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Sports Merchant Offers to Settle Nike Suit : Litigation: Newport man willing to end legal fight if athletic attire giant contributes $1 million to quake relief and other charities.

January 20, 1994|JAMES S. GRANELLI | TIMES STAFF WRITER

NEWPORT BEACH — Sports merchandiser James H. Warsaw said Wednesday that he wants to settle a lawsuit he filed against Nike Inc. by having the athletic products giant donate $700,000 worth of apparel to earthquake victims and $300,000 in cash to other charitable causes.

Warsaw, former president of Nike's Sports Specialties Corp. subsidiary in Irvine, said he would drop his portion of the fraud and breach-of-contract suit that he and his brother filed two months ago if the Beaverton, Ore., company agrees to make the donations, which would provide it with substantial tax benefits as well.

Lindsay Stewart, Nike's general counsel, said Warsaw's offer is a "novel idea" that the company would consider should he make a formal settlement offer. However, he said, Nike maintains that it owes nothing to Warsaw or to his brother, Robert Warsaw, who was chief executive of Sports Specialties.

Were Nike to agree to such a plan, it would put such a donation on a par with what some major companies like Anhueser-Busch Cos. are committing to the earthquake recovery. The St. Louis brewery said Wednesday that it would contribute $1 million to the relief effort.

The Warsaw brothers had expanded their father's company, which distributes Pro brand caps, and helped to engineer its sale to Nike last January for more than $75 million. The brothers stayed on to run the subsidiary, but their family business philosophy soon clashed with Nike's corporate culture, and the brothers quit in November.

James Warsaw, a Newport Beach resident, said he has been calling Nike founder and chairman Phil Knight to discuss his settlement proposal but hasn't reached him yet. Knight has been out of town, Stewart said.

"I started thinking last night (Tuesday) that this million-dollar suit is petty compared to what's going on in the areas damaged by the earthquakes," Warsaw said. "All this suit is going to do is pay a lot of attorneys and maybe myself. There are people suffering tremendously from the earthquake who are a lot worse off than Jim Warsaw."

He said he had been planning for several weeks to try to settle the lawsuit by asking Nike to contribute to charitable groups, but was prompted to act by the earthquake and the death Monday of former University of Arizona basketball coach Fred Snowden, the first African American basketball coach at a major university.

Under his as-yet-unofficial proposal, Warsaw would ask Nike to contribute $700,000 worth of shoes, jackets, caps and other apparel to earthquake victims, donate $200,000 to a University of Arizona scholarship fund set up in Snowden's memory and donate $100,000 to the James H. Warsaw Sports Marketing Center, an endowment established last fall at the University of Oregon's College of Business Administration.

"Jim's pretty upset about what happened with Nike, and he's also upset about the earthquake," said Richard L. Fahrney II, a lawyer the Warsaws recently retained to take over the litigation with Nike.

Warsaw said his proposal applies only to him, not to his brother, who also is seeking $1 million in damages. Fahrney said that James Warsaw did not provide him with all the details of the settlement proposal. Robert Warsaw has not joined in his brother's idea yet.

"I like the creativity, but I'm sure there's a lot more to this proposal than he has stated," the lawyer said. "There are other elements to explore, like what happens to the business the Warsaws sold."

The Warsaws claim Nike broke promises from the start about how Sports Specialties was to be operated. The brothers believe that Nike simply wanted the valuable licenses the company held with all the professional and major collegiate leagues and a host of national teams worldwide.

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