Cybex International Inc., Medway, MA, reached a $19.5 million settlement in the Barnhard v. Cybex International Inc. product liability lawsuit, the company announced Monday.

“We are financially strong. We were able to withstand this,” Art Hicks, COO of Cybex, tells Club Industry.

In December 2010, a jury found Cybex 75 percent liable for a $66 million judgment in a case involving Natalie Barnhard, an employee at Amherst Orthopedic Physical Therapy, Buffalo, NY, who was stretching on a 25-year-old Cybex 4106 ZR Classic leg extension machine when it fell on her, rendering her a quadriplegic. Cybex has spent the past year appealing the decision.

“Though we remain convinced that Cybex was in no way responsible for this tragic accident, we believe it is in the company’s best interest to resolve the lawsuit at this time,” Cybex Chairman and CEO John Aglialoro said in a memo to shareholders and supporters.

The settlement calls for Cybex to pay the plaintiff, net of insurance, approximately $19.5 million, of which approximately $18.5 million will be paid at the consummation of the settlement, which is expected in mid-March, Hicks says, after execution of a definitive settlement agreement by Cybex, the plaintiff and the third-party defendant, Amherst Orthopedic Physical Therapy.

Cybex will secure the $18.5 million through available cash, its existing line of credit and from its principal bank, Hicks says, adding that the loans would be paid back over time. The remaining $1 million will be paid to Barnhard over seven years.

As part of the settlement, Cybex is released of all further liability with respect to the litigation, which will be dismissed with prejudice, meaning the case cannot be brought back to the courts.

Cybex decided to settle after much deliberation, Hicks says. The Fourth District Appellate Court of New York had revised the verdict amount down to $44 million. Cybex had appealed the case further to the Court of Appeals of the State of New York, which could have revised down the amount even further or reversed the decision, but the court also could have chosen not to hear the case at all.

Beyond that, legal costs were mounting for Cybex. Hicks would not disclose how much Cybex spent in legal fees for the case and the appeals process other than to say it was “significant.” And those costs did not include the business the company lost during the process.

“We have certainly lost sales from it,” Hicks says. “That went into some of the thinking of the settlement. There are business implications involved.”

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