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Billionaire Khosla Spars With Surfers Over Pacific Beach

Billionaire Vinod Khosla
Billionaire Vinod Khosla is fighting a lawsuit brought in state court by the nonprofit Surfrider Foundation, which describes its mission as “the protection and enjoyment of oceans, waves and beaches through a powerful activist network.” Photographer: Kim White/Bloomberg

Billionaire Vinod Khosla, the co-founder of Sun Microsystems Inc., made his last stand to block public access to a northern California beach on a 56-acre plot he bought for $32.5 million.

Khosla, who started his own venture capital firm a decade ago, is fighting a lawsuit brought in state court by the nonprofit Surfrider Foundation, which describes its mission as “the protection and enjoyment of oceans, waves and beaches through a powerful activist network.”

The group claims that by locking a gate on a beach access road about 33 miles (53 kilometers) south of San Francisco, Khosla is effectively engaged in beach development without the permit required by the California Coastal Act. Surfrider is seeking fines of as much as $15,000 a day since October 2010, or about $20 million to date.

Today, lawyers for the foundation and for the Indian-born businessman squared off in final arguments before Superior Court Judge Barbara J. Mallach in Redwood City following a nonjury trial.

“How do you force Mr. Khosla to comply with the law?” Joseph Cotchett, a lawyer for Surfrider, asked the judge. “Somehow, somewhere justice has to rain down on this individual, Mr. Khosla, and go to the Coastal Commission and unlock that gate,” he said. Cotchett then invoked U.S. President Ronald Reagan’s plea to Mikhail Gorbachev to tear down the Berlin wall. “Take off that lock, Mr. Khosla! If not, you’re going to pay a fine.”

Constitutional Right

Khosla, whose Khosla Ventures LLC has invested in dozens of alternative-energy startups, argues he has a constitutional right to exclude the public from private property.

“Repainting a billboard or maintaining a fence or gate” that have been at the beach since the 1950s don’t constitute development and are exempt from state permitting requirements, he said in a court filing.

“My client’s property is not a state park,” Jeffrey E. Essner, a lawyer for Khosla, told the judge. Essner argued that the county and state Coastal Commission’s “leveraging” of public access in exchange for construction permits, along with the Surfrider lawsuit, together amount to “coercion and extortion” forbidden by legal precedent.

“The threat of an activist organization to impose tens of millions of dollars in fines” for protecting private property is “the type of blackmail and extortion that the U.S. Supreme Court has found unconstitutional,” Essner said.

Theatrical Performances

Cotchett is known for theatrical court performances and his claim to only take cases involving what he calls “just principle or causes.” His law firm, as well as the beach and the court, are in San Mateo County.

Surfrider traces the roots of the controversy to 2008 when Khosla formed two entities, Martins Beach 1 LLC and Martins Beach 2 LLC, to buy the property. Public access to the beach on Martins Road, which runs through the property, was gradually restricted and finally enforced by security guards hired in 2013, according to court documents filed by the organization.

“We are representing the public and using our meager funds to do so,” Angela Howe, legal director at Surfrider, said in a phone interview.

Previous Owner

Surfrider points to policies of the previous owner, the family of Richard Deeney, which charged cars a small fee for use of the beach road and let pedestrians pass for free, to argue Khosla has developed the beach area.

Khosla cites the same policies to contend it wasn’t considered “development” when Deeney’s family locked the gate during winter when parking attendants weren’t available and when he found dealing with car traffic inconvenient.

The California Coastal Commission told Khosla before the lawsuit was filed that he’s required to get a permit to close off access to the beach, Sarah Christie, a spokeswoman for the agency, said in a phone interview.

“The property owner has not submitted the application that we’ve been looking for,” she said.

Khosla issued a statement today rebutting his adversaries’ arguments and blaming them for not reaching a compromise.

“They’ve refused to collaborate and they’ve refused to negotiate,” according to the statement. “All they offer are threats and litigation and the cynical rhetoric of class warfare -- when all they really want is to permanently and irreparably upset the balance between public access and private property rights in our state.”

In the meantime, some beachgoers have ignored the gate without serious repercussions. Members of the public have been ticketed for trespassing, though San Mateo County District Attorney Steve Wagstaffe said in an e-mail that violators won’t be prosecuted -- yet.

“The sheriff’s office is not citing, and we are not prosecuting, any trespass cases until this case is resolved and the court rules on whether the access can be denied,” Wagstaffe wrote.

The case is Surfrider Foundation v. Martins Beach LLC, CIV520336, California Superior Court, San Mateo County (Redwood City).

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