At a jury trial, Christian Tregillis testified to compensatory economic damages, measured as lost business value, with the court ultimately awarding $4.266 million in lost business value damages, slightly more than Mr. Tregillis’s figure, plus non-economic damages and punitive damages. The defendants appealed the judgment and challenged the business valuation and economic damages analysis performed by Mr. Tregillis, but the appeals court confirmed his analysis and the ruling.
Mr. Tregillis’s testimony, as referenced in the appeals court opinion, included a description of the underlying tenets of a business valuation, use of the three most approaches (income approach, market approach, and asset-based approach), which information would be considered in a business appraisal, company trends as of the valuation date, implementation of the market approach, a discount for lack of marketability, and indications about the accuracy of the financial statements and documents used in his analysis (which caused Mr. Tregillis to not use the income approach).
The Court concluded that Mr. Tregillis’s analysis was reliable under the standard prescribed in Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 770, he provided “a sound basis for rejecting the income approach in favor of the market value approach to valuing the company,” “reliance on data from the Pratt’s Stats database also provided a reasonable basis for him to identify sales of comparable corporate companies,” he “used the descriptions of their businesses to exclude companies that were obviously not comparable,” “fuller descriptions support Tregillis’s reliance on these companies as comparable to Healthwise,” cases cited by the defendants were not contrary to Mr. Tregillis’s analysis or opinions.
“He said he excluded companies too focused on research and development, he discounted the prices of companies with significant research and development components, and he excluded public companies who manufactured miscellaneous products. He also discounted the value of public pharmaceutical companies and made many other adjustments. By making these adjustments, Tregillis made an effort, which he explained to the jury, to connect the comparable companies he chose to Healthwise. The defendants also crossed-examined him about whether the other companies were truly comparable. The jury evidently credited his testimony.”
“Unlike the expert in Zuckerman, Tregillis did not construct a favorable comparable sale. Instead, he found contemporary corporate sales to use as comparables, excluded transactions involving companies whose primary focus was research and development, and significantly discounted the weight of manufacturing companies with significant research divisions. As a result, he gave the jury material they could rely upon to exercise their traditional fact-finding role.”
“For all these reasons, we conclude the trial court did not err by concluding Tregillis’s opinion on the business valuation was not too speculative and submitting the factual issue to the jury. We also conclude Tregillis’ s opinion was not so speculative that it couldn’t, as a matter of law, constitute substantial evidence for the jury’s verdict.”
