Batchelder vs. Malibu case SEC filing

[IXFE]

7 hours ago, IXFE said:

We don’t know the ultimate outcome of this, and I’m sure it will take years to achieve. But let’s not be flippant about $200M. To put it in perspective, that’s almost 2x MBUU’s annual net income (aka profit).

Quoting myself… let me try this a different way. 

Today MBUU has $41M cash in the bank. Let that sink in @shawndoggy. Just because a company is a “NASDAQ listed public company” doesn’t mean they are a big bad company with super deep pockets and can easily absorb a $200M judgement. Being publicly traded says literally nothing about a company size. It just means they chose to allow the public to take part in ownership. It’s just an ownership structure, not an indication of size. Lots of small companies are public traded. 

A judgment this size could bankrupt a company as small as MBUU. Is that justice?  $200M over the lack of a sticker on a boat that was made in small volumes over 20 years ago by a different entity under different ownership and different executives? And for an incident even the jury says Malibu is only 25% responsible. 

My issue with this is NOT that Malibu lost. But $200M against a company who’s entire profit is only $100M a year (and it’s only that big due to recent non-Malibu acquisitions) and only has $40M in the bank?  Come on man, does that punishment fit the crime?  Not only is the company under completely different ownership today, but the people’s who’s lives this will ruin… current Malibu employees and their families… NONE of them were responsible for the design and building of the Response LX. 

[Slayer]

1 hour ago, JohnBrabant said:

I am just glad that this information is being put on the Crew site, discussed and debated.  It also is instructive to people who may have just acquired one of the models that is subject to bow swamping, that they need to proceed with all due caution with weight in the bow, or put ballast in the stern if they plan to have people up front.

This would be true for any open bow towboat or runabout.  It's not a Malibu specific thing to have a bow dip.......

 

Ever been on a prostar 197??

[justgary]

1 hour ago, shawndoggy said:

If your insurance policy isn't covering the cost of your legal defense, you might be buying the wrong insurance @justgary.

Well, insurance comes in many flavors.  Depending on the product you create, an insurer may provide general liability (the slips and falls) but decline to write product liability at all.  As an example, call an insurer and tell them that you design parts for the military and then listen for the click as they hang up on you.  Those that don't hang up will quote astronomical rates.

[jjackkrash]

56 minutes ago, IXFE said:

A judgment this size could bankrupt a company as small as MBUU. Is that justice?

There is a lot of different factors that drive bad decisions to go to trial on both sides, but I would bet good money that the defense decisions in case were insurance driven and that an insurance company controlled the defense.

If the plaintiffs' lawyers made a demand within limits and the insurance company refused pay, and instead elected to roll the dice, the insurance company is probably going to be on the hook for all or a big chunk of it.  I would think it unlikely that there was not such a demand as that is the usual mechanism to put pressure on an insurance company to settle and create another pot of money if they don't.  In-policy-limits-demands create duties that run from the insurance company to the insured to settle or face bad-faith tort exposure beyond policy limits.  (If Malibu did not carry products-liability insurance, frankly, I would have zero sympathy for them in this case).   

Most insurance policies just burn during litigation (meaning defense costs burn the limits) and an insurance company would have very little incentive to settle without good-faith settlement duties in a big case.  My experience in representing insured parties is that in big cases, insurance companies are generally ok with exhausting policies on defense costs and grinding up the other side as they see this as the preferable course to paying out claims to deter others from taking them to the mat. 

We see headlines like this in the very rare case where there is a big pop, but we don't see the reports of the thousands of plaintiffs who get ground into the dirt by insurance-driven litigation strategies. Also, Malibu still has a stack of cards to play and the plaintiffs have not collected a dime yet.  Regardless of the merits, Malibu is also going to have pretty strong con-law/due process argument on appeal to reduce the punitive damage award even if some of it is upheld.  Under BMW v. Gore, the Supreme Court held that there are limits to the amounts that that civil juries may punish tortfeasors under the due process clause of the U.S. Constitution, and courts are required to reduce these types of awards to reasonable amount that is rationally related to the conduct and the amount of actual damages.  So there is still a long way to go to sort this out before anyone gets paid.    

