LeMond Litigation, an Update

Greg LeMond and Trek Bicycle Corporation have reached an out-of-court settlement. The agreement spells out an end to all legal proceedings between LeMond and Trek, bringing a 15-year relationship to a close. While most of the terms of the settlement were confidential, both parties agreed to disclose that Trek will pay $200,000 to 1in6.org, a charity with which LeMond is affiliated.

Trek will make two $100,000 payments to the California-based charity. Its purpose is to educate people about childhood male sexual abuse and takes its name from the rate of incidence of that abuse. LeMond is a member of the organization’s board of directors.

While the impasse between LeMond and Trek seemed to hinge as much on LeMond’s belief that Lance Armstrong was attempting to intimidate him as it did on LeMond’s believe that Trek really wasn’t supporting the LeMond brand to the degree spelled out in their licensing agreement.

In preparing for a possible trial, LeMond had begun deposing witnesses, including Kristin Armstrong, Lance Armstrong’s ex-wife. The possibility that LeMond might try to depose Armstrong himself loomed over the proceedings and threatened to turn a fairly straightforward business dispute—nonperformance—into a three-ring doping circus.

Due to the fact that most of the terms of the settlement are sealed, we’ll never know just what brought the case to resolution. However, by any estimation, the single least desirable result would have involved Armstrong on the stand. In this regard, LeMond had Trek over a barrel; they had two reasons to avoid testimony by Armstrong. While it is safe to assume Armstrong would have said nothing to incriminate him or Trek, his mere presence would have turned the proceedings into front page news. And then there’s the aftermath to consider. Armstrong’s ire has a history of its own and Trek really can’t afford to take any action that would alienate the seven-time Tour winner.

Litigation for LeMond isn’t at an end with the resolution of the Trek suit. As one of the creditors of the bankrupt Yellowstone Club, LeMond, joined by his in-laws, David and Sacia Morris, is contesting the sale of a parcel of the millionaire-only Yellowstone Club in Montana. Membership in the club is ultra-exclusive and includes Microsoft founder Bill Gates and L.A. Dodgers owner Frank McCourt. LeMond and the Morrises wish to make their own bid for the property.

The parcel in question was the “family compound” for Yellowstone Club co-founder Edra Blixseth and her family. It is being sold as part of a liquidation of Blixseth’s assets due to bankruptcy.

LeMond and the Morrises are taking issue with the price offered by CIP Yellowstone Lending, LLC, another Yellowstone Club creditor. Less than two years ago CrossHarbor Capital Partners offered Blixseth $56 million for the 160-acre parcel. Recently, CrossHarbor offered Blixseth a mere $8.5 million, with only $500,000 coming in actual cash; $8 million would be “paid” in debt relief to Blixseth in the form of debt forgiveness. Court papers filed by LeMond and the Morrises argue that the bid has no relation to its actual value.

When the real estate market crashed, sales at Yellowstone Club stalled. Blixseth and her then husband Tim Blixseth took out a $375 million loan with Credit Suisse. Rather than using that to help the faltering Yellowstone Club, the Blixseths put the money into other ventures. When the pair’s marriage hit the skids in 2008, bankruptcy followed, both individually and for the club.

While Blixseth’s parcel is only 160 acres within a 13,600-acre resort, the location of the land make it particularly attractive and its sale is seen by some as key to reviving sales of new parcels in the Yellowstone Club.

As original investors in Yellowstone Club, LeMond and the Morrises should have shared in the proceeds of the $375 million Credit Suisse loan. That suit was settled for $39.5 million, and while a settlement was reached, a fair chunk of that settlement remains outstanding. As a result, LeMond and the Morrises hold a $13.5 million lien on the Blixseth family compound—more than the value of the CrossHarbor bid.

John Shaffer, one of the attorneys representing LeMond and the Morrises asked the judge overseeing the bankruptcy to reject the CrossHarbor bid and to give them 120 days to put together a bid of their own. A ruling on that request is still to come.

