Litigation against fitness facilities and equipment manufacturers is on the mind of more people in the fitness industry after the $66 million judgment and the $19.5 million settlement in the Barnhard vs. Cybex International lawsuit, according to several people in the industry. That concern led some manufacturers and fitness facility operators to meet about litigation at the International Health, Racquet and Sportsclub Association (IHRSA) conference on March 14 in Los Angeles.
“We had some great, well-rounded participation from all different perspectives,” Art Hicks, president and COO of Cybex, Medway, MA, says of the meeting, which was led by Joe Moore, president and CEO of IHRSA.
Hicks did not want to share how many people were in attendance or what groups were represented other than that they were health clubs, manufacturers and the Sporting Goods Manufacturers Association. However, he did say that the meeting was the first time that the groups came together for a formal discussion on litigation, spurred by calls for tort reform by John Aglialoro, CEO of Cybex.
Paul Byrne, president of Precor, Woodinville, WA, had planned to attend the meeting but was not able to be there. He says that because the Barnhard vs. Cybex settlement was the biggest settlement in the fitness industry, it draws attention to the industry.
“I expect more attention from attorneys looking for fertile ground,” Byrne says. “We all have to be aware that because of this suit, attorneys will be looking at and in some cases may be reaching out to the fitness industry. I think it signals tougher times ahead.”
Byrne says that tort reform is too large of an issue for an industry as small as the fitness industry to take on. Instead, the industry should look at ways to protect itself.
“That makes more sense to me,” Byrne says. “We have very limited dollars from a lobbying perspective. Let’s continue to focus on the positive things we can do to have the government help us get more people fit and living the healthy lives that will ultimately reduce health care costs. The government likes that message and understands that message. But to take those dollars and put them in tort reform when the likelihood of getting tort reform is virtually zero doesn’t make sense to me.”
Hicks says that the industry as a whole can work on things through the legal system to improve the climate for business. The meeting participants agreed that they have a lot of common interest, Hicks says, and that the groups should work together for the collective benefit of all. Certain tangential groups, such as the Sporting Goods Manufacturers Association, have initiatives in place that the group could collaborate on. The group did not develop any specific plans beyond some follow-up steps and calls for another meeting, he says.
“There was agreement that there are pieces of different puzzles already in place, so we don’t have to reinvent the wheel—we just have to work together,” Hicks says. “The manufacturers have some things that the clubs can benefit from and vice versa, so you put it together for our mutual benefit, and it makes sense.”
Although the meeting was spurred by the Barnhard vs. Cybex case, product liability lawsuits are not the only concern in the industry.
“During the ‘great recession,’ there was an increase not necessarily in litigation but in people wanting something from a business when something went wrong, even if it wasn’t the business’s fault,” says Bill McBride, president and COO of Club One, San Francisco. He did not attend the litigation meeting at IHRSA.
McBride offered as an example a case at one of his clubs where a member who had a seizure fell on another member. The fallen-upon member wanted the club to pay him because he was injured.
“There was no way I could have prevented that injury,” McBride says. “That was an interesting situation because it wasn’t my fault. It was an act of nature. It was another person, not an employee. But there is sometimes an expectation that if it happened on your property, [the member needs] some type of compensation.”
Lynne Brick, CEO of Brick Bodies and Lynne Brick’s Women’s Health and Fitness, Cockeysville, MD, also did not attend the meeting, but she says that club owners must protect themselves.
“Litigation is the biggest threat to our industry,” Brick says.
The greatest threat may be for the larger chains that can pay out more, but those payouts often come from insurance companies, which means club operators and manufacturers must ensure they have adequate coverage.Prior to the Barnhard case, Cybex carried $10 million in insurance coverage. At the time the initial $66 million judgment in the Barnhard case was handed down in December 2010, Cybex had just $4 million left in its policy for the period. Since that time, Cybex has increased its coverage “dramatically,” Hicks says, without revealing an exact amount on the insurance coverage.
The case spurred Precor to review its insurance coverage, Byrne says, adding that he was reassured the company’s coverage was sufficient.
Increases in insurance coverage lead to increases in costs, which members ultimately must pay for.
“I hope that we can educate people that these types of claims aren’t free,” Hicks says. “They could result in membership dues increasing, equipment costs increasing. It is a cost that will eventually have to be paid by consumers or users.”
McBride and Brick advise other club operators to plan ahead.
“The approach we have taken at Club One is risk management,” McBride says. That starts with a solid, well-articulated, large-font waiver. It also involves ensuring people understand their risks by posting signage that indicates the risks involved in exercise.
Perhaps most importantly, Club One completes a quarterly operational standards of excellence inspection for every site. That inspection includes things such as checking that no trip hazards exist and that the spacing between equipment meets standards. It also includes having an accident and injury process in place to make sure staff handle member and worker incidents or injuries in a certain way.
“The approach that we take on this is common sense and what is the right thing to do,” McBride says. “If something does go wrong that we feel is our responsibility, we take care of it.”
Brick advises club operators to hire good legal counsel.
“Make sure you have a good lawyer who understands our industry,” she says. “That’s critical.”
She also says that club operators should use resources such as IHRSA to make sure that they follow the standards and protocols required. Communicating with other club owners through networking events or roundtables also is critical.
Byrne says that meetings like the one at IHRSA offer an opportunity for manufacturers and club operators to work together and look at ways to limit liability through release forms and education.
“The unfortunate part of this is that there may be products that don’t make it in the marketplace because maybe there is more inherent possibility for misuse,” Byrne says. “Any fitness product that requires instruction to use properly could be the target of an unfair lawsuit.”
The group plans to meet again to discuss the issue further, Hicks says, but no date has been set.