Page 30 - Economic Damages Calculation

the management personnel providing the information had the requisite expertise, and that the expert per-
formed sufficient procedures to support reliance on the management-supplied information.

Reasons why Reliance on Client Projections was Rejected

General Observations

In a number of the decisions examined, courts have provided detailed commentary discussing why reli-
ance on management-supplied information in a particular case may not have been reasonable. Addition-
ally, courts also provided examples in certain cases of what the expert could have done to substantiate
reliance on management-supplied information. Consistent with the reasoning set forth in other matters,
courts have indicated that they do not look favorably upon information that is deemed to be unsupport-
ed, or which has been developed and delivered by individuals who are incapable of defending what has
been developed.

Summit Proprs. Int’l, LLC v. LPGA

In this matter, the plaintiff brought suit against the defendant after it terminated an exclusive licensing
arrangement. fn 24 The plaintiff sought lost profits, among other relief, from the alleged breach. The
plaintiff’s expert submitted a report that relied heavily on projections prepared by the plaintiff’s man-
agement.

The defendant subsequently filed a summary judgment motion seeking to dismiss the plaintiff’s claims.
In evaluating the summary judgment motion, the court undertook an extensive analysis of the claim and
the underlying projections, and then laid out the reasons why it found the projections to be unreliable,
stating:

Courts have repeatedly found that where the existence of lost profits rests on a multitude of as-
sumptions, the plaintiff has failed to establish the existence of lost profits to a reasonable certain-
ty. fn 25

Similarly, in the instant case, the projections rely on a "host of speculative assumptions and few known
factors." Aside from the 2006 numbers fn 26

• [t]he Projections relied on licenses that did not exist yet.

• not one of the five [plaintiff] representatives who helped create the projections, could explain the
assumptions and specific growth rates used in creating the projections for the years 2007 to 2010.

• the projections did not use a specific growth rate but rather "assumed conservative growth."

fn 24 Summit Props. Int’l, LLC v. Ladies Prof’l Golf Ass’n, 2010 U.S. Dist. LEXIS 58444 (S.D.N.Y. June 14, 2010).

fn 25 Id. at *3.

fn 26 The following quote format has been modified for presentation purposes.

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