The full text of the Trek/LeMond joint press release:

Joint Press Release of Greg LeMond and Trek Bicycle Corporation

Cycling legend Greg LeMond and Trek Bicycle Corporation announced an agreement to close out all remaining issues for the business venture they began in 1995, and to provide funding for a charity near Greg’s heart.

“Greg has a hard-won place in the Pantheon of bicycle racing, and we are proud of what we were able to accomplish together,” said Trek’s President John Burke. “Trek respects Greg’s efforts and commitment to the charitable foundation, 1in6.org, and Trek is pleased to lend its support to that very worthwhile endeavor.”

Three-time Tour de France winner LeMond said: “I am pleased to resolve the issues between Trek and myself and am happy to be able to move forward with the things important in my life. I appreciate Trek’s support for the work of 1in6.org. I take deep satisfaction in this resolution and believe it will have a positive impact on those that can benefit most from the purpose of 1in6.org.”

Image: John Pierce, Photosport International

, , , , , , , ,

37 comments

  1. Pingback: That’s a bingo! « eightplustwo.com

  2. Bret

    We should all thank John for 2010 being the year that LeMond got half wheeled into the ditch with only a separated shoulder. News Release – LeMond should be fine for his 2011 campaign

    This is very cheap hush money plain and simple.

    The 2 payment amount of $200,000 paid out over a year is Burke saying please keep your mouth shut for a year and then you can come back to the bunch for more racing.

    Can’t wait for 2011 to see the revamped/refreshed LeMond show, wooowhooo!

    LeMond needs to rethink his winner take all slash and burn business practices. Believe it or not the Badger made him a better racer. Acknowledging adversaries is honoring the people who made your glory possible.

    In full disclosure I own a 853 Zürich and think Lemond very did a good job of briefly getting out of the way so that Trek could build top quality bikes for him.


    1. Author
      Padraig

      Thanks for your comments.

      Bret: I’m not sure it is accurate to say that LeMond has had a winner-take-all attitude in business. It’s true that I have written about actions of his that I find questionable and sometimes counterproductive to what ought to be the bigger picture, but I don’t really see a slash-and-burn strategy.

      Remember that most of the agreement was confidential. Think of it as a contractual iceberg. We have no idea how much money he received personally—if any. We don’t know what he promised to do, or not. The agreement could have stipulated that he watch at least one rerun of the Muppet Show daily for the next ten years—and we’d never find out.

  3. Rick Vosper

    Padraig,

    Once again you’ve grasped the core issue while the mainline cycling press struggles mightily to miss it…or better yet, pretend it never existed.

    The meaning of the joint press release is significant only in that it has no meaning whatever.

    While Bret’s term “hush money” may be a little unkind, it’s pretty clear that we now know exactly what Mr. Burke felt it necessary to spend in order to avoid the hideous spectacle of Lemond’s lawyers spit-roasting his #1 box-office draw, whether a: in person (v.unlikely), b: in absentia, or c: by proxy.

    The idea of two $100K payments, and a year apart at that, seems itself rather suggestive…but perhaps speculation on exactly why the payout would be structured in this particular way is best left as an exercise for the reader.

    And finally, to anyone who still thinks this was a straightforward business agreement gone sour and one involving nonperformance on a licensing agreement…well, please feel free contract my broker re some prime beachfront property that’s just come on the market here in Arkansas.

  4. velomonkey

    OK, the Muppet show comment was funny. I was flummoxed as to what the whole yellow stone thing had to do with the Trek verdict. I will say this, Trek is the one with more blood on the table, at least in terms of financial, you never settle these things unless there is something you don’t want coming out. LA testifying would not have been ideal, but I suspect there was more to it – we’ll never know, though.


    1. Author
      Padraig

      The two issues are unrelated but I really didn’t see the point in a second post. What is significant about the Yellowstone Club litigation is that from any angle LeMond does appear to be the victim of an investment with partners of questionable moral fiber.

  5. Bret

    Two payments a year apart buys you a year silence, bottom line.

