Judge affirms Cybex vs. Kirila ruling…two years later

More than two years after a jury verdict that awarded former Pyramid Fitness owner Gene Kirila $900,000-plus in damages from Cybex International, the judge in the case has affirmed the verdict — and added some $1.5 million in interest, attorneys’ fees and penalties.

According to court documents obtained by SNEWS®, now-retired Judge Michael J. Wherry of the Court of Common Pleas of Mercer County, Pennsylvania, issued the affirmation of the verdict in a case that stemmed from the purchase by Cybex of Pyramid in 1993. It involved charges by Kirila of breach of contract, incorrect calculations of compensation, and various allegations of unfair deductions.

The case took nearly six years to wend through the courts before the original jury verdict was issued in February 2002. Cybex has said it does not agree with the rulings and will appeal the case, which could take 12 to 24 months. That appeal process could not begin until Wherry affirmed the verdict.

“Believe it or not, the judge was sitting on this until just recently,” Cybex CFO Art Hicks told SNEWS®. “He basically just affirmed the same jury verdict and added the interest and legal fees. So we’re just now able to start the appeal process.

“It’s the same issue, nothing has happened since February 2002 and now … amazingly,” Hicks added. “It’s amazing how our legal system works.”

No money has to be paid until the appeal process is complete, but it nevertheless should not affect Cybex financially, Hicks said. In the fourth quarter of 2001, in anticipation of the ruling, Cybex (Amex: CYB) put aside nearly $2.2 million in reserves — an amount it still expects should cover the ruling and legal costs in the verdict, which according to original court documents had found partly in favor of Kirila and partly in favor of Cybex.

The jury in the civil case had awarded Kirila $765,244 on the claim of incorrect calculation of incentive compensation, $107,284 for various improper deductions, and $57,272 for breach of a lease agreement. In a counterclaim, Cybex won $19,138 in alleged overpayments to Kirila, and the jury also found that Kirila did not clearly prove that Cybex had breached employment agreements without cause or that Cybex breached various contractual obligations. Cybex did not win its counterclaim that Kirila unjustly retained $291,794 in compensation.

The affirmation, issued March 31, 2004, entered a total judgment in Kirila’s favor of $2.45 million, composed of $872,528 in breach-of-contract damages, $369,074 in prejudgment interest on breach-of-contract damages, a statutory penalty under the Pennsylvania Wage Payment and Collection Law of $218,000, and attorneys’ fees of $993,783.

Kirila did not return a phone call seeking comment by SNEWS® to the offices of his current company in Pennsylvania.

SNEWS® View: “Amazing” is the word CFO Hicks used to describe this and we couldn’t agree more. Twenty-six months after the jury verdict, all parties finally can stop waiting and get on with an appeal so at some point — perhaps when all the parties involved are mere memories considering the way the system works — there will be a final verdict. Some legal sources have described this as “extraordinarily strange.” You can say that again. What the heck did Judge Wherry do for the last two years?