Page 70 - Acertaining Economic Damages Calculation

What constitutes reasonable certainty is ultimately a subjective decision in which different courts or ju-
ries presented with the same facts could reach different conclusions. In this case, even though plaintiff’s
expert could not identify any specific examples of lost sales, he was able to persuade the court that the
plaintiff suffered damages based upon his analysis of the company’s historical sales records, his reliance
on an industry expert, and his assessment of the market and the competition.

Advanced Drainage Sys., Inc. v. Quality Culvert, Inc., 2015 WL 1299368 (S.D. Ohio March, 23, 2015)

On March 9, 2012, Advanced Drainage Systems (ADS) purchased Quality Culvert, Inc. and County
Pipe, Inc. (collectively, defendants). ADS asserted that defendants breached provisions in the Asset Pur-
chase Agreement that contained a five-year covenant not to compete. ADS sought damages for breach of
contract by defendants.

Plaintiff’s expert calculated lost profits, which included prospective damages comprising (a) lost profits
resulting from temporarily damaged customer relationships and (b) diminution in value of permanently
damaged customer relationships.

Plaintiff’s expert’s opinions were calculated by performing an analysis of the pre-acquisition period
sales for each customer to the post-acquisition sales for each customer. Those customers whose sales
had declined, but subsequently recovered, were characterized as "temporarily damaged," and damages
were limited to the 16-month period that was being examined. Those customers whose post-acquisition
purchases had not recovered to pre-acquisition levels were characterized as "permanently damaged."
The expert calculated the impact that the loss of these customer revenues would have had on EBITDA
and multiplied this amount by the EBITDA multiple reflected in the purchase price.

The court allowed this testimony to be presented to the jury, ruling that

...in general, [ADS’s Expert] properly applied the Before and After method to determine damag-
es... [S]he independently analyzed revenue changes between the Before and After Periods; she
analyzed market, ADS specific, and customer specific factors; and she identified damaged cus-
tomers by ruling out several factors that could contribute to sales losses. fn 7

While not all analyses have sufficient data and facts that allow for a direct comparison of pre-incident
customer data to post-incident customer data, in this case, the court apparently found the approach used
by plaintiff's expert to be credible.

American Eagle Waste Indus., LLC v. St. Louis County, 463 S.W.3d 11 (Mo. Ct. App. 2015)

Plaintiffs in this case were a group of entities that provided trash collection services (Haulers). As a re-
sult of changes in municipal ordinances, the county of St. Louis divided portions of the unincorporated
county into districts and required that Haulers submit bids that would result in contracts being awarded
to the winning bidder for each new district. Legislation was subsequently passed by the Missouri Gen-
eral Assembly that required current Haulers be given a two-year notice prior to the awarding of new
contracts, which resulted in a petition being filed by the Haulers. After the trial court denied the Haulers’
petition, the county proceeded to implement the new plan. This decision by the trial court was reversed
on appeal resulting in the Haulers bringing suit and seeking damages.

fn 7 Id. at *10.

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