USI Insurance Services LLC v. Alliant Insurance Services Incorporated
2:23-cv-00192
D. Ariz.Jun 30, 2025Background
- USI Insurance Services LLC sued Alliant Insurance Services Inc. and four former employees, alleging improper client solicitation, tortious interference, and breach of employment agreements after those employees joined Alliant.
- The dispute centers on economic damages USI claims resulted from losing clients to Alliant after the employees' departures.
- USI retained expert Lynton Kotzin to opine on damages through two approaches: the fair market value of the lost employees' "books of business" and diminution of value to USI’s Phoenix office.
- Defendants filed a motion to exclude Kotzin’s expert opinions, arguing his damage calculations were methodologically flawed and speculative.
- Central to the dispute are the admissibility standards for expert testimony under Federal Rule of Evidence 702 and applicable Ninth Circuit law.
- The court's order addresses only evidentiary challenges to Kotzin’s testimony, not liability or the ultimate calculation of damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Inclusion of intangible assets in valuing books of business | Intangible assets like client relationships and goodwill are relevant to fair market value damages under a market approach; Arizona law supports recovery | Including value of intangible assets overstates damages as employees were at-will and not all value was lost; Florida law applied in Simmons case should control | Kotzin’s inclusion of intangible assets is relevant and permissible under Arizona law |
| Use of market multiples (MarshBerry report) | Multiples used are industry-standard, from reliable reports produced preeminent insurance M&A firms; defendants received all data | Multiples are unverifiable and derived from reports or conversations not shown to be reliable; late disclosure prevented proper challenge | Reliable under Fed. R. Evid. 703; sufficient facts/data; attacks go to weight, not admissibility |
| Normalized income method differences for each employee | Differences justified by distinct revenue profiles; expert explained methodology as consistent with industry practice | Expert cherry-picked methods to inflate damages, leading to unreliable and inconsistent opinion | Expert’s rationale for differences is sound; methodology not excluded |
| "Platform" multiple for diminution of value | Relevant to value office as a whole; reflects actual loss from loss of books of business; jury can weigh appropriateness | Using platform multiple overstates value, not tailored to facts; lacks review of underlying transactions | Not irrelevant; provides alternative damages calculation; criticisms affect weight, not admissibility |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (Supreme Court articulated standard for admissibility of expert testimony)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (Expert admissibility standard applies to technical and specialized fields)
- Cooper v. Brown, 510 F.3d 870 (Party offering expert bears burden to show admissibility)
- Kennedy v. Collagen Corp., 161 F.3d 1226 (Weight and credibility of expert testimony are for the finder of fact)
- All Am. Sch. Supply Co. v. Slavens, 609 P.2d 46 (Arizona measure of damages for breach of contract)
- Valley Med. Specialists v. Farber, 982 P.2d 1277 (Arizona recognizes employer interest in customer base for purposes of restrictive covenants)