Judge Orders Trek, LeMond to Settlement Conference
Trek and Greg LeMond have been ordered by the judge presiding over their case to hold a settlement conference in a last-ditch effort to avoid going to trial. U.S. magistrate judge Janie Mayeron ordered that the two parties to meet at a St. Paul, Minnesota, courthouse on January 28 for the purpose of perhaps negotiating a settlement.
As a prelude to the meeting, counsels for both parties are to meet on or before January 18 for a “full and frank discussion of settlement.”
However, if Trek and LeMond do not come to a settlement at the settlement conference, each attorney is required to submit a confidential letter to the judge. In it the attorneys must each give a progress report including outstanding issues and analyze their case’s merits and weaknesses.
While the roots of the conflict began with LeMond criticizing Lance Armstrong’s association with Dr. Michele Ferarri, a known proponent of EPO use for cycling, for business purposes, the conflict began when Trek informed LeMond that it would not renew its 13-year licensing agreement with him when it expires in 2010. LeMond filed suit on March 20 claiming that Trek had promoted Armstrong ahead of his brand and asked the court, essentially, to require Trek to continue to make and promote LeMond bicycles. On April 8, Trek sued to sever all ties with LeMond.
Trek cited multiple reasons for severing the relationship including dilution of the LeMond brand name due to mass-merchant line of parts bearing the LeMond name. And while there has been wide-spread belief that the brand never sold well, industry statistics show LeMond was the fifth largest road bike line in the U.S. in 1999.
Whether the case settles out of court seems to be up to LeMond and what his greatest priority is. If protecting his brand and his income is his greatest priority, then the case will get settled behind closed doors; terms of the settlement are likely never to be known. If LeMond’s greater desire is to attempt to expose Lance Armstrong as sporting fraud, then this case is bound for a jury and the fireworks will be considerable.
LeMond’s choice may be pivotal. Should he pursue an open trial, the number of companies will to do business with him will shrink considerably. Certainly any players that consider themselves risk-averse would shy away from any association.
An out-of-court settlement would end the mudslinging and let LeMond get back to his mission of marketing a line of bicycles bearing his name. The business climate has changed significantly for the bike industry since LeMond negotiated his deal with Trek in 1995. The market consolidation taking place then has largely dried up. However, there is one notable exception.
Dorel, the parent company for Pacific Cycle and Cycling Sports Group, is the cockroach that ate Cincinatti of the bike industry. Dorel’s cycling brands include Mongoose, Schwinn, GT, Cannondale, Pacific, Roadmaster, Dyno and Sugoi.
And they are still buying. Recent purchases have included Australian distributor Gemini Bicycles as well as UK distributor Hot Wheels and Circle Bikes. Dorel also acquired the Iron Horse at auction for a measly $5.2 million following the bike brand’s demise amid multiple lawsuits and finger-pointing. Oak trees aren’t a shady as the deals made to try to keep the brand operational.
If LeMond were to go quietly, it wouldn’t take a science fiction author to imagine a deal with Dorel that could place the LeMond name in the mass market, the sporting goods chains or the IBD before the end of 2010.