Page 46 - Economic Damages Calculation

In addition to a regression analysis, the plaintiff's expert performed a before-and-after method in order to
test whether merely having a foothold at the beginning of the damage period would have impacted
growth rates during the alleged damage period. Specifically, he looked at the plaintiff’s growth rates in
the pre-damage period, comparing the growth in foothold states to growth in non-foothold states. Find-
ing that the foothold states did not grow significantly more than the non-foothold states, he concluded
that merely having a foothold did not explain the higher growth rates experienced during the damage pe-
riod.

The plaintiff’s expert also employed a yardstick method in which he analyzed the plaintiff’s growth
rates in the loose leaf tobacco market. This was a market in which the defendants did not participate. He
once again found that the plaintiff’s growth in foothold states was not significantly greater than its
growth in non-foothold states. As such, he concluded that this was further proof that having a higher
market share at the beginning of the damage period did not, in and of itself, lead to higher growth during
the damage period.

Ultimately, the plaintiff’s damages expert calculated damages ranging from $313 million to $488 mil-
lion, dependent upon whether the plaintiff’s market share would have grown by 6.5% or 8.1%, "but for"
the actions of defendant. The jury returned a verdict of $350 million.

On appeal, the defendant challenged the jury award in part because it argued that the plaintiff’s damages
expert failed to account for other factors that could have had a negative effect on the plaintiff’s sales and
did not relate any of the plaintiff’s loss to specific bad acts by the defendant. The defendant also argued
that the plaintiff’s expert had not established causation by linking damages to any specific bad acts. In
response, the plaintiff's expert testified that he considered the sworn affidavits of 241 of the plaintiff's
sales representatives that detailed the defendant’s wrongful behavior.

The court ruled that (a) the plaintiff’s expert "ruled out all plausible alternatives for which he had data,"
(b) "accounted for all variables raised by [the Defendant’s] own expert," and (c) concluded that it is not
necessary to rule out all other possible causes for injury. fn 27 As such, the court concluded that the work
done by the plaintiff's expert was sufficient to address causation and affirmed the trial court’s decision
allowing him to testify.

While there is no precise checklist that establishes the lengths that an expert must go to in order to estab-
lish damages, the plaintiff’s expert’s decision to employ a regression analysis, which includes elements
of the before-and-after method and the yardstick method, in reaching and supporting his opinions ap-
pears to have given the court ample grounds to allow his testimony.

Arista Records LLC v. Lime Grp. LLC

The plaintiff alleged that the defendant facilitated copyright infringement by inducing its users of an
online file-sharing program to infringe upon the plaintiff’s copyrights. The defendant designated three
experts to rebut the plaintiff’s allegations. One of its experts, a CPA, opined that the cause of the plain-
tiff’s sales declines was not attributable to the actions of the defendant or to file sharing in general, but
rather to a confluence of micro- and macro-economic factors that negatively impacted the music indus-
try, including "two global recessions, changes in consumer preferences with regard to digital music, mu-

fn 27 Id. at 794.

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