In Ima North America, Inc. v. Maryln Nutraceuticals, Inc., No. CV-06-344-PHX-LOA, 2008 WL 4628404 (D. Ariz. Oct. 17, 2008), the vendor of a tablet making machine brought a payment deficiency action against a vitamin manufacturer.  The vitamin manufacturer, Maryln, agreed to purchase a Comprima 230 table press for $585,000.  Pursuant to a purchase order with vendor IMA, Marylyn paid IMA $234,000 as a down payment and agreed to pay the balance in full upon delivery of the press.  However, the vitamin manufacturer discovered upon taking delivery of the press that it was not brand new, citing to evidence of rust, powder residue and the age of the press’s parts.  Marylyn refused to pay the remaining balance of the press.  Marylyn’s proposed expert, Damian Hillseth, opined that the press was valued at $225,000 at the time of purchase.

The court found that Mr. Hillseth’s experience in buying, selling and appraising manufacturing equipment in the pharmaceutical and nutraceutical industries qualified him as an expert to testify regarding the value of the tablet press.  Id. at *5.  His lack of specific training regarding valuation of the equipment did not disqualify him as an expert. 

However, Mr. Hillseth’s opinion regarding the value of the tablet press was held to be unreliable.  He could not adequately explain his methodology for arriving at the $225,000 value.  When valuing equipment, Mr. Hillseth stated that he took into consideration the age, condition, marketability and location of the machine, including whether it had been demonstrated by producing a tablet at a trade show.  However, Mr. Hillseth then opined that the machine had been “demoed” without regard to whether it had actually made any tablets.  The court noted that “even if part of Mr. Hillseth’s methodology included consideration of the condition of the machine, he did not apply that methodology in this case.”  Id. at *7.

Mr. Hillseth furthermore failed to research comparable sales, consult industry standard guides, or consider the valuation of various options including an 18-month warranty that was included with the tablet press, and the two weeks of training that IMA provided to Marylyn.  In summary, Marylyn’s expert did not adequately explain the methodology he used to arrive at the value, and failed to take into account the particular factors that affected the value of the tablet press.  His opinion was excluded under the criteria set forth by Daubert.

Arissa M. Peterson is an associate with the Seattle office of Williams Kastner.  She practices civil and commercial litigation with a concentration on product liability defense, including pharmaceutical and medical device, toxic tort, mass tort and multi-district litigation and health care liability defense.  She is a member of DRI's Drug and Medical Device and Young Lawyer Committees and a member of the Washington Defense Trial Lawyers Association.  Arissa can be reached at apeterson@williamskastner.com or (206) 233-2984.

Jennifer Gannon is an associate with the Seattle office of Williams Kastner.  She practices civil and commercial litigation, including health care liability defense, product liability defense, and real estate law.  Jen currently serves as the Webpage Technology chair of DRI’s Young Lawyers subcommittee.  She also is a member of the Washington Defense Trial Lawyers Association.  Jen can be reached at jgannon@williamskastner.com or (206) 233-2868.