    Speaking in public is a fundamental right. No legal agreement can keep someone from speaking in public without compensation.

    I think late March we will have a better understanding of just how much the “agreement” means to Greg.

    My Slash and Burn comment is over the top I agree, I was attempting a euphemism for burning your bridges.

  6. Alex Torres

    “…LeMond does appear to be the victim of an investment with partners of questionable moral fiber.” My oh my, why do I feel a dèjavú…

  7. fausto

    I am not surprised that you chose to toe the company line, but it only hurts your creditability.

    The fact is Armstrong could not be forced to testify and it really would not have mattered if he did not. Lemonds case against Trek was so overwhelming that Armstrong testifying would have just been a bonus for the freakshow.

    Emails, phone calls, statements to dealers and distributors, sworn statements from Trek employees, all combines to insure that no matter how much posturing they did Trek was never going to trial.

    Surely Greg got a nice big check. The charity also benefits. Nice to see truth prevail over PR spin.

  8. Touriste-Routier

    Settlement agreements typically have non-disclosure and anti-disparagement clauses in them. Essentially the parties are paid to keep silent. Whether this is actually enforceable in the states in question is beyond my knowledge.

    Settlements are often made because this outcome is certain, whereas in trial it is not; no matter how strong your case, you never know what a judge or jury are going to decide. Furthermore, as was previously stated, you have the risk of undesirable statements and information becoming public. You also have the stress of trial compounded with the expense of trial.

    Whatever the settlement was, both parties found it palatable and advantageous versus continuing down the path they were on. Sometimes the best outcome is the expedited return to the normal course of business.

  9. Sophrosune

    Padraig,

    In your ongoing defense of Armstrong from every sling and arrow, you posited in your previous Lemond vs. Trek blog: “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.”

    So, since this was your own postulation I am surprised we didn’t hear from you that it turns out Lemond in fact cares about his company more than tarnishing the reputation of Armstrong.

    It’s okay, you can do it. I know you can.


    1. Author
      Padraig

      Sophrosune: honestly, I don’t know what you’re on about. If you think I’m defending Armstrong you really aren’t reading carefully. Truly, he’s a fascinating character, and while I think cycling is abit more interesting with him in the sport, don’t confuse that with better or as a defense of any action he has ever taken.

  10. Sophrosune

    @Padraig, You wrote a lengthy diatribe on how it seemed to you that Lemond had descended into pettiness and personal vendetta in his business dealings. This appearance would be confirmed for you if Lemond rejected an out-of-court settlement and instead insisted on going to trial, which would indicate to you that he was merely going after Armstrong.

    So, weeks later Lemond did reach an out-of-court settlement and instead of noting that it would seem Lemond’s concerns centered around his business dealings in this case rather than his thoughts of personal vendetta or legacy, you ignore that and again harp on the litigiousness of his present circumstances.

    Then you post the strange “Contador, Cheated?” blog that posited the oddest bunch of nonsense as irrefutable fact, only to have all your “facts” dismissed one by one. And instead of acknowledging any of it, you continued on denying, obfuscating and finally ignoring.

    Honestly, I don’t know what you’re on about. But so it’s clear, I am quite the opposite to you. I think the sport of cycling is poisoned by Armstrong presence, which I can only hope will come to an end sooner rather later.


    1. Author
      Padraig

      I’ve been critical of LeMond on several posts, including one for Road Bike Action. However, it does not mean I will never write critically of Armstrong. It most especially does not automatically mean I’m a supporter of Armstrong. As to the Trek/LeMond settlement, it is what it is; that the settlement terms are mostly confidential says more about Trek’s desire to conclude the public battle than anything else. At least, that’s my take. I don’t think LeMond had any reason to seek confidentiality in the terms.

  11. JZ

    Padraig, don’t you know, being critical of LeMond or Contador makes you an Armstrong lover, which also makes you the enemy of all Armstrong haters or Armstrong non-lovers if you wish. There is no middle ground where Armstrong is concerned. You must choose now.

