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Judge Allows AIDS Rides by Rival Groups

Charity: The firm that ran earlier fund-raisers sought to stop a competing event that was organized after a fight over the proceeds.

January 15, 2002|MARTHA GROVES | TIMES STAFF WRITER

A Los Angeles judge on Monday waved the green flag allowing two competing San Francisco-to-Los Angeles bicycle rides to raise money for AIDS charities in May and June.

The action was greeted with jubilation by the Los Angeles Gay & Lesbian Center and the San Francisco AIDS Foundation, which may now proceed with their own ride, AIDS/LifeCycle.

That ride, scheduled for May 13-19, gets the jump on the annual California AIDS Ride, which was originated by Pallotta Teamworks of Los Angeles in 1994 and has been run by that company since.

Pallotta also plans to go forward with its ride, set for June 2-8.

The Los Angeles Gay & Lesbian Center and the San Francisco AIDS Foundation had been beneficiaries of Pallotta's eight previous 575-mile rides, reaping millions of dollars to pay for services for individuals who have HIV or AIDS.

But in October, the two groups decided to organize their own event after unexpected cost overruns of several hundred thousand dollars cut into their profits from the June 2001 ride. The groups also complained that Pallotta's cross-promotion of other events staged by the company, such as the Avon 3-Day Breast Cancer Walk, diluted the effect of the 2001 ride.

Pallotta Teamworks responded to the groups' October announcement by seeking an injunction in Los Angeles Superior Court to halt AIDS/LifeCycle. The company claimed that the two groups, in exchange for receiving proceeds from the California AIDS Ride, had previously agreed never to put on a rival, multiday cycling event without consent.

Superior Court Judge David P. Yaffe on Monday denied Pallotta's request, suggesting that the so-called noncompete clause was not valid under California law. He indicated that he thought the company did not have a strong enough case to prevail in a trial.

Pallotta's California AIDS Ride will now benefit AIDS Project Los Angeles and 19 other groups statewide.

Despite Pallotta's failure to stop the rival ride, a company official expressed relief that a decision had been made.

"This [has been] driving the riders nuts, making them feel they have to take sides," said Pallotta President Stephen Bennett. However, he reiterated the company's position that it's a mistake to stage two such costly events.

"A lot more money is produced if there's one ride," he said.

Pallotta officials have said that extra costs for safety and logistics, compounded by an unexpectedly low turnout of riders from San Francisco, cut into the 2001 ride's profits. About half of the $11 million raised went to the Los Angeles and San Francisco beneficiaries. In years past, the groups said, they often exceeded that share, even receiving as much as 65% of the proceeds.

Bennett said 475 riders had signed up for this year's California AIDS Ride as of Monday morning. Each rider commits to raising a minimum of $2,700.

More than 700 riders have signed up to participate in AIDS/LifeCycle, said Gustavo Suarez, a spokesman for the San Francisco AIDS Foundation. Each rider must agree to raise $2,500.

A lawyer for Pallotta declined to concede defeat on the merits of the company's case. Attorney Jayne Taylor Kacer of Costa Mesa said several issues are being resolved in binding arbitration.

For one thing, Pallotta contends it is entitled to reimbursement for hundreds of thousands of dollars in costs relating to the 2001 ride. Conversely, the San Francisco AIDS Foundation and the Los Angeles Gay & Lesbian Center maintain they are entitled to reimbursement for hefty costs.

Also at issue is whether Pallotta should receive damages for what it alleges are defamatory remarks made by the two groups as they have marketed AIDS/LifeCycle.

A final issue to be determined in arbitration, Kacer said, is whether the two groups did, indeed, break a contractual agreement not to put on a competing event.

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