Anyway, IMO, the incentives may seem out of wack, but there needs to be risk on both sides to provide both sides with strong incentives to compromise pre-trial.  And, the vast majority of cases settle for reasonable amounts well before they go to trial.  Big hits like this are generally outliers and, again, the plaintiffs in this case don't have a nickel in their pocket yet and won't until someone agrees to pay them something or another 5 to 10 years of appeals play out and they prevail at every single step.

Edited September 11, 2021 by jjackkrash

[shawndoggy]

1 minute ago, justgary said:

Well, insurance comes in many flavors.  Depending on the product you create, an insurer may provide general liability (the slips and falls) but decline to write product liability at all.  As an example, call an insurer and tell them that you design parts for the military and then listen for the click as they hang up on you.  Those that don't hang up will quote astronomical rates.

Yeah, I'm going to confess 100% ignorance there.  Though I'd also think a PI design defect case by the military is pretty rare if it's even possible.  Seems like all of the lotto ticket PI verdicts come from consumer products, not military ones?  Again, not a topic I know anything about tho.

[justgary]

1 hour ago, JohnBrabant said:

I am just glad that this information is being put on the Crew site, discussed and debated.  It also is instructive to people who may have just acquired one of the models that is subject to bow swamping, that they need to proceed with all due caution with weight in the bow, or put ballast in the stern if they plan to have people up front.

*Any* boat is subject to swamping. 

Adding ballast to the stern may not provide protection, and will definitely reduce freeboard.  The generally accepted practice is to remain aware at all times, watch conditions carefully, and always try to leave yourself in a position that allows you to add a bit of forward power to raise the bow.

[jjackkrash]

9 minutes ago, shawndoggy said:

 Though I'd also think a PI design defect case by the military is pretty rare if it's even possible.  

If you produce a product to military spec to sell to the military you are usually going to be immune from state-law products liability under federal law.  But this is a complicated area of law and its easy to lose the defense if you are not acting under the express design direction/control of the feds.  

Edited September 11, 2021 by jjackkrash

[justgary]

4 minutes ago, shawndoggy said:

Yeah, I'm going to confess 100% ignorance there.  Though I'd also think a PI design defect case by the military is pretty rare if it's even possible.  Seems like all of the lotto ticket PI verdicts come from consumer products, not military ones?  Again, not a topic I know anything about tho.

You are correct in the sense that the military generally accepts all liability for the stuff it buys.  In the incident I referenced, three consulting engineers got hired by a prime contractor to do a job.  The lawyers for the prime had written their subcontract agreement (of course), and required $1M in product liability insurance.  The three went out independently to find insurance.  One came back and couldn't get insurance at all, the second had gotten a crazy high quote, and the third had basically lied about what he does and was able to buy.  The difference was basically how much truthful information they provided.  The prime immediately backed off of the requirement after being told that it wasn't practical.  Just another case of lawyers adding stuff without doing any homework beforehand, causing others to do the work for them.

I could go on about other subcontract clauses that don't apply at all, yet get shoved at every subcontractor to have to do the work and push back against them to get them removed.  The lawyers and "contracts specialists" don't bother to tailor the contracts properly, they just lump it on the subs to figure out.

[shawndoggy]

1 hour ago, IXFE said:

Quoting myself… let me try this a different way. 

Today MBUU has $41M cash in the bank. Let that sink in @shawndoggy. Just because a company is a “NASDAQ listed public company” doesn’t mean they are a big bad company with super deep pockets and can easily absorb a $200M judgement. Being publicly traded says literally nothing about a company size. It just means they chose to allow the public to take part in ownership. It’s just an ownership structure, not an indication of size. Lots of small companies are public traded. 

A judgment this size could bankrupt a company as small as MBUU. Is that justice?  $200M over the lack of a sticker on a boat that was made in small volumes over 20 years ago by a different entity under different ownership and different executives? And for an incident even the jury says Malibu is only 25% responsible. 

My issue with this is NOT that Malibu lost. But $200M against a company who’s entire profit is only $100M a year (and it’s only that big due to recent non-Malibu acquisitions) and only has $40M in the bank?  Come on man, does that punishment fit the crime?  Not only is the company under completely different ownership today, but the people’s who’s lives this will ruin… current Malibu employees and their families… NONE of them were responsible for the design and building of the Response LX. 