  12. nrs5000

    (1) Settlements in civil litigation are almost always confidential, unless in a class action. Non-disparagement is a standard term, and the timing of the two charity payments incentivizes LeMond to keep his end of the deal.

    (2) Doubtful anyone is really happy about the settlement. More likely it’s just the mutually least unpalatable of many unpalatable outcomes, for all concerned.

    (3) From a business perspective the value in the settlement is probably as much in resolving the parties’ rights to the LeMond brand as in any cash payment.

    (4) Re Armstrong testifying: He couldn’t be compelled to testify in person at trial, as long as he didn’t turn up in Minnesota to subject himself to service. But he fairly easily could have been compelled to give a deposition for use at the trial. It’s standard to videotape the deposition of a witness who can’t be compelled to attend trial. Once the deposition is used at trial, it’s in the public record. Then, it’s not long before the choicest soundbites are popping up all over YouTube.

  13. Sophrosune

    Sigh…Okay, let’s try this again. You can be critical of whomever you wish but doing it exclusively in the defense and elevation of Armstrong (which you have done in the two instances I have cited) without offering a full-blown article that is critical Armstrong (except of course in your comments when you have been confronted with obvious distortions on your part) indicates to your reader your bias.

    Now you conclude that the confidentiality of the terms is more than likely because of Trek’s wish for it to be so. But you can’t bring yourself to offer up the reason for this, which to any casual observer is that they (likely at Armstrong’s urging) didn’t want Armstrong providing testimony in open court–with the looming threat of perjury.

    You constructed the syllogism of out-of-court settlement=Lemond’s good business practice or goes to trial=vindictive sore loser, not me. So when it landed on “good business practice” we get from you instead “While the impasse between LeMond and Trek seemed to hinge as much on LeMond’s belief that Lance Armstrong was attempting to intimidate him as it did on LeMond’s believe that Trek really wasn’t supporting the LeMond brand to the degree spelled out in their licensing agreement.” AGAIN!

    Look I get it. Even though you don’t and some of your readers don’t either (@JZ: Sarcasm is where the weakling and prankster meet and they misunderstand each other). Anyone who crosses Armstrong not only will meet his wrath but yours as well.

  14. Alex

    LeMond seems ready to be on the charge again. He and his attorneys are gearing up to bring Armstrong to trial for his alleged doping offenses. LeMond should perhaps join WADA.

    Not even touching the “love Lance, hate Lance” debate, I find it quite disturbing that Greg won´t show the same disposition (and resolution) to bring the same war on to other riders and shores. He barely started it on Contador and fell back. Is he trying to bring Armstrong´s 7 Tour wins down to 3 or 2 so he can go on forever as the US golden boy at the Tour or what?

    I mean, he sure doesn´t have anything substantial to prove his claims but his relentless campaign agains Armstrong is depressing in a very quixotesque way. I admire LeMond big time but I just can´t get it. He´s looking to me like a sad, sour ex-champ who just can´t seem to live – and let others – in peace anymore.

  15. fausto

    Alex, can you give some examples of this “Relentless campaign” against Lance? I must have missed it. All I see is a couple of weak expressions of disspointment.

    While Lance would like you to think it is all about him Greg has been an outspoken about many of the sports ill’s. The UCI, doping doctors, testing methods. It is good to see someone in his position use his position for good, instead of intimidating anyone who breaks the Omerta.

  16. Alex

    Fausto, it all started back in 2001 and from then it´s been escalating. I´m sure you can find plenty to read about their feud in the net. The tension between the two may have lowered a bit during the Armstrong´s semi-retirement but somehow Greg seem imbued with the spirit of vengeance. Or cleaning of the sport, and if that´s what he´s got my vote.

    Like many (most?) I´m all for someone of Greg´s stature to take position, speak openly and join the anti-doping campaign. He´s very knowledgeable and he´s an insider, and the context in which he raced also adds to the credibility of his words. I´ve said here a couple times about how I believe his ideas and propositions make much sense, more so when compared to the tests currently in use.

