In yet another blow to the creators of EPI Products USA, a Santa Monica jury awarded $13.7 million to a woman who contended she was a partner in a business from which EPI emerged but was cast aside when the Epilady hair removal system took off.
Epilady was a tremendous success in the late 1980s--as was the Krok family, which brought the electric hair removal gadget to the United States in 1987. Epilady promised smooth legs, but the device proved painful for some women. The EPI empire began to disintegrate amid charges of disorganization, overspending and fraud.
In a suit tried in Los Angeles County Superior Court, Patricia Jones claimed that EPI Products was an outgrowth of A-Plus Products, a business founded in 1981 to market a bathing product for infants.
The successful enterprise was bankrolled by South African-born businessman Solomon (Solly) Krok for his daughter, Arlene Krok. Jones was a partner in the business, which eventually included another Krok sister, Sharon Krok Feuer.
In the suit filed in 1989, Jones alleged that, as a 20% partner in A-Plus Products, she was fully involved in developing EPI's business but was pushed aside when that business skyrocketed. Jones claimed that she was entitled to 20% of EPI's profits.
After awarding Jones compensatory damages on Thursday, the Santa Monica jury today will begin hearing a second phase of the trial during which punitive damages could be granted.
Lawyers for both sides were subdued in their comments because the case is still pending.
Robert L. Esensten, who represents the Kroks, said he was "appalled" by the verdict.
When asked if Jones was pleased by the verdict, one of her lawyers, John Dito, replied simply: "I think you could surmise that."
Santa Monica-based EPI Products is operating under Chapter 11 of the U.S. Bankruptcy Code. The Kroks are no longer involved in the business.
The Kroks face other suits, including one filed by Bank of New York, Daiwa Bank and Bank One that contends the officers and controlling shareholders "used EPI as their personal piggy bank."
The Kroks have filed a countersuit in that case accusing the banks of, among other things, mounting a humiliating and groundless "smut campaign" to win a settlement from the family.