District Court Properly Disallowed Lay Opinion Testimony On Lost Profits When Witness Had No Particularized Personal Knowledge On the Subject
GERHARD VON DER RUHR v. IMMTECH INTERNATIONAL, INC. (June 30, 2009)
Gerhard Von der Ruhr founded Immtech and Septech, both medical technology companies. Immtech patented a human protein product. Septech claims it has a worldwide license and a right to purchase the product from Immtech. Septech claims that Immtech breached the agreement, resulting in lost profits. Septech offered the lay opinion testimony of Von der Ruhr that, had Immtech not breached: a) Septech would have partnered with a major, undetermined pharmaceutical company, b) the pharmaceutical company would have developed and received FDA clearance of the product at its cost, c) the product would have immediately captured half of the target market, and d) Septech would have received 5% of sales proceeds. He would have testified that Septech’s lost sales amount to $42 million. The district court did not allow the testimony and precluded the lost profits claim. Septech appeals.
Von der Ruhr had an option to purchase 24,390 shares of Immtech stock at $.34 a share, exercisable in whole or in part by May 1, 2001. He attempted to exercise the options in April of that year and sent a check in an amount equal to the number of shares times $.34. The company never issued the shares. Instead, relying on the fact that the option price was really $. 3409594, returned the check. A jury found that Immtech breached the contract and also found that three individual officers were guilty of tortious interference with the contract. The individuals appeal.
In their opinion, Judges Bauer, Flaum and Wood affirmed. With respect to the lay opinion testimony, the Court recognized that lay opinion testimony is permissible in limited situations when the witness has particularized, personal knowledge. Von der Ruhr had no such knowledge – he never entered into the kind of licensing agreement he described, he never brought a pharmaceutical to market, he never even made a profit in the business, and he had no knowledge of the market. The Court found no abuse of discretion in disallowing the testimony.
With respect to the tortious interference, the Court conceded that there was evidence to support the defendants’ assertions of innocence. However, a jury found otherwise and the Court concluded that their decision was not irrational based on other evidence -- Von der Ruhr was treated differently, they originally authorized the share transfer, only $23.40 was at stake, there was a history of tension and strife, etc.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select