@IXFE to be clear, I'm not defending the verdict or suggesting Malibu deserved it.  My point wasn't about the reasonableness of the verdict in relation to earnings, and if I were a betting person, I'd guess that the verdict is going to be reduced on appeal.    Rather I was responding to @justgary's point that personal injury attorneys keep small business owners from doing business.  That might be true for his business, but MBUU's revenues suggest that it had the resources to vigorously defend the suit since it was initiated in 2016.   There's certainly enough money there in earnings to have paid to defend the suit, if not justify the verdict.

If you go back and look at the S-1 filed in 2014, there's a lot of claim to the historical achievements of "old Malibu," and not much of a distinction claimed between "new Malibu" and "old Malibu."  For instance: "Growth continued throughout the early 1990s and, in 1992, we built a new production facility near Knoxville, Tennessee to accommodate increased demand east of the Mississippi. During that time, we became the first boat manufacturer to use computers in our initial boat designs and introduced a new, patented, fiberglass engine chassis system that eliminated vibration and noise associated with the drivetrain."  They don't say "the guys that we acquired the assets from and whose liabilities and design defects we didn't assume..."

So when it was selling shares, the current company sure wanted to rely on that history of the entity that did build the boat in question.   I could see how a jury might think it's a bit disingenuous to now say "whoa whoa whoa, that isn't even our boat, that was the other guys."  I suppose it could even be pitched as a dirty trick by the corporate lawyers, if it were possible to find a jury in rural Georgia who might be distrustful of corporate lawyers and their dirty tricks.

Not dispositive by ANY means, but just pointing out that this is more shades of gray than black-and-white.  

Edited September 11, 2021 by shawndoggy

[Surfbeast21]

11 hours ago, jjackkrash said:

You can think what you want about the merits of the case or the system, but this is simply false. Trial stakes are huge for plaintiffs' lawyers if it is a contingent-fee case; the lawyers have literally all the skin in the game.

One zero verdict can break a firm--even a successful firm.  Experts can cost hundreds of thousands of dollars per case and those fees are fronted by the lawyers; depositions cost 10s of thousands of dollars per case and those fees are fronted by the lawyers; not to mention thousands of hours of lawyer and paralegal time and overhead and staff salaries to pay for the years leading up to trial; and endless appeals even if you hit a big verdict.  Some lawyers need to resort to hard-money lenders and 20% interest rates to finance a big case that won't settle and have to bet all their personal assets as collateral.  

Big trials are seriously high stakes affairs.  Almost every case that goes to trial involves one side that has seriously miscalculated the risk and exposure and strength of their case.  And, this case isn't over.  There is still plenty of opportunities for a zero, especially if Malibu is right about the successor liability issue on appeal.    

 

That’s like buying a million dollars on lottery tickets and complaining you didn’t win.  So what’s the contingency on this, 33% minimum and up to 55%? Even at 33% of 200M.   That’s a little excessive 

[IXFE]

22 minutes ago, shawndoggy said:

@IXFE to be clear, I'm not defending the verdict or suggesting Malibu deserved it. 

Then writes three full paragraphs doing exactly that… 

My last comment in this thread… please don’t use “revenues” to justify the verdict. That’s not the right measure to use to ascertain a company’s ability to pay. 

[shawndoggy]

@IXFE I was using revenues to say MBUU can afford to defend. 

[justgary]

The thing that really sticks in my craw about this case is the concept of "punitive" award.  I can see the need for a heavy punishment in some cases, but in my opinion those should only be where obvious deception or intentional harm has occurred.  Enron, Telemarketers who ignore "do not call" lists, the dentist who gave patients AIDS, etc. are good examples.  Punishment for failure to mail some stickers or even for just designing something in good faith is the problem.

Lawyers will blame juries for awarding punishment.  I blame the whole system (which was set up by lawyers) for even allowing it in these type of cases.

[justgary]

Just now, shawndoggy said:

@IXFE I was using revenues to say MBUU can afford to defend. 

High revenue doesn't mean high profit margins.  Defense lawyers have to be paid out of profit since the other business expenses still exist.  Many large companies operate at relatively low profit margins, and may not be able to assemble the dream team of lawyers they would like to have.  I see this case as an example of, "how much justice can you afford?"  Malibu apparently didn't afford enough justice.

