Nutrimatix Inc. v. Xymogen, Inc.
Filing
92
ORDER granting 40 Motion for Partial Summary Judgment; denying 43 Motion for summary judgment; denying Defendant's Daubert Motion and Motion in Limine to Exclude and Strike the Testimony and Report of Richard Rampell (Doc. 47). Signed by Judge Roy B. Dalton, Jr. on 1/27/2017. (VMF)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
NUTRIMATIX INC.,
Plaintiff/ Counter
Defendant,
v.
Case No. 6:15-cv-790-Orl-37GJK
XYMOGEN, INC.,
Defendant/ Counter
Claimant.
ORDER
This cause is before the Court on the following:
1.
Defendant’s Daubert Motion and Motion in Limine to Exclude and Strike
the Testimony and Report of Richard Rampell (Doc. 47), filed June 28,
2016;
2.
Plaintiff’s Opposition to Defendant’s Daubert Motion and Motion in Limine
to Exclude Expert Testimony (Doc. 51), filed July 8, 2016;
3.
Plaintiff’s Motion for Partial Summary Judgment on Defendant’s
Affirmative Defenses, and Incorporated Statement of Material Facts and
Memorandum of Law (Doc. 40), filed June 24, 2016;
4.
Defendant’s Response in Opposition to Plaintiff’s Motion for Partial
Summary Judgment on Defendant’s Affirmative Defenses (Doc. 50), filed
July 8, 2016;
5.
Plaintiff’s Reply in Support of Motion for Partial Summary Judgment on
Defendant’s Affirmative Defenses (Doc. 55), filed July 22, 2016;
6.
Defendant’s Motion for Summary Judgment and Memorandum of Law in
Support (Doc. 43), filed June 24, 2016;
7.
Plaintiff’s Opposition to Defendant’s Motion for Summary Judgment
(Doc. 56), filed July 22, 2016; and
8.
Defendant’s Reply to Plaintiff’s Opposition to Defendant’s Motion for
Summary Judgment (Doc. 58), filed August 5, 2016.
OVERVIEW
This action arises from the alleged breach of a contract for the sale of powdered
nutritional supplements for runners. Currently pending are motions for summary
judgment by both parties and Defendant’s motion to exclude Plaintiff’s damages expert,
Richard Rampell (“Rampell”). (See Docs. 40, 43, 47.) Though brevity is the soul of wit, 1
the expanse of disagreement between the parties necessitates a thorough summary of
the facts underlying the instant dispute. To provide context for the details that follow, the
Court begins with a brief overview of the facts. 2
Early in 2014, Plaintiff Nutrimatix Inc. (“Nutrimatix”) formulated a business plan
to place promotional electrolyte sticks (“Electrolyte Sticks”) in post-race meal boxes at
the October 2014 Marine Corps Marathon (“MCM”) held in Washington D.C. Nutrimatix
intended to use the Electrolyte Sticks to drive traffic to a mobile fitness application
1W.
Shakespeare, HAMLET, Act II, Scene 2 (Lord Polonious).
Plaintiff seeks partial summary judgment on discrete affirmative defenses,
the Court’s resolution of this motion is untied to a material factual dispute. Conversely,
the resolution of Defendant’s motion turns on genuine factual issues, as Defendant
seeks summary judgment on all of Plaintiff’s claims and a breach-of-contract
counterclaim. Hence the Court views the facts in the light most favorable to Plaintiff,
who is the non-moving party with respect to the only factually significant motion. See
Lage v. Ocwen Loan Servicing LLC, 839 F.3d 1003, 1008–09 (11th Cir. 2016).
2While
2
(“Fitness App”), where users could purchase one of eight customized nutritional
supplements (“Custom Supplements”) based on their nutritional needs.
Nutrimatix ordered the Electrolyte Sticks and Custom Supplements from
Defendant Xymogen, Inc. (“Xymogen”)—a manufacturer of vitamins and nutritional
supplements, with its global headquarters in Orlando, Florida. The purchase orders
specified expected delivery dates for the Electrolyte Sticks and Custom Supplements.
Due to problems that arose during production, Xymogen was unable deliver the
Electrolyte Sticks by the specified due dates or in time for the MCM. Instead, Xymogen
delivered a portion of the original Electrolyte Stick order on December 9, 2014—in time
for Nutrimatix to place the product in meal boxes at the Walt Disney World Marathon
Weekend (“Disney Marathon”) in January of 2015. By that time, Xymogen had
delivered six of the eight Custom Supplement orders to Nutrimatix. But after receiving
and verifying a customer complaint about the taste of one formula, Nutrimatix
discontinued sales and brought suit against Xymogen for breach of contract and breach
of warranty. In turn, Xymogen countersued for non-acceptance, non-payment, and
wrongful rejection of the remaining Electrolyte Sticks and Custom Supplements.
On June 24, 2016, the parties each moved for summary judgment and to exclude
the opposing party’s expert witnesses (“Daubert Motions”). As intimated at the final
pretrial conference (“PTC”), the profuse disagreements between the parties have
complicated the Court’s task in resolving the pending motions. Thus, at the PTC, the
Court heard oral argument on the pending motions and issued rulings on a portion of
the Daubert Motions. In addition, on January 4, 2017, the Court held an evidentiary
hearing on Xymogen’s motion to exclude the Rampell’s damages testimony. The instant
3
Order memorializes the Court’s rulings on these motions.
BACKGROUND
I.
The Parties
Nutrimatix’s chief executive officer (“CEO”) Sergio Radovcic (“Radovcic”) formed
the company on March 11, 2014, with the goal of using a proprietary Fitness App to sell
Custom Supplements to runners based on their nutritional needs. (Doc. 57, ¶¶ 2, 6.)
Formulated by pharmacist Paul Sullivan (“Sullivan”), the Custom Supplements included
the Male Basic formula, the Female Basic formula, the Male Inflammation formula, the
Female Inflammation formula, the Male Sport formula, the Female Sport formula, the
Male Total formula, and the Female Total formula. (See Doc. 57, ¶ 37; Doc. 1-1, p. 4.)
To promote the Fitness App and garner sales, Radovcic intended to place free
Electrolyte Sticks in post-race meal packages during the fall 2014 racing season, in
conjunction with his preexisting company Fitful. 3 (See Doc. 57, ¶¶ 4, 6, 14; see also
Doc. 57-5, p. 1.)
To this end, and in light of his prior business relationship with Xymogen, 4
Sullivan introduced Radovcic to Xymogen’s executive vice president, Daniel Gulick
(“Gulick”), on April 6, 2014 via e-mail. (Doc. 57, ¶ 5; see also Doc. 57-1, p. 2.) Due to
Nutrimatix’s mid-to-late summer launch targets, Sullivan advised Radovcic and Gulick to
begin production discussions as soon as possible. (Doc. 57-1, p. 2.)
