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Ruhr v. Immtech International

June 30, 2009


Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 03 C 5335-Robert W. Gettleman, Judge.

The opinion of the court was delivered by: Bauer, Circuit Judge


Before BAUER, FLAUM and WOOD,Circuit Judges.

Septech, Inc. sued Immtech, Inc. for breach of a licensing contract between the two companies. Septech's president, Gerhard Von der Ruhr, sued Immtech for breaching an option contract that he held to purchase Immtech stock. Von der Ruhr also sued three Immtech officers, T. Stephen Thompson, Gary C. Parks, and Rick L. Sorkin, for tortiously interfering with the option contract. In ruling on two motions in limine, after briefing and an evidentiary hearing, the district court prohibited Von der Ruhr from presenting lay opinion testimony about his expectation of Septech's profits from the licensing agreement and disallowed Septech's lost profits theory altogether because it lacked sufficient evidentiary support.

As to the stock options, the district court reserved judgment on defendants' motion for judgment as a matter of law; the jury found that Immtech breached the option contract with Von der Ruhr and that the individual officers tortiously interfered with the contract. The district court denied the defendants' renewed motion for judgment as a matter of law. Septech now appeals the district court's ruling on the motions in limine and the Immtech officers appeal the denial of their motion or renewed motion for judgment as a matter of law. Finding no error, we affirm.


A. The Sepsis Licensing Agreement

Gerhard Von der Ruhr founded several medical technology companies, including Immtech and Septech. Immtech developed and patented a pharmaceutical product called mCRP, a modified human protein, which Immtech hoped could treat the disease sepsis. Septech claims that through an assignment of rights from another of Von der Ruhr's companies, it received from Immtech an exclusive worldwide license for the mCRP patent, as well as the right to purchase mCRP from Immtech, and the right to the services of Dr. Potempa, Immtech's Chief Scientific Officer and the person who discovered the mCRP technology. Septech claims that after Von der Ruhr resigned from Immtech, Septech attempted to utilize the licensing agreement to purchase mCRP from Immtech in order to run clinical trials and that Immtech did not honor the agreement. Septech believes that if the agreement had not been breached, Septech would have further developed and realized great profits from this new drug. Whether Septech held rights to the original licensing agreement and whether Immtech breached that agreement are both disputed by the parties, but are not at issue here. Rather, this appeal focuses on whether Septech can prove lost profits damages if there was a breach.

Through Von der Ruhr's lay opinion testimony, Septech intended to establish that if Immtech had fulfilled its obligations, Septech would have entered into an agreement with a corporate partner, an undetermined major pharmaceutical company, that would have been responsible for the details and costs of conducting the necessary clinical trials and walking the product through the FDA clearance process. Von der Ruhr was to testify that under the terms of the agreement that would have been negotiated, the corporate partner would be responsible for all elements and costs of manufacturing and marketing the drug and Septech would receive five percent of the drug's total sales. Von der Ruhr was to testify that, upon being introduced to the market, this new drug would have immediately captured, and for the next ten years would have maintained, at least half of the gross revenue of the only other drug to treat sepsis on the market at the time, an Eli Lilly product called Xigris. Finally, Septech intended for Von der Ruhr to testify that Septech's lost profits damages, discounted to their present value, totaled $42 million.

The district court did not allow this testimony and also precluded Septech's lost profits theory.

B. Von der Ruhr's Stock Options

Von der Ruhr held several options to purchase Immtech stock, one of which was an option for 56,000 shares at $.15 per share issued May 1, 1991 and to be exercised by May 1, 2001. After a series of stock splits and reverse stock splits, Immtech informed Von der Ruhr, and Immtech documents indicate, that the option was for 24,390 shares at $.34 per share. The option could be exercised in whole or in part.

Von der Ruhr attempted to exercise the option in April 2001. Together with a check, he sent a letter stating, "Enclosed please find a check for $8292.60 to exercise 24390 options." This comes out to $.34 per share. Upon receiving the request, Parks, Immtech's CFO, prepared a letter to Immtech's transfer agent instructing that the stock be issued. However, that letter was never sent. Instead it was marked, "Hold per TST [Thompson] & Sorkin." The officers claim that when they received Von der Ruhr's letter they consulted with Immtech's attorneys because Von der Ruhr had filed a separate lawsuit against Immtech a few days before they received the redemption request, regarding a different set of shares that Von der Ruhr claimed he had not received.

Parks informed Thompson and Sorkin that the correct price was not $.34 per share, but $.3409594 per share for a total of $8,316 and reported that Von der Ruhr's check was "technically . . . $23.40 short." Toward the end of June, Parks sent Von der Ruhr a letter, which Parks claims was drafted by legal counsel, stating that Von der Ruhr's request "fails to identify exactly which options you are intending to exercise" and asking him to clarify. Parks admitted at trial that he knew which options Von der Ruhr was trying to exercise. Parks' letter continued that if Von der Ruhr was intending to exercise the May 1, 1991 option, that the purchase price was $8,399.72.*fn1 Parks returned Von der Ruhr's check and the shares were never delivered.Von der Ruhr never responded to the request for clarification or sent another check, but that fact is, at this point, not important. The jury found that Immtech breached the option contract by not issuing the stock and no one appeals that issue. For the purposes of this appeal then, Von der Ruhr did everything necessary to exercise the option and was entitled to receive the shares.

The district court did not disturb the jury's verdict that this constituted a breach of the option contract and that the Immtech officers tortiously interfered with that contract.


On appeal, Septech argues that the district court erred by prohibiting Von der Ruhr's lay opinion testimony and Septech's lost profits theory. Immtech responds that it was proper to prohibit the testimony and theory because they lacked foundation. The Immtech officers cross-appeal, claiming that the district court erred by denying their motions for judgment as a matter of law, allowing them to be personally liable for the ...

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