Page 76 - Acertaining Economic Damages Calculation

The financial terms of the LATS were a sufficiently certain basis to calculate damages, and the
Court of Chancery did not err in rely [sic] on the LATS financial terms used by [Expert] in his
financial model. fn 13

Best Evidence and Contemporaneous Admissions by Plaintiff

As reflected in the preceding section, experts typically consider available information that is relevant to
the reasonableness of the assumptions and model used in any damages calculation. Evidence of contra-
dictory statements made by the plaintiff prior to the litigation, however, can be a fruitful basis for cross-
examination that can sometimes prove fatal to the expert’s opinions. Though the context and materiality
of such statements matter, experts that only consider facts that support their opinions, while ignoring
those that are contrary, may cause the court to view the expert’s analysis and opinions unfavorably.

Alaska Pulp Corp., Inc. v. United States, 59 Fed. Cl. 400 (Ct. Fed. Cl. 2004)

Alaska Pulp Corp. (APC), a manufacturer of wood pulp for use in Japanese rayon and paper manufactur-
ing, had entered into a 50-year contract with the U.S. Forest Service for the sale of timber in the Tongass
National Forest, which required that all timber be processed locally prior to export. In 1990, the United
States passed the Tongass Timber Reform Act (TTRA), which modified long-term timber contracts to
protect certain lands in the national forest. Among the modifications to the contract was

• a comparability price adjustment (CPA), which required APC to pay the highest price for lumber
among

— contractual base prices,

— appraisal prices at the time of an offering, or

— market prices at the time of delivery, and

• a reduction in the maximum amount of timber that could be purchased by APC.

APC consequently sued and prevailed in its liability claims against the U.S. government for breach of
contract.

In the damages trial, APC’s experts presented alternative measures of damages ranging from several
hundred million dollars to $8.7 billion. Ultimately, all the measures of damages were rejected by the
court, and the plaintiff was not awarded any damages. Among the many issues addressed by the court in
reaching its decision were APC’s overstatement of the impact of the CPA on its product purchases, the
limitations on timber purchases potentially caused by the TTRA, and the impact of deteriorating eco-
nomic conditions on APC’s financial performance.

With respect to the CPA, which potentially increased the price that APC would have been required to
pay for its timber purchases, facts showed this adjustment had no actual impact on its costs as a result of
revisions also made to "purchaser road credits" granted to APC that served to offset the increases due to

fn 13 Id. at 1135.

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