3
Radovcic formed Fitful in 2010 to provide runners with “ready-to-eat,”
“balanced, environmentally friendly, [and] nutritious” meal boxes. (Doc. 56-1, pp. 9–11.)
Fitful’s first delivery was to the MCM in October of 2011. (Id. at 17.) Fitful also provided
meal boxes at the Disney Marathon in January of 2012. (Id. at 11.)
4 Sullivan had previously referred new customers to Xymogen. (Doc. 43-9, ¶ 4.)
4
Four days later, Radovcic and Gulick met in person in Scottsdale, Arizona, where
Radovcic explained his business plan to Gulick. (Doc. 57, ¶ 6; see also Doc. 56-1,
p. 21; Doc. 43-9, ¶¶ 5, 9.) During the meeting, Gulick indicated that Xymogen could
make Nutrimatix’s products. (Doc. 57, ¶ 6.) Thereafter, the two arranged for Radovcic to
tour Xymogen’s Orlando facility on April 23, 2014. (See Doc. 56-1, p. 20; Doc. 57, ¶ 7.)
During the tour, Xymogen’s representatives—including CEO Brian Blackburn—
confirmed that they could make the stick packs. (Doc. 57, ¶ 7.) Radovcic subsequently
chose to use Xymogen as Nutrimatix’s manufacturer. (Id.)
II.
Purchase Orders
Following the tour, Radovcic began coordinating with Xymogen on the stick pack
order. (Id.) In the interim, Xymogen sent Radovcic sample sticks of “the base Nutrimatix
custom formula.” (Doc. 57, ¶ 11.) Though Radovcic approved these samples, he also
expressed some concerns—namely that: (1) “some fairly large particles” remained
present in the mixture when diluted”; and (2) that the sample “seemed rather sweet”
when mixed with eight ounces of water. (Doc. 57, ¶ 11; Doc. 57-5.) In the same e-mail,
Radovcic told Gulick that he was “looking forward to getting the electrolyte samples and
getting [them] ordered to meet [their] October race schedule.” (Doc. 57-5, p. 1.)
Radovcic also reminded Gulick that he intended to: (1) use 100,000 Electrolyte Sticks in
race meals to promote Nutrimatix; and (2) launch the Fitness App at the same time. (Id.;
Doc. 57, ¶ 11.)
On July 29, 2014, Nutrimatix sent Xymogen a purchase order for 150,000
orange-flavored Electrolyte Sticks at a total cost of $18,915 (Doc. 57-7 (“First
Electrolyte Order”); see also Doc. 57, ¶ 13; Doc. 43-9, ¶ 23.) The First Electrolyte
5
Order contained a due date of September 12, 2014. (Id.) Around this time, Gulick
informed Radovcic: (1) that Xymogen had a maximum twelve-week production
timeframe, beginning from the time Nutrimatix placed its order; and (2) that the
Nutrimatix order would probably be finished within eight to nine weeks. (Doc. 57, ¶ 13.)
Based on these representations, Radovcic assumed that Xymogen was already working
within its twelve-week timeframe, as it had already finalized the formulas pending his
tasting and approval, completed samples of the product, and begun creating labels for
the stick packs. (Id.)
On this understanding, Nutrimatix e-mailed a purchase order for the Custom
Supplements (“Custom Supplement Order”) to Xymogen on August 11, 2014. (See
Doc. 57-8 (“August 11 E-mail Chain”) (documenting a chain of e-mails exchanged
between Gulick and Radovcic on August 11, 2014); see also Doc. 57, ¶ 14.) Radovcic
attached the Custom Supplement Order and the First Electrolyte Order to the August 11
E-mail, stating that he would wire a fifty-percent deposit on each Order the following
day. (Doc. 57-8, p. 2.) Radovcic also asked Gulick to “confirm on [his] end that this
[was] fine.” (Id.) Gulick’s response read: “Sergio all is good . . . wire the funds and let
[sic] start rolling.” (Id.)
Radovcic then sent Gulick an amended version of the Custom Supplement Order
to reflect a pricing formula that Sullivan had discussed with Gulick. (Id. at 1.) As
amended, the Custom Supplement Order requested 50,400 units of each formula at a
total price of $107,911.44; it also contained an October 31, 2014 due date. (Doc. 57-8,
p. 1.) In the August 11 E-mail Chain, Radovcic stressed that the “entire company
depend[ed] on having the product ready as soon as humanly possible” and that he
6
needed to have “the electrolyte sticks to Fiftful for insertion into food boxes for
promotion or . . . risk missing the big marathon season.” (Id. at 3.) Radovcic also
indicated the same sense of urgency with respect to the “regular sticks for Nutrimatix
boxes”—i.e., the Custom Supplements. (Id.) Gulick did not object to due dates reflected
in the purchase orders. (Doc. 57, ¶ 14.)
The next day, Nutrimatix wired a $63,412 deposit to Xymogen—$9,457 for the
First Electrolyte Order and $53,955 for the Custom Supplement Order. (Doc. 57, ¶ 15;
Doc. 57-9.)
III.
Formal Quotes
Over the next two weeks, Radovcic received and approved taste test samples for
each of the Custom Supplements. (Doc. 57, ¶ 16.) Once approved, Radovcic signed
custom formula quotes for each Custom Supplement on August 20, 2014.
(Doc. 57, ¶ 17; Doc. 57-11 (“Quotes”).) The Quotes signed by Radovcic did not contain
the quantity of product that Nutrimatix had ordered. (Doc. 57, ¶ 17.) Rather, according
to Gulick, the Quotes were a standard requirement of Xymogen’s manufacturing
process, pursuant to which Xymogen requires its customers to sign formal quotes
before it orders any raw materials or manufactures any product. (Doc. 43-9, ¶ 21.) Such
quotes contain: (1) a list of all active and inactive ingredients for the product;
(2) provisions relating to the customer’s taste approval; (3) details for the product
packaging components; (4) testing requirements; (5) pricing information; (6) shelf life
dating provisions; and (7) provisions concerning additional certifications. (Id.; see also
Doc. 57, ¶ 17).)
7
However, the evidence demonstrates that Xymogen made certain concessions to
Nutrimatix with respect to its standard requirements. For example, Gulick informed
Radovcic that Xymogen had received the “devil claw extract” ingredient for the Custom
Supplements on August 14, 2014—almost a week before Radovcic signed the Quotes.
(Doc. 57-10, p. 1.) Additionally, Gulick instructed Radovcic to disregard an email he
received from a Xymogen sales representative, which: (1) detailed expected turnaround
times for producing formula samples for approval, obtaining a signed quote, ordering
raw materials, and making product labels; and (2) advised Radovcic of the potential for
delays beyond Xymogen’s control, including those caused by late prepayment, label
modification, unexpected machinery breakdown, and packaging problems. (Doc. 57,
¶ 18; Doc. 57-12 (“August 27, 2014 Email”).) Because the timeframes described in the
August 27, 2014 Email included many steps that Nutrimatix had already completed,
Radovcic assumed that there were no issues with the timeframes he had previously
discussed with Gulick. (Doc. 57, ¶ 18.)
