ST. LOUIS (CN) – The developer of amino acid supplements is not eligible to claim $1.9 million in damages against his business partner, who allegedly breached their settlement agreement by selling the supplements after a split, the 8th Circuit ruled.
Martin Hinz’s D5, D5 Extra and D5 Mucuna products, used to treat neurotransmitter dysfunction, were sold jointly by Hinz and Gottfried Kellerman until Kellerman ended the partnership in 2002 and Hinz started his own business, Neuroresearch Clinics Inc.
Kellerman stayed with Neuroscience Inc. and paid Hinz a 43 percent royalty fee per sale until he was barred from selling Hinz’s products as part of a 2003 settlement agreement. Hinz then sued Kellerman for continuing to sell his products anyway, and was awarded nearly $2 million for lost profits.
The 8th Circuit found that Hinz should not have received the hefty award, because he provided no “reasonable basis” for the amount of damages. The impact of Kellerman’s competing business was a matter of speculation, Judge Benton wrote, as there was no way to attribute Hinz’s slowed profit growth directly to Kellerman. For one, Hinz used profit-loss data that bunched together all of his products, some of which Kellerman did not sell. Also, according to the ruling, Kellerman was selling Hinz’s products during the period that Hinz dubs his profit peak, before Kellerman’s competition allegedly hurt his sales. Additionally, the court said Hinz failed to name specific customers stolen by Kellerman and provided no market evidence for expected profit growth rates in the industry.
The three-judge panel found that Hinz’s only injury was lost profits and found no reasonable basis for additional damages.