[justgary]

11 hours ago, jjackkrash said:

You can think what you want about the merits of the case or the system, but this is simply false. Trial stakes are huge for plaintiffs' lawyers if it is a contingent-fee case; the lawyers have literally all the skin in the game.

One zero verdict can break a firm--even a successful firm.  Experts can cost hundreds of thousands of dollars per case and those fees are fronted by the lawyers; depositions cost 10s of thousands of dollars per case and those fees are fronted by the lawyers; not to mention thousands of hours of lawyer and paralegal time and overhead and staff salaries to pay for the years leading up to trial; and endless appeals even if you hit a big verdict.  Some lawyers need to resort to hard-money lenders and 20% interest rates to finance a big case that won't settle and have to bet all their personal assets as collateral.  

Big trials are seriously high stakes affairs.  Almost every case that goes to trial involves one side that has seriously miscalculated the risk and exposure and strength of their case.  And, this case isn't over.  There is still plenty of opportunities for a zero, especially if Malibu is right about the successor liability issue on appeal.    

 

I stand by my statement.  Lawyers get to pick the cases they want to pursue.  They decide how much effort (or money) they want to put into it.  They can probably even walk away at any point if they choose to.  Except for contingency fee cases, the skin is all from the plaintiff or defendant.  In contingency fee cases, the skin is all from the defendant.

In contrast, the defendant is *always* under duress and has no choice but to show up.  They took the initiative to design and market a product, usually in good faith and expecting that it will be used in a manner consistent with its design.  They have all the skin in the game.  Lawyers get to show up decades later and tell them how they should have designed their product or run their company.  They are generally nothing but armchair quarterbacks who think they know something about what it really takes to run a business or design products. 

The system was designed by lawyers for the benefit of lawyers, who have no skin in the game.

[IXFE]

49 minutes ago, shawndoggy said:

@IXFE I was using revenues to say MBUU can afford to defend. 

Okay maybe not my last post. Lol

that’s not what you said, you included “if not justify the verdict.” And what bothers me most is you continue to misuse the word revenues (now twice). Do you even know what it means? I seriously wonder. @justgary understands. 

Honestly Shawn, I’m kinda shocked at how casually you’re throwing around words which mean very specific things. It started with you casually mentioning that Malibu is a “NASDAQ listed public company” which was clearly meant to imply BIG and can afford it (it doesn’t mean any of those things). Then you say you’re not justifying the size of the verdict but spent three paragraphs doing just that, and you use revenues as your evidence.

Sheesh…  

Edited September 11, 2021 by IXFE

[Surfbeast21]

24 minutes ago, IXFE said:

Okay maybe not my last post. Lol

that’s not what you said, you included “if not justify the verdict.” And what bothers me most is you continue to misuse the word revenues (now twice). Do you even know what it means? I seriously wonder. @justgary understands. 

Honestly Shawn, I’m kinda shocked at how casually you’re throwing around words which mean very specific things. It started with you casually mentioning that Malibu is a “NASDAQ listed public company” which was clearly meant to imply BIG and can afford it (it doesn’t mean any of those things). Then you say you’re not justifying the size of the verdict but spent three paragraphs doing just that, and you use revenues as your evidence.

Sheesh…  

In his defense, maybe they didn’t teach big words in his law classes 🤪🤪

[Ronnie]

Let’s keep the posts respectable to each other here. Agree to disagree. We’ve seen how this escalates. We’ve see how the thread gets shut down. 

[shawndoggy]

1 hour ago, IXFE said:

Okay maybe not my last post. Lol

that’s not what you said, you included “if not justify the verdict.” And what bothers me most is you continue to misuse the word revenues (now twice). Do you even know what it means? I seriously wonder. @justgary understands. 

Honestly Shawn, I’m kinda shocked at how casually you’re throwing around words which mean very specific things. It started with you casually mentioning that Malibu is a “NASDAQ listed public company” which was clearly meant to imply BIG and can afford it (it doesn’t mean any of those things). Then you say you’re not justifying the size of the verdict but spent three paragraphs doing just that, and you use revenues as your evidence.