IV.
Production Delays
Around this time, communication between the parties began to break down—first
with respect to correspondence concerning the packaging and labeling of Nutrimatix’s
products. (Id. ¶ 19.) On September 18, 2014, Radovcic sent Gulick an e-mail
expressing his concerns about unanswered correspondence, a pattern of delays, and a
lack of transparency in their business communications. (Doc. 57-13.) Radovcic also
expressed concerns about Xymogen’s ability to meet Nutrimatix’s deadlines. (Id.)
By October 10, 2014, Xymogen had still not delivered any of the products
ordered by Nutrimatix. (Doc. 57, ¶ 20.) This delay created significant tension, as Fitful
8
was obligated to provide 30,000 Electrolyte Sticks in post-race meal boxes for the MCM
and Nutrimatix had planned to use this placement to promote the launch of its Fitness
App. (See Doc. 57-14; Doc. 57, ¶ 20.) Attempting to salvage the situation, Radovcic
asked Gulick if it was possible for Xymogen to complete 30,000 Electrolyte Sticks by
October 20 and send them to D.C. via two-day shipping. (Doc. 57-14.) But due to
problems that Xymogen encountered with its stick pack machine (“INVR Machine”),
Gulick intimated that it was unlikely that Xymogen would be able to ship 30,000
Electrolyte Sticks by October 20. (Doc. 57-15.) Ultimately, Xymogen could not supply
the Electrolyte Sticks in time for the MCM; therefore, to meet its obligation, Radovcic
bought a competitive electrolyte product on the open market at full price. (Doc. 56-1,
p. 23.)
Problems with the INVR Machine persisted, as the machine began experiencing
problems with “weight variation in the packets.” (Id.) To remedy this problem, Gulick
proposed adding a flow agent to the Custom Supplements on October 20, 2014.
(Doc. 57, ¶ 22; see also Doc. 57-16; Doc. 43-9, ¶ 40.) Radovcic “grudgingly” agreed, as
he felt it was the only way for Xymogen to complete the Custom Supplements on time,
and Nutrimatix would not have been able to secure an alternative product for the fall
racing season. (See Doc. 57, ¶ 23; Doc. 57-17.) Gulick told Radovcic that the addition
of the flow agent would not materially change the taste of the Custom Supplements or
affect the other ingredients. (Doc. 57, ¶ 23.)
On October 22, 2014, Radovcic sent Gulick a list of November racing events at
which Fitful was scheduled to provide post-race meals and, by extension, the Electrolyte
Sticks. (See id. ¶ 24; Doc. 57-18.) Based on Gulick’s representations that Xymogen was
9
“working around the clock to correct its manufacturing issues,” Radovcic thought that
Xymogen would be able complete the orders in time to make most of the November
events. (Doc. 57, ¶ 24.)
On November 6, 2014, Gulick sent Radovcic an e-mail representing that:
(1) Xymogen had finished the Male Basic formula; (2) another of the Custom
Supplement formulas was already running on the INVR Machine; and (3) each
remaining Custom Supplement would follow every two days. (Doc. 57-19.) However, on
November 12, 2014, Radovcic learned that neither the Male nor the Female Basic
formulas had been shipped. (Doc. 57-20.) At this point, Radovcic informed Gulick that
Xymogen was fifteen days past the October 31 deadline and asked him for a
reasonable estimate of when the orders would be completed. (Id.) As of November 21,
Xymogen had only shipped the Male Basic formula and none of the Electrolyte Stick
Packs (Doc. 57, ¶ 27), prompting Radovcic to send Gulick a lengthy email concerning
Xymogen’s constant delays and misrepresentations with respect to expected delivery
dates. (Id.; see also Doc. 57-21 (“November 21 E-mail”).) In the November 21 E-mail,
Radovcic also asked Xymogen for written shipping dates for each Custom Supplement
and the First Electrolyte Order.
Xymogen made attempts to address its continued INVR machine problems and
speed up production. In particular, prior to the November 21 e-mail and in the weeks
that followed, Gulick: (1) recommended the addition of flow agent to the Electrolyte
Sticks to improve the material flow5 (Doc. 57, ¶ 28; Doc. 57-22); and (2) made several
5
The flow agent added to the Custom Supplement was arabinogalactan.
(Doc. 43-9, ¶ 41.) Due to its cost, Radovcic requested that a different flow agent be
added to the Electrolyte Sticks. (Id. ¶ 43.) Ultimately, with Radovcic’s approval,
10
representations about the amount of product it had already completed, the additional
shifts that Xymogen would work to complete Nutrimatix’s orders, and the length of time
that it would take to run the Custom Supplement formulas through the INVR Machine
(see, e.g., Docs. 57-20, 57-22, 57-23, 57-24).
Despite maintaining that Xymogen was “past any possible deadline”, Radovcic
told Gulick to send the late orders (Doc. 57-23) and requested updates on the balance
of the shipments (see e.g., Doc. 57-24). By December 9, 2014, Nutrimatix had launched
its Fitness App, yet had only received one Custom Supplement. (Doc. 57, ¶ 30.)
V.
Partial Receipt of Product and Reorder
Xymogen eventually shipped 70,000 Electrolyte Sticks to Nutrimatix on
December 9, 2014 (“Partial Electrolyte Order”) (Doc. 57, ¶ 30), which was less than
half the 150,000 units requested in the First Electrolyte Order (see Doc. 57-7). On
January 5, 2015, Xymogen shipped four of the Custom Supplements to Nutrimatix—
44,373 units of the Male Total formula, 44,500 units of the Female Total formula, 45,500
units of the Male Sport formula, and 44,400 units of the Female Sport formula. (Id. ¶ 30;
Doc. 43-9, pp. 11, 19.) Notably, Nutrimatix had requested 50,400 of each formula in its
Custom Supplement Order. (Doc. 57-8.)
Perhaps to make the best of a less-than-ideal situation, Nutrimatix used the
Partial Electrolyte Order to promote the Fitness App during the 2015 Disney Marathon
weekend, that ran from January 7 through January 11. (Doc. 57, ¶ 32.) Over 1,000
people downloaded the Fitness App, and Nutrimatix began filling orders. (Id.) But
because it had not received the Male and Female Inflammation formulas, Nutrimatix
Xymogen added corn maltodextrin to the Electrolyte Sticks. (Id.)
11
was unable to service customers with corresponding fitness data. (Id.)
