Page 47 - Economic Damages Calculation

sic industry missteps in adapting to technological change, and increased competition from other forms of
personal entertainment." fn 28

Notably the court acknowledged that damages experts are often permitted to testify even when they do
not have specific industry expertise, stating:

"[A] certified public accountant, a certified business appraiser, a shareholder and director of liti-
gation support group of an accounting firm, and [who] has offered testimony in at least fifty
court cases" could testify on lost profits of a movie theater, even though he did not have any ex-
perience in the movie theater industry. fn 29

In this case, however, the court distinguished the expert’s analysis as follows:

Here, however, [the Defendant’s expert] does not appear to apply his own economics expertise in
reaching his conclusions on this issue. He appears to have little empirical basis for much of his
testimony beyond the reports that he read, and he does not offer any opinion quantifying the de-
gree to which any of the causes to which he attributed the music industry's decline were respon-
sible for that decline, either individually or in the aggregate. fn 30

Despite this analysis, the court did not exclude the expert’s causation opinion in its entirety. The court
allowed the expert to testify to the extent that the opinions were based upon the expert’s own economic
analysis or expertise.

[The Defendant’s expert] may testify that ‘the effect of file sharing on music sales is small,’
based on economic principles of sloping demand curves, product substitution and displacement
rates... The fact that these conclusions are based, in part, upon a review of surveys and the rele-
vant literature in the area does not render his testimony inadmissible, as long as [the Defendant’s
expert] bases his conclusions on his own expertise and analysis, and as long as those sources are
"of a type reasonably relied upon by experts" in his field. fn 31

Other sections of this expert’s causation testimony, however, were excluded. For example, the court
stated "[Defendant’s expert’s] failure to perform any independent analysis results in an opinion that is
only a summary of what other experts have said, without application of his own expertise. This is not an
appropriate type of expert testimony." fn 32 Clearly, the differentiating factor between what was allowed
or excluded hinged upon whether the expert applied his own expertise or merely was found to have
summarized the opinions of others.

fn 28 Arista Records LLC v. Lime Group LLC, 2011 U.S. Dist. LEXIS 47416, *29 (S.D.N.Y. May 2, 2011).

fn 29 Id. at *33 (citing Regal Cinemas, Inc. v. W & M Props., 90 F. App’x 824, 833 (6th Cir. 2004)).

fn 30 Id. at *33–34.

fn 31 Id. at *35–36 (citing Fed. R. Evid. 703).

fn 32 Id. at *34.

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