Page 21 - Economic Damages Calculation

gram to a different radio station. fn 2 In support of its claim for lost profits, the plaintiff retained a dam-
ages expert who based the calculation of lost profits on projections developed by the plaintiff’s man-
agement. The defendants, in turn, sought to exclude the plaintiff’s expert by asserting that the expert’s
reliance on management projections (which were consistently inaccurate), coupled with the expert’s
failure to investigate factors that could have affected those projections, rendered the expert’s analysis of
lost profits fundamentally flawed.

The plaintiff countered, arguing that reliance on management projections was proper because the expert
relied on those projections in accordance with applicable accounting and auditing standards for practi-
tioners, and because he did factor circumstances in which the plaintiff may not have achieved its budget
goals. Reflecting the view that reliability of management-supplied information is a question for the trier
of fact to consider, the court stated:

The Court considers the data upon which [the expert] bases his opinions to be reliable. [Defend-
ants’] criticisms affect the weight, if any, a jury will give to [the expert’s] opinions, rather than
the admissibility of those opinions. Questions relating to the bases and sources of the expert
opinion affect the weight to be assigned that opinion rather than its admissibility and should be
left for the jury's consideration. "Vigorous cross-examination, presentation of contrary evidence,
and careful instruction on the burden of proof are the traditional and appropriate means of attack-
ing shaky but admissible evidence." fn 3

Legier & Matherne v. Great Plains Software, Inc.

In this matter, the court similarly assessed a motion to exclude the plaintiff’s damages expert. fn 4 This
challenge was predicated, in part, on whether management-supplied projections were prepared by an in-
dividual with the requisite expertise, and whether the expert performed sufficient procedures to examine
the reliability of the projections.

At issue in the dispute was a software distribution contract between the plaintiff and the defendant,
where the plaintiff served as a reseller of software developed by the defendant. The plaintiff alleged the
contract was breached, and submitted an expert report setting forth its asserted damages. The defendant
challenged the admissibility of the damages testimony from the plaintiff’s expert, claiming that the
plaintiff’s expert, among other things, relied on projections of a third party without independent verifica-
tion, and therefore, did not satisfy Daubert’s reliability prong. In making its argument, the defendant re-
lied upon an earlier decision made by the same court on a Daubert motion in the JRL Enterprises matter.
(See following discussion regarding cases in which an expert was not allowed to testify regarding dam-
ages predicated on management-supplied information.) However, the court in the instant matter disa-
greed with the defendant’s argument, drawing a distinction between the two cases as follows:

fn 2 Amigo Broadcasting, L.P. v. Spanish Broad. Sys., Inc., 2006 WL 5503872, at*1 (W.D. Tex. Apr. 21, 2006).

fn 3 Id. at *4.

fn 4 Legier & Matherne v. Great Plains Software, Inc., No. Civ. A. 03-0278, 2005 WL 2037346, at *1 (E.D. La. Aug. 3, 2005).

© 2020, Association of International Certified Professional Accountants 19