    But it would only help his cause (if there IS a cause – I´m especulating here and I´m no expert or insider or anything, just a passionate cyclist and spectator of the sport) if he showed this same disposition on a broader scale, instead of focusing his efforts against Armstrong alone. He voiced his concerns about Contador´s performance at the ´09 TdF and ended there. Same with Landis. But he keeps fighting Armstrong.

    OK, perhaps LeMond feels that Lance is the last bastion of undisclosed doping, or perhaps even a symbol of unproven doping, or something… Whetever. My feeling – and it´s just my opinion – is that Greg would be a great anti-doping ambassador if he went for other ways, but of course assuming he is really pursuing that and nothing else.

    Time will tell.

  17. fausto

    Alex,

    I asked the question, but I already knew the answer.

    The fact is Greg as been talking out about what is wrong with the sport for decades. He seldom has mentioned Lance but as Mr. Armstrong is a sensitive boy he has made an effort for it to appear that Greg is obsessed with him.

    Greg has spoken about the UCI, doping doctors, DS’s that abuse young rider…his topics are endless and usually spot on. As much as Armstrong thinks everything is about him, it isn’t


    1. Author
      Padraig

      Everyone: Thanks for the lively comments and for keeping it civil.

      Fausto: To your point, I do agree that when LeMond speaks out on doping what he has to say is unusually insightful, and yes, he has spoken out on topics other than just Armstrong. What I find troubling, and what so many people seem to react to is the fact that he hasn’t spoken out on anyone else with the same verve he has reserved for Armstrong. As far as I’m concerned, same goes for David Walsh. Good writer, insightful guy, seems to focus on Lance too much.

      For that matter, I respect that some of you think I have it in for Contador, and that’s not the case.

  18. Lachlan

    I can’t see that its particularly wrong for the main author on a blog to have points of view or favourites in his sport (Bias to a degree is inherent and normal in everyone)…. and in that context hope you don’t mind me saying Padraig, but for someone very knowledgeable about the sport, you are unusually Lance-fan-boy-esque in not just the tone of pro-lance articles, nor only the tone of anti-lance enemy articles,, but also the volume of postings that come over as spinning for lance…
    But again thats fair enough, and provides a point for debate, right?


    1. Author
      Padraig

      Lachlan: I’m not sure how a post whose main subject is Greg LeMond and only incidentally concerns Armstrong becomes yet another post about Armstrong, nor how I spun for Lance on this. I’ve learned I’m powerless to keep a single mention of Armstrong on an incidental basis from becoming a full-blown discussion of him in the comments.

      To reiterate something I’ve written before: I think LeMond has a lot to offer in the fight against doping. His insight into performance seems rather sharp, but he isn’t part of any enforcement apparatus, though I think he could be very useful to WADA. I don’t think I’d be troubled by him talking about Armstrong if he spent as much time talking about Ricco, Kohl, Schumacher, etc.

  19. Alex Torres

    @Fausto: You´re saying then it´s not LeMond that´s obsessed with Lance but the other way around. Fine, it´s possible. I could be (and probably am) way off in my interpretation, misguided by Armstrong´s powerfull PR skills. I admit Lance´s a player and between the facts and myself there´s the whole universe of “filters” (i.e. press, PR and attorneys, interests diverse, etc.) to add distortion to everything.

    But I see no logic in this strategy. Lance may be playing games with Contador and his opponents but I would not include Greg LeMond in this list, but then what do I know. I´d guess he´d much rather Greg let it all go and race the TdF once more, that´s my impression.

    As with pretty much everything, there are way too many perspectives and “truths”. I´m neither pro nor against Lance, much less against LeMond, quite au contraire. But I hardly ever read Lance picking on LeMond. Sure, Lance is always bullying with his opponents, and sure he doesn´t like to be trated in the same way. But at least he doesn´t use the “for a better and cleaner cycling” as a backdrop to his campaigns.