Sheesh…  

Maybe poor word choice on my part. By “if not justify” I meant “even if it doesn’t justify.”  Apologies if that created any confusion. 
 

oh and you 100% have me on the revenues Q!  I will defer to the financial pros when breaking down the financials. Apologies for misuse of terms. Hopefully didn’t obscure my point that Malibu has more than enough money to pay its lawyers (unlike someone like @justgary who can be priced out) even if Malibu does not have enough money to pay on the jury verdict. 
 

the three paragraphs are really about a different q altogether (which you did raise) … whether new Malibu should be liable for the acts of old Malibu at all. Again not whether the punitive award was reasonable/justified/appropriate. Just whether new Malibu should even be able to be liable under any circumstance for old Malibu’s defective product. 

Edited September 11, 2021 by shawndoggy

[justgary]

It sounds like I need to start a "Poor Little Me" fund...  I seem to be priced out of a lot of things!

[granddaddy55]

14 hours ago, jjackkrash said:

You can think what you want about the merits of the case or the system, but this is simply false. Trial stakes are huge for plaintiffs' lawyers if it is a contingent-fee case; the lawyers have literally all the skin in the game.

One zero verdict can break a firm--even a successful firm.  Experts can cost hundreds of thousands of dollars per case and those fees are fronted by the lawyers; depositions cost 10s of thousands of dollars per case and those fees are fronted by the lawyers; not to mention thousands of hours of lawyer and paralegal time and overhead and staff salaries to pay for the years leading up to trial; and endless appeals even if you hit a big verdict.  Some lawyers need to resort to hard-money lenders and 20% interest rates to finance a big case that won't settle and have to bet all their personal assets as collateral.  

Big trials are seriously high stakes affairs.  Almost every case that goes to trial involves one side that has seriously miscalculated the risk and exposure and strength of their case.  And, this case isn't over.  There is still plenty of opportunities for a zero, especially if Malibu is right about the successor liability issue on appeal.    

 

most commit the client to that debt (advance of the judgement) here in LA at usury 36%  .   yes the expenses you mentioned are real but most firms make that business decision to spend based on tgeir ability to win in court “AT ALL COSTS”. 

thats a business decision and that's on them.  they are not heroes

the clients can often end up with nothing but that advance

[granddaddy55]

14 hours ago, tksport said:

The question is why did the jury award that?  Punitive damages have a higher burden of proof.  It seems they found the actions or lack of actions after numerous warnings egregious.  Regarding how would they find you?  The dealers may not reach every new owner...but they did not try to reach even 1.  It would be nice to think that corporations would do the right thing without regulation or litigation  Do you not expect the potentially dangerous products you you use in the United States to have undergone testing?  

boating is inherently dangerous, all of us ever caught in an instantaneous squall with rollers filling the boat know that.  its up to the consumer to understand snd set his limits

capitalism is based on two things:

let the buyer be ware snd a handshake transaction means the deal is final and both parties agree   

what happens after that is on the consumer

my old bass boat style fish and ski and a real low nose/bow.  i bought it used. is the seller responsible for me being caught in a squall.  

lawyers are not your friend nor our savior,  they are in it to make money not protect your “rights”

 

[Chartman]

11 hours ago, Ronnie said:

My question is, why are these two new guys here spouting all this? What’s in it for them. Are these attorneys for the case. What are they looking for here? Ammo for the appeal? What is it guys?

@Chartman

@tksport

 

It is no secret who I am. I am Gary Polson of PropellerSafety.com / Polson Enterprises.  I have already stated multiple times in this forum I am with PropellerSafety.com . I signed the post that started this thread as "Gary Polson" and have signed most or all the rest of them as Gary.  If you go to PropellerSafety.com you will see it is ran by Gary Polson. No secrets here.

I am not an attorney. In our PS post about the $200 million award which we directed viewers here to,  I openly state I was an expert in this case.

As to my interest - below is a direct quote from the Plaintiff's Expert Witness Disclosures filed with the Superior Court of Rabun County State of Georgia on 31 October 2019 pertaining to what I would be testifying about:

"Subject Matter: Accident Data Availability, BARD (Boat Accident Reporting Database), Prior Similar Accidents, Consumer Field Data, Research, Recalls, Technical Service Bulletins.