After the Disney Marathon weekend, Radovcic learned that Xymogen had still not
completed the First Electrolyte Order, which Nutrimatix needed to meet Fitful’s meal box
requirements. (See id. ¶ 33.) In response to Radovcic’s inquiries, Gulick told Radovcic
to place a second order because the addition of a flow agent to the Electrolyte Stick
formula required Radovcic to execute a second formal quote. (See id.; see also
Doc. 43-9, ¶ 47.) Radovcic executed and sent a quote for the revised electrolyte formula
on January 16, 2015 (“Second Electrolyte Order”). (Doc. 43-9, pp. 11, 20–24.)
Nutrimatix did not pay a deposit on the Second Electrolyte Order, nor did it ever receive
it. (Id.)
VI.
Payment Disputes
In January of 2015, more disputes arose between the parties—this time
regarding payment. In particular, on January 20, 2015, Radovcic received an email from
Xymogen requesting payment of past-due invoices (“Unpaid Invoices”). (Id. ¶ 34; see
also Doc. 57-25.) In his response, Radovcic pointed out that the invoices did not reflect
Nutrimatix’s payment of deposits. (Doc. 57-25.) While Radovcic stated that Nutrimatix
would “immediately process any payments ACTUALLY due, based on the product [it
had] ACTUALLY [received],” he also complained about the untimeliness of the
Xymogen’s deliveries. (Id.)
By early February, Xymogen had completed 43,500 units of the Male
Inflammation formula, 44,000 units of the Female Inflammation formula, and 183,000
sticks for the Second Electrolyte Order. (Doc. 43-9, ¶ 50.) However, Xymogen did not
ship these products to Nutrimatix in light of the Unpaid Invoices. (Id. ¶ 51.)
12
VII.
Customer Complaint
Further complications arose on March 9, 2015, when Radovcic received a
customer complaint stating that the Male Total formula tasted like a “chewed up One-aday vitamin” with “barely any citrus and fizz.” (Doc. 57, ¶ 36; Doc. 56-27.) After further
inspection, Radovcic and Sullivan each concluded that the Male Total formula “tasted
horrible” and “was unacceptable.” (Doc. 57, ¶ 37; see also Doc. 56-1, pp. 25–26.)
Nutrimatix immediately stopped sales of the Total formulas and informed Gulick, who
offered to refund the Total formulas. (Doc. 57, ¶¶ 37, 38.) Based on his belief that
Xymogen had ruined his company, Radovcic refused to pay for or accept delivery of the
remaining Inflammation formulas, though Gulick had informed him that the order was
complete. (Doc. 56-1, pp. 24–25; see also Doc. 57-26.) Accordingly, Xymogen never
shipped the Inflammation formulas. (See Doc. 57, ¶ 35.)
VIII.
Formal Demand Letter and Suit
On April 30, 2015, Radovcic sent Xymogen a formal demand letter via e-mail,
detailing his complaints about the “unusable formulas,” “numerous delays,” and the lost
profits and marketing opportunities caused by Xymogen’s late and defective deliveries.
(Doc. 57-29 (“Demand Letter”).) In the Demand Letter, Radovcic requested
reimbursement for the costs that Nutrimatix had expended up to that point. (Id.) Though
Gulick advised Radovcic that he would get back to him after discussing the matter with
his team (id.), Xymogen never responded to the demand (Doc. 57, ¶ 39).
Ultimately, Nutrimatix filed the instant lawsuit on May 15, 2015, asserting claims
for breach of contract and breach of warranty. (Doc. 1.) Nutrimatix’s breach-of-contract
claim is premised on Xymogen’s failure: (1) to deliver the Custom Supplements on time;
13
(2) to deliver the requested number of Electrolyte Sticks on time; and (3) to deliver any
of the Custom Supplement products. (Doc. 1, ¶¶ 40–44.) Additionally, Nutrimatix alleges
that Xymogen breached its warranties by: (1) delivering Custom Supplements that did
not conform to the specifications previously agreed to by the parties; and (2) delivering
two Custom Supplements that were substantially inferior in taste to the samples it had
provided. (Id. ¶¶ 45–54.) In its Answer, Xymogen asserts several affirmative defenses;
Xymogen also asserts counterclaims for non-acceptance and breach of contract.
(Doc. 8.)
EXPERT OPINIONS
Xymogen has moved to exclude the report of Rampell. (Doc. 47.) In his report,
Rampell opines that Nutrimatix incurred the following damages as a result of the acts
and omissions of Xymogen: (1) lost profits in the amount of $15,608,202; (2) production
and inventory acquisition costs in the amount of $152,386; (3) unrecovered startup and
operating expenses in the amount of $251,111; and (4) residual expenses constituting
$3,000 for lab testing and $27,945 in rental expenses for storage of the alleged
defective products. (Doc. 47-1 (“Rampell Report”).)
Xymogen argues that the Rampell Report is inadmissible because: (1) Nutrimatix
failed to timely disclose a significant change in its theory of damages; (2) Xymogen did
not have reason to know that a ninety-day delay in delivery would lead to more than
$15 million in lost profits; (3) Nutrimatix’s business was completely destroyed in 2015,
thus precluding the recovery of lost profits; (4) the Rampell Report is unreliable and
relies on flawed methodology in derogation of Daubert; and (5) Rampell’s estimate of
lost profits are too speculative to be submitted to the jury and contain damages not
14
caused Xymogen. (Doc. 47.) Nutrimatix opposes the motion. (Doc. 51.)
I.
Damages Theory Changes
First, the Court rejects Xymogen’s contention that Nutrimatix failed to disclose a
change in its theory of damages in a timely manner. As an initial matter, the Complaint
“states that Nutrimatix suffered lost profits and lost business opportunities caused by
Xymogen’s delivery problems” and sufficiently notifies Xymogen that Nutrimatix is
seeking damages for lost profits resulting from Xymogen’s breach. (Doc. 1, pp. 10–11.)
Furthermore, in its initial disclosures, Nutrimatix indicated that it had suffered “[l]ost
business opportunities and profits from the delay of its product launch,” of “at least
approximately $180,000.” (See Doc. 47-6.) However, Xymogen contends that such
disclosure was incorrect or incomplete and that Nutrimatix was required to amend its
disclosure to indicate that the Rampell Report would project lost profits over a threeyear period, rather than estimating only “delay damages.” (Doc. 47, p. 4.) As such,
Xymogen argues that “Nutrimatix’s complete change in theory, as well as the magnitude
of the disparity [and timing] between Nutrimatix’s initial estimate and the amount in the
Rampell Report . . . is prejudicial and contrary to Rule 26.” (Id. at 4–5.)
In response, Nutrimatix maintains that it never changed its theory of damages
and did not have a final calculation of its lost profits until Rampell completed his Report,
which it timely served on Xymogen. (Id. at 2.) Nutrimatix also maintains that Xymogen
suffered no prejudice because Nutrimatix served the Rampell Report on Xymogen on
April 8, 2016—well before the discovery deadline of May 27, 2016. (Id.) The Court
agrees. Nutrimatix was not bound by the approximation made in its initial disclosures.