    In trying to keep up with the universe of pro cycling, I read about Greg´s efforts for a better and cleaner cycling, sure. But they get a whole different proportion – and tone – when it involves Armstrong. To me, he sounds bitter when it´s about Lance, and that´s what I find disturbing. Other than that I agree he´s super. Maybe that´s what´s sticking.

  20. fausto

    Lance has consistently tried to paint Greg and a crazy thief

    http://www.mensjournal.com/citizen-lance

    “This guy was getting bikes at a discount and selling them out of the back door of his garage. He was doing an end run around the dealers to the tune of two and a half million dollars”

    The fact that this BS claim was tossed out by the judge was never covered.

    Here are a few more by Lance

    “Greg is just not in check with reality,” Armstrong said Monday from New York City. “It’s ridiculous. Greg is obsessed with foiling my career.”

    Or the multiple times during his short lived retirement that he said he was going to stay in shape, he was not going to get fat like Greg

    Or Lance’s rambling letter to the Wall Street Journal where Lance seemed to forget his own multiple lawsuits in a failed effort to paint Greg as sue happy. He also forgot to mention the unlike Lance, Greg WINS his lawsuits

    This was only part of Armstrong organized effort to smear Greg and interfere with his business dealing with Trek and other companies.

  21. Lachlan

    sorry, post should probably have gone under the other ‘armstrong’ series of comments currently underway! ;+) My point was one of overall impression of your personal point of view being pretty strong at attacking any Armstrong adversaries, and supposed to be a lighthearted one.

    Your blog has a great width of great posts, and I dont think there’s anything wrong with you being more behind Armstrong or Bruyneel when it comes to race analysis or politics etc.
    We all have our favourites, people who we think the same way as, and all read situations differently: thats what makes for a good debate and discussion right? It would be pretty boring read if everyone agreed on tactics at the tour for example : o )


    1. Author
      Padraig

      Lachlan: No worries. Conversations here spill over a bit. That’s fine. It’s important to me to point out my belief in Bruyneel as a director as being different from being a Lance fanboy. I think it’s a substantive difference and that perspective can make a real difference in how someone reads my work. Had Lance and Alberto really listened to Bruyneel, the Tour might have played out differently and the rancor between the two might not be so acute. That might not be as entertaining for us, though. I just want to make sure our readers are clear on where I truly stand.

  22. Alex Torres

    Fausto, if LeMond felt attacked by Armstrong saying he´s bulked up (and hasn´t he?) or comments about his questionable business practices (there´s a record on that one, I won´t go there), I think he should by all means seek reparation in whatever form he feels. Pistols, an uphill challenge, a debate, a trial, suing Lance, whatever.

    But what I see is LeMond seeking revenge and trying to take his fight to other levels, and for reasons that are not clear to me. And he´s trying to involve everyone from the Andreu family to Lance´s ex-wife and even his dog if that helps his case agains the texan. I remember when Landis was on trial and Greg got involved in a much, much nastier mess caused by someone from Landis´side, and yet he never made such noise. The whole affair just… died. He testified, cried, got pissed and went about his business.

    Now you say that Armstrong should also be above that small talk. Could be, but he´s still in business, still racing, still helping Trek sell 1000s of bikes, and still battling his opponents on and off the road. Makes a whole difference being part of the circus. Besides, I guess Lance couldn´t avoid the attention and print he gets even if he tried his best.

    My point is that Greg LeMond – the racer, the character, the family man and the cycling spokesperson – is bigger than what he´s on about Lance. Or should be, again in my opinion. Opinion of a Greg´s fan, if I didn´t make that clear enough. It´s for him, not for Armstrong, that I feel sad and sorry. He could be much, much more than what he´s turning himself into.

  23. wvcycling

    I have always wondered if LeMond is experiencing any minor kinds of mental or psychological deficiencies due to the lead shot being in his body for so long and acutely, but constantly breaking down. It’s a theory, but I like to blame this instead of him for his actions sometimes.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>