Page 63 - Acertaining Economic Damages Calculation

then sought to recover lost profits that would have been earned on nearly 25,000 adjustable rate mort-
gages (ARMs) it claims the bank was forced to sell in order to meet the new regulatory capital require-
ments.

Finding in favor of the government, the court denied CalFed’s claim for lost profits, concluding that the
bank sold a roughly similar number of ARMs prior to the breach and that the bank’s "business was sell-
ing loans, before and after the breach." Moreover, the court agreed with the government’s experts who
testified that CalFed’s damages expert’s lost profits model and assumptions did not comport with what
CalFed was, in reality, doing at the time, which was selling its ARMs in order to continue making in-
vestments into high-risk loans. The court found the government’s experts, who relied upon historical da-
ta to conclude that the sale of ARMs was an integral part of the banks operations, to be more persuasive
than CalFed’s fact witnesses, who testified about what their intentions would have been, which was
found to be contrary to historical results.

By comparing the bank’s historical operating data to comparable data in the alleged damage period, the
government was able to successfully undermine CalFed’s damage claim.

National Prods., Inc. v. Gamber-Johnson LLC, 734 F. Supp. 2d 1160 (W.D. Wash. (2010)

This case involved a dispute between National Products Inc. (plaintiff) and Gamber-Johnson LLC (de-
fendant), competitors in the vehicle laptop mounting business, over a promotional video produced by
Defendant. NPI sued Gamber-Johnson under the Lanham Act, alleging false advertisement of their
product in the video.

At trial, plaintiff’s expert presented an unjust enrichment and defendant’s profits calculation allowed
under the Lanham Act, finding Defendant’s sales of $54 million and profits of $22.6 million, which rep-
resented 100% of the sales of the product at issue. Plaintiff performed no analysis to determine what
portion of the defendant’s sales could be attributed to the deceptive advertising, arguing that simply
identifying the "pool of money" that was at issue was sufficient to meet its burden. The jury awarded the
plaintiff $10 million, which the defendant challenged by filing a motion for directed verdict or judgment
as a matter of law.

Upon granting defendant’s motion for judgment as a matter of law, the court rejected plaintiff’s "pool of
money" theory given their failure to identify which of defendant’s customers may have seen the video,
how the video affected customer buying decisions, which of the other vendors identified in the video
would have otherwise made the sale, and performing any analysis that would have demonstrated the
amount of defendant’s profits attributable to the video.

Defendant’s expert calculated an increase in Gamber-Johnson’s sales in the relevant period of approxi-
mately $1.2 million over the prior period. Using plaintiff’s calculated profit margin for defendant result-
ed in profits of approximately $0.5 million, which the court believed presented a better indication of
profits earned as a result of the deceptive advertising and reduced the damage award from $10 million to
approximately $0.5 million.

LightLab Imaging, Inc. v. Axsun Techs., Inc., 469 Mass. 181 (2014)

The plaintiff LightLab Imaging, Inc. (LightLab) manufactured and sold OCT (optical coherence tomog-
raphy) technology used to image human coronary arteries for diagnosis and treatment. Defendant Axsun
Technologies, Inc. manufactured lasers and entered into an agreement with LightLab to develop a laser
used to overcome limitations in the existing OCT technology. Defendant Volcano Corporation competed

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