Page 45 - Economic Damages Calculation

• "From its inception in 1998 through 2000, Safety Plus 1 revenue grew at an annual rate of 27.5
percent per year, but beginning in 2001 — at precisely the same time [certain existing customers]
stopped buying Safety Plus 1 because of glass failure — [the Plaintiff’s] sales of Safety Plus 1
decreased." fn 24

• "[E]vidence of each individual customer’s motivation is not required because [the Plaintiff’s] ev-
idence, taken as a whole, sufficiently proved causation." fn 25

In reaching its decision, the 11th Circuit further indicated that the plausibility of the plaintiff’s lost prof-
its was enhanced because data was available from a large group of customers over a period three years
prior to the damage event. This data was thus preferable to the data underlying a similar cause of action
in a case cited by the defendants in which the behavior of only one customer was modeled.

Ultimately, the Appellate Court provided an exhaustive review of the damages model put forth by the
plaintiff’s expert. For example, the decision describes in detail the factors used by the plaintiff’s expert,
an accountant, to develop the growth rate that were applied to lost sales such as the historical rate of
growth, on the particular product line considering changes to the market caused by the enactment of new
building codes. An awareness of the analysis by the court presented in this particular decision may have
been useful to the damages expert in the Manpower Inc. v. Insurance Co. of Pennsylvania described in
chapter 1 at the trial court stages of that matter, which, until reversed on appeal, ruled that such analysis
was outside the CPA’s expertise.

Conwood Co., L.P. v. U.S. Tobacco Co.

In this antitrust case, the plaintiff alleged that the defendant used its monopoly position to exclude com-
petitors from the moist snuff market. fn 26 The plaintiff's damages expert performed a regression analysis,
which purportedly demonstrated that the plaintiff achieved higher sales growth in those markets in
which it was not subject to the defendant’s alleged unfair tactics than it did in those geographic areas
where it was subject to the wrongful acts. He also concluded that, while the defendant’s tactics unrea-
sonably suppressed the plaintiff’s market share, once the plaintiff reached a 15% market share, the de-
fendant’s unfair practices were not as effective. Upon reaching a 15% market share, the plaintiff’s expert
determined that the plaintiff’s growth in market share was an additional 6.5%. Upon reaching a 20%
market share, the plaintiff’s growth in market share was an additional 8.1%. He calculated "but for"
sales by applying these growth rates to those states where the plaintiff had allegedly not gained a foot-
hold (that is, had a market share below 15%) as a result of the plaintiff’s alleged anti-competitive behav-
ior.

In response to the defendant’s charges that there were other causes for the slower sales growth in the
non-foothold states, the plaintiff’s expert testified that he had specifically considered these factors in
performing his regression analysis and, not finding any correlation, excluded them as possible explana-
tions.

fn 24 Id.

fn 25 Id. at 1214.

fn 26 Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768 (6th Cir. 2002).

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