Page 29 - Economic Damages Calculation

argued that the plaintiff’s expert failed to conduct independent research on the projections to validate the
assumptions and projections, and that alleged failure was "not a sound methodology." As such, the de-
fendant’s argument went beyond a challenge to the reasonableness of the assumptions, and specifically
challenged the soundness of the methodology employed to quantify the damages.

In response, the plaintiff urged the court to consider the following:

• The projections were not prepared solely for litigation.

• The projections were based on the VP of sales, and that their development was part of the normal
company strategy.

• Cross-examination was the proper mechanism to address the concerns, not FRE 702 or Daubert.

In conducting its assessment and analysis, the court looked to and cited other cases addressing expert re-
liance on information. In particular, the court noted one case in which the expert was excluded from tes-
tifying because "the plaintiff had shown no evidence that the expert’s calculations were ‘anything more
than an exercise in arithmetic based on inherently unreliable values.’" The court ultimately decided to
exclude the plaintiff’s expert stating:

When these principles are applied to [the Plaintiff’s expert’s] report, this Court finds that [the
Plaintiff] has not met its burden of relevance and reliability under Rule 702. [The Plaintiff’s ex-
pert] has merely accepted as true the facts given him by [the Plaintiff]. [The Plaintiff’s] assertion
that it is not offering [its expert] as an expert in causation or statistics but as an expert on the cal-
culation of damages is not enough. [The Plaintiff’s expert] performed no independent analysis of
the numbers given to him by [the Plaintiff]; in fact, his report is devoid of any analysis of figures
other than those provided by [the Plaintiff]. He has failed to show that reasonable accountants
would simply and blindly accept such numbers in formulating opinions. His theory cannot be
tested, and the rate of error is not known. Basically the plaintiff is presenting its own estimation
of damages in the guise of an expert opinion. [The Plaintiff’s expert] has failed to demonstrate
any impartiality in formulating his opinions, and he should be precluded from testifying. fn 23

The court did not comment specifically on how it addressed the plaintiff’s arguments regarding how the
projections were prepared and by whom, but ultimately did not agree with the plaintiff’s argument that
the issue was for cross-examination and not exclusion under FRE 702 or Daubert. It appears the expert’s
lack of "independent analysis" and "blindly" accepting numbers from the plaintiff was too little, result-
ing in a situation in which the court determined that the plaintiff was presenting its own damages estima-
tion in the guise of expert analysis and testimony.

While on the surface it may appear that there are inconsistencies between the decisions discussed in this
section, and those that were discussed earlier within this chapter, deeper analysis demonstrates that the
courts are consistently considering the same factors when evaluating expert analyses. Specifically,
whether at the pre-trial stage, or at trial, the courts have indicated that damages experts are well advised
to demonstrate that it was reasonable to rely on the particular management information provided, that

fn 23 Id. at *8.

© 2020, Association of International Certified Professional Accountants 27