Further, Nutrimatix disclosed the Rampell Report to Xymogen by the Court-mandated
15
deadline. Accordingly, Xymogen has not shown sufficient prejudice to exclude
Rampell’s opinions.
II.
Knowledge of Potential Consequential Damages
Xymogen’s second point of contention is that it had no reason to know at the time
of contracting that a ninety-day delay in delivery would lead to $15 million in lost profits.
(Doc. 47, pp. 5–6.) In support, Xymogen cites § 672.715(1) of the Florida Statutes,
which limits consequential damages resulting from a seller’s breach of contract to “[a]ny
loss resulting from general or particular requirements and needs of which the seller at
the time of contracting had reason to know and which could not reasonably be
prevented by cover or otherwise” (emphasis added). However, Nutrimatix’s proffered
evidence reveals that, both before and at the time of contracting, Radovcic shared with
Xymogen his business plan and the impact that untimely delivery could have on the
company. (Doc. 51-1, pp. 40–41; Doc. 51-2, p. 1 (stating that the “entire company
depends on having the product ready as soon as humanly possible”).) As such, whether
Xymogen had reason to know at the time of contracting that delivery delays could lead
to a steep loss of profits is a factual matter for determination by the jury, not a basis for
exclusion. See Nature’s Prods., Inc. v. Natrol, Inc., 990 F. Supp. 2d 1307, 1316
(S.D. Fla. 2013) (stating that the jury should weigh the evidence and resolve at trial all
factual questions relating to consequential damages). Indeed, pursuant to the Florida
Standard Jury Instructions, the Court will instruct the jury at trial that “[t]o recover special
damages, [Nutrimatix] must prove that when the parties made the contract, [Xymogen]
knew or reasonably should have known of the special circumstances leading to such
damages.” Fla. Standard Jury Instructions—Contract and Business Cases, Instruction
16
504.2 Breach of Contract Damages (2013).
III.
Damages for Completely Destroyed Business
Xymogen’s motion also seeks exclusion of the Rampell Report on the ground
that a completely destroyed business may only recover the market value of the
business as of the date of loss and may not recover lost profits. (Doc. 47, pp. 9–10.)
According to Xymogen, Nutrimatix was completely destroyed in the spring of 2015 when
it halted its sales. (Id. at 10.) Nutrimatix disputes this and maintains that although it has
since changed its name to “Styr Labs” “to distance itself from the failed product launch
and damaged brand caused by Xymogen,” it remains the same entity with the same
rights, obligations, key personnel, and nutritional personalization technology. (Doc. 51,
p. 6.)
Under its new name, Nutrimatix has contracted to obtain custom supplements
from a different supplier and re-launched its Fitness App to sell these supplements
during the summer of 2016. (Doc. 51, p. 6.)
Upon consideration, the Court is persuaded that a business that is interrupted,
rather than completely destroyed, may still recover lost profits caused by the
defendant’s conduct. See Zinn v. GJPS Lukas, Inc., 695 So. 2d 499 (Fla. 5th DCA
1997). Because Xymogen has not conclusively demonstrated that Nutrimatix was
completely destroyed, the Court declines to exclude the Rampell Report on this basis.
IV.
Daubert Challenges
A.
Legal Standards
In its gatekeeping role, a district court is tasked to ensure that juries only hear
“expert” opinions that are qualified, reliable, and helpful to the fact-finder. City of
Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562–63 (11th Cir. 1998); see also
17
Cooper v. Marten Transp., Ltd., 539 F. App’x 963, 965–67 (11th Cir. 2013). The Court
must abstain from credibility determinations and any assessment of the merits of an
expert witness’s opinion—which are matters exclusively reserved to juries—and must
instead narrowly focus on whether the proponent of the expert witness has established
the qualification, reliability, and helpfulness requirements. 6 See Daubert v. Merrell Dow
Pharm., Inc., 509 U.S. 579, 594–95 (1993); see also Reeves v. Sanderson Plumbing
Prods., Inc., 530 U.S. 133, 155 (2000).
The proponent of an expert opinion has the burden of establishing admissibility.
See Kilpatrick v. Breg, Inc., 613 F.3d 1329, 1335 (11th Cir. 2010)); see also Frazier,
387 F.3d at 1260. The proponent does not have to prove that the opinion is scientifically
correct, just that it is reliable and helpful, and the witness is qualified. See Lord v.
Fairway Elec. Corp., 223 F. Supp. 2d 1270, 1279 (M.D. Fla. 2002) (citing Fed. R. Evid.
702, Advisory Committee Notes). If the proponent does so, then the court opens the
gate because the Court’s limited gatekeeping role “is not intended to supplant”
presentation of contrary evidence to the jury or the practice of cross-examination in a
courtroom. See United States v. Ala. Power Co., 730 F.3d 1278, 1282–85
(11th Cir. 2013). Rather, the jury must resolve the parties’ remaining reliability and
relevance disputes—preferably based on the litigants’: (1) presentation of contrary
evidence, such as testimony from the litigant’s own expert witness providing both
contrary opinions and criticism; and (2) cross-examination and appropriate legal
argument. See id.; see also Costa v. Wyeth, Inc., No. 8:04-cv-2599-T-27MAP, 2012 WL
1069189, at *2 (M.D. Fla. Mar. 29, 2012).
6
Because Xymogen has not challenged Rampell’s qualifications, the Court
focuses on the reliability and helpfulness requirements.
18
B.
Discussion
Xymogen contends that Rampell’s lost profits calculation falls short of meeting
the reliability requirement. (Doc. 47, pp. 10–19.) The reliability requirement turns on a
plethora of matters that vary depending on the opinions and testimony at issue, and
include the following well-known Daubert factors:
(1)
whether the expert’s theory can be or has been tested;
(2)
whether the theory has been subject to peer review and publication;
(3)
the known or potential rate of error of the particular scientific
technique; and
(4)
whether the technique is generally accepted in the scientific
community.
Daubert, 509 U.S. 579; United States v. Frazier, 387 F.3d 1244, 1262 (11th Cir. 2004).
The reliability requirements and Daubert factors “are only illustrative and may not all
apply in every case.” United States v. Abreu, 406 F.3d 1304, 1307 (11th Cir. 2005).
Ultimately, the district court must identify the pertinent factors, and it is accorded “wide
latitude in deciding how to determine reliability.” Id.
The Supreme Court of Florida most recently clarified its position on the recovery
of lost profits for new businesses in W.W. Gay Mechanical Contractor, Inc. v. Wharfside
Two, Limited, 545 So. 2d 1348 (Fla. 1989) (“Wharfside”). The Wharfside decision held
that “[a] business can recover lost prospective profits regardless of whether it is
established or has any ‘track record’” so long as the party proves that: “(1) the
defendant’s actions caused the damage[;] and (2) there is some standard by which the
amount of damages may be adequately determined.” 545 So. 2d at 1351. In doing so,
the Wharfside court reaffirmed its prior decision in Twyman v. Roell, 166 So. 215 (Fla.
