Jurors rule against San Diego VC Kinsella in case about mediation

Kevin Kinsella, founder and managing director of Avalon Ventures, is one of San Diego’s winningest VCs, with his firm boasting a long list of successful exits in tech and biotech companies.

But the verdicts in a trial that ended in mid-May may not have been what he was hoping for.

In San Diego Superior Court Kinsella had claimed he had been deprived of his constitutional rights after he and his then wife hired mediation service JAMS Inc and mediator Sheila Prell Sonenshine to hammer out a divorce settlement.

Kinsella claimed in court that Sonenshine had padded her resume to fill a gap between her retirement as an appellate judge in the late 1990s and her joining the mediation service in 2008 as a way to attract successful business people as clients.

Sonenshine’s resume said she co-founded an investment bank and then founded a private equity fund focused on women-owned companies.

After three weeks of deliberations, a jury deadlocked on the claim that Sonenshine and JAMS misrepresented her credentials.

In a separate 11-1 vote, the jurors found Sonenshine not responsible for any financial harm Kinsella claimed he suffered from mediation.

Kinsella’s attorneys asked for a mistrial based on an incomplete verdict, but Judge John Meyer denied it. He then dismissed Kinsella’s claims for restitution and an injunction under California’s Consumer Legal Remedies Act. Kinsella was seeking $1.6 million in damages.

Kinsella told VCJ that he was disappointed in the jury’s verdict, and said he continues to believe that Sonenshine misrepresented her credentials during his divorce proceedings. As a result, he says she didn’t understand his role as a venture capitalist, and the complexity of his personal finances.

Since the 70-year-old Kinsella has been at the helm of Avalon, Kinsella and his early-stage firm have invested in more than 125 startups, according to his website. Avalon, which raised $116 million for its 11th fund, is known for its life-sciences portfolio and its early investment in social-game developer Zynga.

Alongside his veteran status as a venture capitalist, one of his biggest claims to fame was his $1.4 million personal investment in the musical “Jersey Boys,” which he backed when the show returned to Broadway in 2004. The investment made him one of the largest individual investors in the musical, which tells the story of the musical group the Four Seasons.

The production, the 12th-longest-running in the history of the Great White Way, closed earlier this year after grossing more than $2 billion in ticket sales.

The Los Angeles Times reported in January that Kinsella and a number of other local investors made 22x their original investment.

Kinsella also pointed out to the LA Times writer that he separately lost $750,000 after investing in a revival of the musical “Jesus Christ Superstar.” The reprised production of that musical closed its Broadway run after just three months. 

Kevin Kinsella, founder of Avalon Ventures. Photo courtesy of the firm