Opinion Summary: Mr. Polson may testify regarding industry and publicly available accident data and information, including the U.S. Coast Guard BARD (Boat Accident Report Database), online forums, news media, State boat accident reports, FOIA requests, Social Media, trade journals, public court records, consumer field data, the types of information and searches available, the listing of incidents and data relevant to the issues involved in this case, and the results of searches and other information sources that were also available to the Defendants before and after the sale of the boat and before the subject accident."

**********

As to me being a "new guy" I worked for MerCruiser in the early 1990s when their Scorpion engine came out. I regularly monitored the old usenet rec.boats and rec.sport.waterski newsgroups back then for comments and issues concerning the Scorpion and other MerCruiser products. I was even written up in the 1995 special Internet issue of Soundings. Malibu was regularly monitoring and participating in rec.sport.waterski back then.

I joined TMC in March 2017 as part of my effort to identify accidents similar to the Batchelder accident. I also searched Malibu Boat Owners (MBO) a predecessor of TMC and and Wakeside rides the successor of MBO.

I was been online in the old dial up bulletin boards in the 1980s.

Maybe new to posting here, but have been around here and forums a while. Even boating on The Well if anybody remembers where that was.

*****************

As to what am I looking for here - the same thing I am over on PropellerSafety.com (abbreviated later as PS) You can read our mission under the About Us tab. No secrets there either.

More specifically at this time (case is over) we hope to raise awareness of the importance of manufacturers using annual BARD databases and other sources as a means of continuous product safety improvement, especially in the area of boat propeller safety. The process is often called Post Sale Monitoring of product safety or Post Sale Surveillance of product safety.

Most boat builders now have extensive safety programs regarding reporting, investigating, and preventing shop floor accidents. Some have big celebrations to recognize so many million many hours without a lost time accident. For example Malibu put out a press release about celebrating three million man hours without incident on July 16, 2019. They even gave away a boat and several $500 gift cards. That is a tremendous accomplishment and we congratulate them for it.

While Malibu and many boat builders have extensive employee safety programs and systems, when many boat builders are asked about similar programs and systems regarding the safety of those using their products all you hear is crickets.

If anybody is interested in using BARD we point them to the large pile of training materials, charts, tips, worksheets and online videos we freely available online on our site (see the "BARD Training" tab in the PS menu). 

As to "other sources "The Malibu Crew" is a great example. Just typing swamped into the TMC search box currently finds 281 results. Yes some of them are for other meaning of the word swamped and some are multiple references to the same instance.
But many of those threads at least raise concerns about swamping. Yes, many of the more recent ones refer to larger wake surfing boats but many still refer to ski boats like the Malibu Response LX. The same goes for searching the TMC for sank, sunk, or sinking. 

Use google to search TheMalibuCrew by entering this search phrase in google including the quotes plus the site part            

"water over the bow" site:themalibucrew.com         

That search currently finds over 350 threads. Not all of them will involve swamping. But boat builders wanting to Continuously Improve the safety of their products can use tools like BARD and forums like TMC to monitor what is going on with their products.

Several threads of the nature of "We sank our 06 Response Lxi with water over the bow" should have raised some eyebrows at Malibu if they were monitoring TMC.

Malibu could have just asked the Coast Guard to supply them an annual list of their BARD reported accidents and typed a few search terms into TMC now and then and gathered valuable product safety information. They did not per their own depositions..

*****************

In summary - my identity is not a secret, and I hope my goals here are shared by at least some others (raising awareness of how manufacturers can make safer boats by monitoring their boats in the field) while I answer a few questions and help out a little where I can.

Gary Polson

 

[justgary]

2 hours ago, Ronnie said:

Let’s keep the posts respectable to each other here. Agree to disagree. We’ve seen how this escalates. We’ve see how the thread gets shut down. 

I have had to hold off on some really good lawyer jokes because somebody might get all hurt if I tell them.  I suppose I could ask "why do lawyers wear neckties" here and only answer via PM....

[wakesonthesnake]

Mr. Polson, the actions you describe above amount to trolling.  Your handle Chartman is appropriate as you are logging all the cases of seeming accidents related to boats from our comments.  This is a site about Malibu boats and our enjoyment from them.  Your comments seem to fall out of the Terms of Use of this site.