19
1936), which held that “if there is a yardstick or measure of damages by which
prospective profits may be determined and they arise out of a contract in which profit is
the inducement to its making, they may be followed if proven.” 166 So. at 217. Such
amount must be established “with reasonable certainty” and “[t]he requisite to their
allowance is some standard, such as regular market values, or other established data,
by reference to which the amount may be satisfactorily ascertained.” Id.
State and federal courts interpreting Florida law on this issue recognize three
distinct methods for calculating lost profits—(1) the yardstick method 7; (2) the “before
and after” method 8; and (3) the projected sales method. 9 That said, Florida law does not
require a business to employ any of these methods to recover lost profits. Marshall,
2003 WL 25668018, at *7. Rather, in assessing the reliability of Rampell’s opinion, the
Court need only determine whether there is “some standard by which the amount of
[Nutrimatix’s] damages may be adequately determined.” Upon consideration of the
7
The yardstick test “consists of a study of the profits of business operations that
are closely comparable to the plaintiff’s. Although allowances can be made for
differences between the firms, the business used as a standard must be as nearly
identical to the plaintiff’s as possible.” Lehrman v. Gulf Oil Corp., 500 F.2d 659, 667
(5th Cir. 1974). Pursuant to Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207
(11th Cir. 1981), decisions handed down by the U.S. Court of Appeals for the Fifth
Circuit prior to the close of business on September 30, 1989, are binding as precedent
in the Eleventh Circuit.
8 “The before and after theory compares the plaintiff’s profit record prior to the
violation with that subsequent to it.” However, this theory “is not easily adaptable to a
plaintiff who is driven out of business before he is able to compile an earnings record
sufficient to allow estimation of lost profits.” Lehrman, 500 F.2d at 667.
9 “The projected sales theory allows an expert to estimate what a company’s
profit margin would have been in the absence of a negligent act based on the plaintiff’s
past accounts with repeat or regular customers. As long as there is data from which
anticipated future profits can reasonably be ascertained, lost profits can be recovered
under the projected sales theory even in the absence of a contract requiring customers
to patronize the plaintiff’s business.” Marshall Auto Painting & Collision, Inc.,
No. 6:02-cv-109-Orl-22KRS, 2003 WL 25668018, at *7 n.46 (M.D. Fla. May 8, 2003)
20
methodology used in the Rampell Report, the Court concludes that the standard used to
calculate lost profits meets the Daubert criteria.
In developing and applying the methodology for his calculations, Rampell—a
certified public accountant—relied on a practice aid published by American Institute of
Certified Public Accountants for calculating lost profits. (Doc. 47-1, pp. 1, 2.) In
formulating his opinions, Rampell considered: (1) information provided by Radovcic;
(2) historical data from the nutrition and supplement industry data; and (3) the market
outlook. (Doc. 47-1, p. 3.) Rampell then evaluated Radovcic’s business projections for
2014–2016 and adjusted them based on his experience and market research. (Id.)
Rampell also considered historical fitness app growth rates and historical conversion
rate data. (Doc. 47-1, p. 7.)
On this record, Rampell began with Nutrimatix’s record of sales following the
Disney Marathon in January of 2015, at which time users downloaded the Fitness App
1,248 times and placed 180 orders for the Custom Supplements. (Id.) From this direct
sampling campaign, Rampell calculated the conversion rate of downloads to purchases
(“Order Rate”) as 14.42%. (Id.) Comparatively, the average U.S. Order Rate in 2015
was 3.35% for tablets and only 1.22% for smartphones. (Id.) Based on this data,
Rampell opined that the success of the Fitness App’s launch, with only minimal
promotion, provided a basis to calculate Nutrimatix’s potential for success upon entry in
the market. (Id.)
Rampell then: (1) compared Nutrimatix’s projected downloads for 2014–2016
with the number of downloads from other fitness apps to arrive at his own projection for
2014; and (2) used the average growth rates for selected fitness apps to project the
21
number of downloads for 2015 and 2016 (“Projected Downloads”). (Doc. 51, p. 8;
Doc. 47-1, p. 19.) Though Nutrimatix’s Order Rate following the Disney Marathon was
14.42%, Rampell used a 2.4% Order Rate (“Projected Order Rate”) in his lost profits
calculation “to account for the risk that the conversion rates would not in the near future
be as robust as actually experienced by Nutrimatix in the past.” (Doc. 47-1, pp. 7, 19;
Doc. 51, p. 9.) As indicated in his report, the lower Order Rate was a weighted average
of the actual conversion rates in published industry app-to-app product purchase
conversion rates. (Doc. 47-1, p. 19; Doc. 51, p. 9.) Next, Rampell multiplied the number
of Projected Downloads by the Projected Order Rate to calculate the number of units
that would have been sold. (Doc. 47-1, p. 19.) Multiplying this number by the unit price
($44), Rampell arrived at the amount of initial projected sales. (Id.) Rampell then used
the reorder rate from Nutrimatix’s business projections to arrive at the total projected
sales. (Id.) This reorder rate—or repeat customer estimate—was based on Radovcic’s
experience and knowledge of the vitamin and supplement industry, as well as historical
information on subscription-based services. (Doc. 47-1, pp. 7–8.) Finally, Rampell
subtracted Nutrimatix’s costs, expenses, depreciation, taxes, and sales revenue
realized to calculate total lost profits of $15,608,202.00.
Contrary to Nutrimatix’s representation, Rampell’s methodology is not a classic
example of the projected sales method for calculating lost profits. But under Florida law,
Rampell’s deviation from this model is of no consequence. See Marshall,
2003 WL 25668018, at *7. Indeed, Rampell’s application of methodology promulgated
by the American Institute of Certified Public Accountants leaves the Court hard pressed
to find reason to exclude the Rampell Report on grounds of unsound methodology
22
despite the magnitude of the projected loss that results. Xymogen’s concern about the
size of the claim, while understandable, does not justify exclusion.
The Court is persuaded by the rationale in Lehrman v. Gulf Oil Corporation,
500 F.2d 659 (5th Cir. 1974), which recognized that the plaintiff’s method of calculating
lost profits was not a classic example of the yardstick or before and after theories, but
rather had elements of each. 500 F.2d at 667–68. Ultimately, the Lehrman court found
that the plaintiff’s unique tailoring of such method of proof to fit his case did not render it
unacceptable. Id. at 668. The deviations here are likewise not disqualifying.
