Page 61 - Acertaining Economic Damages Calculation

this is the "best evidence the nature of the case admit[s]" and without it the jury would have no
reasonable factual basis for determining lost profits.

Perhaps, no opinion better encapsulates the objective of this chapter than Eastern Fireproofing Co., Inc.
v. United States Gypsum Co., No. S7-938-G (D. Mass. 1970), which recognizes the inherent subjectivity
in determining what constitutes best evidence. Eastern Fireproofing Co., Inc. (Eastern), a company en-
gaged in the roof deck business, brought an antitrust action against United States Gypsum Company
(U.S. Gypsum), a supplier of roof deck material, in which the jury found that U.S. Gypsum conspired
with Eastern’s competitors by refusing to sell raw materials to Eastern in an attempt to monopolize the
business. Addressing the issue of best evidence used to calculate damages, the court stated the follow-
ing:

[A] plaintiff may not conjure up favorable estimations and hold back more solid but less favora-
ble evidence otherwise available. And the admissibility of a particular class of evidence will de-
pend to a degree upon the availability of less speculative evidence. On the other hand there is no
rule of law that only the best available evidence may be used. This would necessarily imply a de-
termination of what class of evidence is best and it seems that such a determination cannot be
made without infringing on the proper function of the jury as the finder of fact. A decision that a
class of evidence indicating a theory of damage is the best evidence is also apt to be equivalent to
a decision as to the amount of these damages.

In Bigelow v. RKO Radio Pictures, Inc., supra, classes of evidence under two theories of damage
were introduced. Under one theory, damage period earnings of the plaintiff were compared with
the earnings of its competitor; under the second theory, plaintiff's earnings prior to the violation
were compared to earnings during the violation period. Damages under both theories closely cor-
responded. The Supreme Court, 327 U.S. 251, at 266, said: ‘We conclude that there was evi-
dence to support a verdict for damages on at least one theory on which the case was submitted to
the jury. We do not imply that the verdict could not be supported on some other theory.’

The question for the court then is not whether one class of evidence is better than another, but
whether each is adequate itself to support a finding based upon it. If it reaches this minimum,
then it will be up to the trier of fact to decide which is the best.

It should come as no surprise to learn that two courts faced with similar issues may reach entirely differ-
ent opinions when it comes to deciding what constitutes best evidence — sometimes within the same
state and district. As such, the cases discussed throughout this chapter have been selected to illustrate
how experts have dealt with challenges involving evidence, with varying degrees of success, and the
type of information considered in developing their damage opinions. Because the calculation of econom-
ic damages is such a fact-intensive exercise in which decisions pertaining to the use of evidence are of-
ten affected by the availability of information (or lack thereof), it is generally not possible to establish
fixed criteria that would apply in all circumstances. Practitioners are encouraged to review the cases dis-
cussed in this chapter as a means of better understanding potential types of evidence that may assist
them to establish damages with reasonable certainty, rather than as firm guidelines to which they must
adhere.

Best Evidence and the Use of Historical Financial Data

In establishing and supporting a claim for lost profits in a dispute, the relevant historical financial data
that preceded the alleged bad act may often be the starting point for analysis. For example, the use of a
before-and-after approach to calculate lost profits requires the expert to compare the plaintiff’s revenues,

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