Page 69 - Acertaining Economic Damages Calculation

details as the date, the name of the customer, the amount of the would-be sale, and the reasons for the
loss. In most cases, however, this information is not available with such specificity. In such cases, the
expert may have to develop damage calculations and rely on multiple sources of information and alter-
native damages methodologies by using such approaches as the before-and-after or yardstick methods.
The following cases address the amount of weight some courts have placed on the availability of cus-
tomer data, or lack thereof, in relation to an expert’s damages calculations.

Packgen v. Berry Plastics Corp., 847 F. 3d 80 (1st. Cir. 2017)

Packgen was a manufacturer of polypropylene containers used to transport hazardous materials. Berry
Plastics Corp. (Berry) supplied Packgen with laminated fabric used in the manufacture of the containers.
After a number of these containers began to split while being transported, the largest customer for these
containers, CRI, canceled an order with Packgen of 1,359 units. The plaintiff was unable to sell the con-
tainers to 37 other refineries. Packgen subsequently filed a complaint against Berry alleging, among oth-
er things, breach of contract and breach of warranty.

To calculate lost profits from lost sales to CRI, Packgen’s expert estimated lost sales of 1,261 containers
per month for each of the 10 years following the product failure. To calculate lost profits for the 37 re-
fineries, the expert assigned a 10% annual probability that each of the 37 refineries would have pur-
chased containers from Packgen.

The jury found Berry liable for damages and awarded Packgen $7.2 million. Berry appealed the finding,
including the court’s denial of its motion to exclude Packgen’s damages expert, arguing that its damages
expert had no facts to support

• sales to CRI of 1,261 units per month,

• a 10-year loss period, and

• the assumed 10% success rate in sales to the 37 refineries.

In support of the projected sales to CRI, Packgen’s expert testified to the six months of actual sales
made to CRI prior to the loss date and the lack of entry by any new competitors into the market in the
six years between the date of loss and the date of trial.

In support of the 10-year loss period, Packgen’s expert testified to actual container sales made by Pack-
gen in the 6 years between the loss date and the trial date, which demonstrated a recovery that exceeded
initial projections. In addition, Packgen’s industry expert testified that Packgen was the only supplier of
intermediate bulk containers, and the use of these containers was expected to increase through the end of
the 10-year period.

In support of the 10% success rate used in the model for calculating lost sales to the 37 refineries, Pack-
gen’s expert relied upon the industry expert who also testified that the refineries would have benefited
from substantial savings by using the Packgen containers, that the refineries' decision-makers had ex-
pressed an intent to purchase the containers, and that those refineries would have seen CRI using the
containers and would have likely been persuaded to try them. Moreover, this success rate was substan-
tially lower than Packgen’s internal projections. Given the lack of support for Packgen’s projections, its
expert believed that 10% represented the minimum sales that would have been achieved, after compar-
ing these projected amounts to what Packgen had actually sold to CRI prior to the date of loss.

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