As additional grounds for exclusion, Xymogen contends that Rampell’s lost profit
analysis is flawed because it: (1) fails to assess potential pitfalls in Nutrimatix’s
marketing strategy; (2) fails to account for reasonable mitigation strategies; (3) is not
limited to delay damages alleged in the Complaint; and (4) fails to reduce the damage
estimates to their present value. Such challenges attack the values used in Rampell’s
methodology, rather than the methodology itself. Having already concluded that such
methodology is sound under Daubert, any alleged errors in its application go to the
credibility of Rampell’s opinions, rather than their reliability. Quiet Tech., 326 F.3d at
1344–45; see also Furmanite Am., 506 F.2d at 1132. Indeed, “[t]he identification of
such flaws in generally reliable scientific evidence is precisely the role of
cross-examination.” Quiet Tech., 326 F.3d at 1344–45. As such, this “garbage in,
garbage out” argument is insufficient to require exclusion under Daubert. 10
10
Additionally, although Florida law requires a jury to reduce an award of future
profits to its present value, there is no requirement that a party introduce expert
testimony to aid a jury in its determination of present value. Brough v. Imperial Sterling
Ltd., 297 F.3d 1172, 1180 (11th Cir. 2002). It is sufficient if the Court instructs the jury
that damages for future loses must be limited to the present cash value of the future
23
Rampell’s lost profit calculation is not unduly speculative. While Xymogen is
correct that an award of damages for lost profits may not be based upon speculation or
conjecture, E. Qualcom Corp. v. Glob. Commerce Ctr. Ass’n, 59 So. 3d 347, 351 (Fla.
4th DCA 2011), lost profits may be based on reasonable estimates, Ad-Vantage Tel.
Directory Consultants, Inc. v. GTE Dirs. Corp., 943 F.3d 1511, 1518 (11th Cir. 1991);
see also Twyman, 166 So. at 218 (“If from proximate estimates of witnesses a
satisfactory conclusion can be reached, it is sufficient if there is such certainty as
satisfies the mind of a prudent and impartial person.”) Notably, “[t]he uncertainty which
defeats recovery in such cases has reference to the cause of the damage rather than to
the amount of it.” Twyman, 166 So. at 218.
Here, Rampell began with Radovcic’s pre-launch business projections, which
Radovcic reached using his business experience as an entrepreneur, as well as his
personal knowledge of the nutritional supplement industry. Rampell then evaluated
these projections for reasonableness, comparing them with industry data and adjusting
them accordingly. As in Lehrman, this Court concludes that such evidence is not unduly
speculative but rather “a just and reasonable estimate of damages under difficult
circumstances based on relevant data.” Lehrman, 500 F.2d at 671. Though
“unquestionably open to challenge,” such evidence may be submitted to the jury for
resolution. Id. at 668. Indeed, “once the causation hurdle has been overcome, the
expert on damages need not be armed on the right hand with a slide rule [and] on the
left hand with a computer. He is allowed some economic imagination so long as it does
not become fantasy.” Terrell v. Household Goods Carriers’ Bureau, 494 F.2d 16, 25
loss. Id.
24
(5th Cir. 1974). Whether the jury will accept the reasonableness of Radovcic’s
protjection or the other assumptions inherent in Rampell’s opinion remains to be seen.
To be sure, rigorous cross-examination may well substantially undercut its foundation.
To this point, Xymogen argues that the Rampell Report includes damages not
caused by Xymogen—namely, costs for a replacement electrolyte product for the MCM,
the reengineering of boxes for the Electrolyte Product, startup and operating expenses,
testing, and storage of the allegedly defective product. The Court’s review of the
Rampell Report reveals that Rampell has provided an adequate basis to establish a
causal link between these alleged damages and Xymogen’s conduct. (See Doc. 47-1,
pp. 4–7.) As such, Xymogen’s arguments are more properly reserved for the jury.
THE SUMMARY JUDGMENT MOTIONS
I.
Standards
Summary judgment is appropriate only “if the movant shows that there is no
genuine dispute as to any material fact and that the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
As to issues for which the movant would bear the burden of proof at trial, the “movant
must affirmatively show the absence of a genuine issue of material fact, and support its
motion with credible evidence demonstrating that no reasonable jury could find for the
non-moving party on all of the essential elements of its case.” Landolfi v. City of
Melbourne, Fla., 515 F. App’x 832, 834 (11th Cir. 2012) (citing Fitzpatrick v. City of
Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993)). As to issues for which the non-movant
would bear the burden of proof at trial, the movant has two options: (1) the movant may
simply point out an absence of evidence to support the nonmoving party’s case; or
25
(2) the movant may provide “affirmative evidence demonstrating that the nonmoving
party will be unable to prove its case at trial.” U.S. v. Four Parcels of Real Property in
Green & Tuscaloosa Cntys. in State of Ala., 941 F.2d 1428, 1438 (11th Cir. 1991) (citing
Celotex Corp., 477 U.S. at 325).
“The burden then shifts to the non-moving party, who must go beyond the
pleadings and present affirmative evidence to show that a genuine issue of material fact
exists.” Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006) (citing Fitzpatrick v. City of
Atlanta, 2 F.3d 1112, 1115–17 (11th Cir. 1993)). “A factual dispute is genuine ‘if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.’”
Four Parcels, 941 F.2d at 1437 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248) (1986)).
The Court must view the evidence and all reasonable inferences drawn from the
evidence in the light most favorable to the non-movant. Battle, 468 F.3d at 759.
However, “[a] court need not permit a case to go to a jury . . . when the inferences that
are drawn from the evidence, and upon which the non-movant relies, are ‘implausible.’”
Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 743 (11th Cir. 1996).
II.
Nutrimatix’s Motion for Summary Judgment
Nutrimatix moves for summary judgment on several of Xymogen’s affirmative
defenses. (Doc. 40.) In particular, Nutrimatix contends that Xymogen can produce no
evidence in support of the following defenses: (1) first, that any change in the taste of
the Custom Supplements resulted from intervening or supervening causes—namely,
the handling process or the storage of such goods once out of Xymogen’s control; and
(2) second, that any change in the taste of such goods from the time it was
26
manufactured and delivered to the time customers opened the goods resulted from the
custodial interference of Nutrimatix or the custodial interference of Nutrimatix’s
customers. (See Doc. 8, ¶¶2–3, 10.) The Court agrees.
Importantly, Xymogen bears the burden of proof on its affirmative defenses at
trial. Thomas v. George, Hartz, Lundeen, Fulmer, Johnstone, King, & Stevens, P.A.,
525 F. 3d 1107, 1110 (11th Cir. 2008). Thus, once Nutrimatix pointed to an absence of
supporting evidence for these defenses, the burden shifted to Xymogen to present
affirmative evidence to show that a genuine issue of material fact exists for trial. Four
Parcels, 941 F.2d at 1438; Porter, 461 F.3d at 1315. However, in its response,
Xymogen misstates the applicable burden and argues that Nutrimatix’s failure to provide
affirmative evidence to either contradict Xymogen’s affirmative defenses or demonstrate
the products’ storage conditions its fatal to its motion. (Doc. 50.) Not so.
