Jury awards $1 to Specialized in Cotati bike feud case
South Bay jurors awarded $1 in damages Friday to the Specialized bicycle company in a breach-of-contract trial against two former employees who started their own bike business in Cotati.
Volagi co-founders Robert Choi and Barley Forsman called the verdict a victory for themselves and workers at large companies everywhere who dream of someday opening their own firms.
Santa Clara County jurors split, finding Choi breached a non-competition clause in his contract and Forsman didn't. But the nominal award shows the panel did not consider the violation serious, the men said.
"It sent a clear message that people should pursue their dreams," said Choi, 50, shortly after the verdict was announced. "Just because you sign a contract doesn't mean they own you 24/7."
Specialized is expected to seek legal fees at a future hearing. Attorneys for Choi and Forsman estimated the cost to the mammoth manufacturer exceeded $2 million.
A lawyer for the Morgan Hill-based company, Robert Shwarts, declined to comment.
The case was closely watched within the cycling community.
Andrew Nelson, general manager of the Santa Rosa Trek store, said many of his customers felt Specialized was overstepping with its claims against Choi and Forsman.
"Small companies have a right to grow and establish themselves," said Nelson, whose shop sold the first Volagi bikes in July.
Jim Keene, a Santa Rosa Specialized dealer and co-owner of Norcal Bike and Sport, said Specialized had to sue to protect its business. He said Volagi bikes bear a strong resemblance to Specialized products, right down to the red and black color scheme.
"Specialized has always been deeply embedded with that red color," he said. "It looks like they pushed it for sure."
Choi and Forsman were employed at Specialized from February 2008 to spring 2010. They quit to start Volagi, which makes high-end bikes in the $2,500 to $4,500 range.
Specialized sued, making nine different claims, including theft of trade secrets. A judge tossed out all but breach of contract.
Choi said jurors likely sided with Specialized in his case because he sent emails before he quit and downloaded the company's contacts list.
However, Choi said he and his partner never took ideas from Specialized. Neither of the men designed bikes during their employment.
Their lawyer, Tyler Paetkau, said their contract stated they couldn't work for a competitor or start a business while they remained employed. They argued it didn't bar them from planning a new venture.
Paetkau said it cost about $400,000 to mount a defense against Specialized, which he said was known to practice "competition by litigation."
"Our guys didn't cave," he said. "They kept up the fight at great personal risk."
Specialized founder Mike Sinyard testified during the four-day trial. Choi and Forsman also took the stand.
Jurors began deliberations Thursday and returned with a verdict at about noon.
Forsman's wife, Susan, reported the decision on Twitter.
"Best dollar we ever spent," she wrote.
The company intends to pay the damages on Jan. 21 in an unusual way. It is attempting to organize a group of 100 cyclists, each carrying a single penny, who will depart from Volagi offices in Cotati at 6 a.m. and ride 100 miles to Mountain View, where they will deposit their copper coins on Specialized's doorstep.
"They can't take away our passion for cycling. They can't take away our support from people who think the lawsuit is frivolous," Susan Forsman said.