the case progresses.