Therefore, because Xymogen failed to present any affirmative evidence
demonstrating that an intervening cause, supervening cause, or the custodial inference
of Nutrimatix or its customers caused the bitter tasting products alleged in the
Complaint, Nutrimatix’s motion for partial summary judgment is due to be granted.
III.
Xymogen’s Motion for Summary Judgment
For its part, Xymogen moves for summary judgment on Nutrimatix’s breach of
contract and breach of warranty claims. (Doc. 43.) Xymogen also moves for summary
judgment on Count III of its Counterclaims, which alleges that Nutrimatix failed to pay
Xymogen the full contract price. (Id.)
A.
Contract Claims
Upon consideration, the Court concludes that material factual disputes prevent
27
Xymogen from succeeding on its motion for summary judgment as to either party’s
breach-of-contract claims. Specifically, the Court finds that genuine issues of material
fact remain concerning: (1) whether time was of the essence, and if not, whether
delivery occurred within a reasonable time; (2) whether Nutrimatix provided Xymogen
with adequate notice of breach; (3) whether Nutrimatix waived its breach of contract
claims with respect to untimely delivery; and (4) whether Xymogen breached the
contract by failing to deliver the Custom Supplements on time, thus excusing Nutrimatix
from its obligation to pay Xymogen the full contract price. In light of these factual
disputes, these issues must be submitted to a jury for determination.
The Court writes further only to resolve the parties’ disagreement over which
document contains the essential terms of their contractual obligations. Nutrimatix
maintains that the purchase orders evidence the contract terms, Xymogen contends
that the Quotes alone govern the terms of the parties’ agreement (Doc. 43-9, ¶ 2).
Upon review of the evidence and Florida law governing the formation of a contract for
the sale of goods, the Court agrees with Nutrimatix.
Ordinarily, “[a] contract for sale of goods may be made in any manner sufficient
to show agreement, including conduct by both parties which recognizes the existence of
such a contract.” Fla. Stat. § 672.204(1). Under Florida law, a contract ordinarily
requires: (1) an offer; (2) acceptance; (3) consideration; and (4) sufficient specification
of the essential terms.” Kolodziej v. Mason, 774 F.3d 736, 740 (11th Cir. 2014). The
only essential term in a contract for the sale of goods is the quantity.
Fla. Stat. § 672.201(1) & cmt. 1 (“The only term which must appear [in the writing] is the
quantity term[,] which need not be accurately stated but recovery is limited to the
28
amount stated.”)
Because the Quotes do not contain a quantity term (see Doc. 57-11), they do not
constitute a valid contract for the sale of goods. The First Electrolyte and Custom
Supplement Orders (collectively, “Purchase Orders”), however, do contain a quantity
term, and review of the parties’ electronic communications also evidences satisfaction
of the remaining elements necessary for contract formation.
Specifically, Radovcic attached the Purchase Orders to the August 11 E-mail
chain. (Doc. 57-8.) In this e-mail, Radovcic stated that he would wire a fifty-percent
deposit to Xymogen for each Purchase Order the following morning; he also asked
Gulick to confirm that this was acceptable. (Doc. 57-8.) Gulick’s response stated: “all is
good . . . wire the funds and let [sic] start rolling.” (Id.) Radovcic wired the deposits the
following
day.
(Doc.
57-9.) In
accordance
with
Florida
law,
the
foregoing
correspondence demonstrates the existence of a contract as it demonstrates: (1) an
offer; (2) acceptance; (3) consideration; and (4) sufficient specification of the essential
terms. See Kolodziej, 774 F.3d at 740–41.
Next is the question of whether there is a sufficient writing:
a contract for the sale of goods for the price of $500 or more
is not enforceable by way of action or defense unless there
is some writing sufficient to indicate that a contract for sale
has been made between the parties and signed by the party
against whom enforcement is sought.
Fla. Stat. § 672.201(1). Exceptions to this requirement include valid contracts:
(a)
Where the goods are to be specially manufactured for
the buyer and are not suitable for sale to others in the
ordinary course of the seller’s business and the seller,
before notice of repudiation is received and under
circumstances which reasonably indicate that the
goods are for the buyer, has made either a substantial
29
beginning of their manufacture or commitments for
their procurement;
(b)
Where the party against whom enforcement is sought
admits in his or her pleading, testimony or otherwise
in court that a contract for sale was made . . . ; or
(c)
With respect to goods for which payment has been
made and accepted or which have been received and
accepted.
Fla. Stat. § 672.201(3).
Here, the Purchase Orders evidence a contract for the sale of goods for the price
of more than $500 (see, e.g., Doc. 57-8), thus triggering the writing requirement of
§ 672.201(1) of the Florida Statutes. The Purchase Orders are not signed by either
party; thus, to be enforced, the Purchase Orders must fit within one of the exceptions
under § 672.201(3).
A contract that does not satisfy section (1), but is valid in other respects, is
enforceable if the party against whom enforcement is sought admits in his or her
pleading, testimony or otherwise in court that a contract for sale was made. Fla. Stat. §
672.201(3)(b). Under section (2), a confirmatory writing between merchants satisfies the
requirements of section (1) if it is sent within a reasonable time and the party receiving it
has reason to know of its contents and fails to object within ten days of its receipt.
Xymogen admitted in its Answer to the Complaint that a contract existed between
the parties, but it disavowed the existence of an enforceable contract in the Joint Pretrial
Statement. (Compare Doc. 8, with Doc. 68.) When questioned about this change in
position at the PTC, counsel for Xymogen indicated his belief that the matter of mutual
assent was in dispute. As this issue was not raised in the parties’ pre-trial motions, nor
briefed, the Court declines to reach this specific dispute, which—according to the
30
representations of Counsel—appears to turn on a factual dispute. The parties,
therefore, are free to litigate the existence of an enforceable contract at trial.
B.
Breach of Warranty Claim
Additionally, the Court finds that Xymogen has not met its burden to demonstrate
that it is entitled to judgment as a matter of law on Nutrimatix’s breach of warranty claim.
In so finding, the Court rejects Xymogen’s argument that Nutrimatix’s Complaint fails to
properly plead the elements for breach of implied warranties. Moreover, the balance of
the parties’ briefing demonstrates that genuine issues of material fact exist with respect
to this claim, thus precluding summary judgment.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1.
Defendant’s Daubert Motion and Motion in Limine to Exclude and Strike
the Testimony and Report of Richard Rampell (Doc. 47) is DENIED.
2.
Plaintiff’s Motion for Partial Summary Judgment on Defendant’s
Affirmative Defenses, and Incorporated Statement of Material Facts and
Memorandum of Law (Doc. 40) is GRANTED.
3.
Defendant’s Motion for Summary Judgment and Memorandum of Law in
Support (Doc. 43) is DENIED.
DONE AND ORDERED in Chambers in Orlando, Florida, on January 27, 2017.
31
Copies:
Counsel of Record
32
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