Business loses hefty lawsuit verdict.

Byline: Bill Bishop The Register-Guard

In the largest jury verdict ever in Lane County, officers of a Klamath County business were ordered this week to pay at least $165 million in a lawsuit charging they negligently failed to protect shareholders' interests.

The award came after a seven-week trial in which Daryl Kollman, co-founder of Cell Tech International, Inc., claimed the company's officers unfairly diluted the value of his stock and terminated him from company management.

A lawyer for the company said legal action challenging the award is pending and an appeal is possible.

Because the jury ordered the officers to pay millions to the company, the verdict probably will benefit the firm, which is the second-largest employer in Klamath County, said Kollman's lawyer, Bruce Moore of Eugene.

The company manufactures nutritional supplements containing blue green algae harvested from Upper Klamath Lake. It had sales of $200 million annually at its peak and currently employs about 70 people with annual sales of about $21 million, Moore said.

Lane County Circuit Judge Lyle Velure heard the case after settlement efforts by a federal judge failed and several Klamath County judges were disqualified from hearing it.

Liz Laird, whose newsletter - Laird's Court Report - has chronicled local court action for more than 25 years, said it is the largest verdict by a Lane County jury, although technically it is not a Lane County case.

The disagreement stems from the company's decision to go public in 1999 and an alleged plot to exclude Kollman from the company that he co-founded with his ex-wife, Marta Carpenter.

The couple divorced in 2002, the same year the lawsuit was filed.

"There was a plan to exclude Mr. Kollman from being in the business," Moore said. "As a result, he lost his power."

In its verdict, the jury also found that Carpenter and the company's board chairman, Los Angeles attorney Donald P. Hateley, were negligent in how they financed the process of making the company publicly held.

The process they followed substantially devalued the stock held by Kollman, Moore said.

The jury awarded Kollman and the company $105 million from Carpenter and Hateley for their failure to protect the interest of shareholders, Moore said. The jury decided Carpenter and Hateley were liable for $60 million in direct damages to Kollman, Moore said.

Lawyers are continuing to haggle over the jury verdict and a judge may decide that Carpenter and Hateley each owe $105 million to Moore and the company - making the actual verdict much higher than $160 million, Moore said.

The company's lawyer, Jeff Matthews of Eugene, described the case as "very complex."

"We respectfully disagree with many of the jury's conclusions," Matthews said.

For example, he said the company's board dismissed Kollman after disciplining him for a number of actions that were detrimental to the company.

"Different people have different perspectives. Mr. Kollman has his view," Matthews said. "Right now the company is going about its business."