Page 50 - Economic Damages Calculation

Cases Excluding The Expert for Failing to Sufficiently Consider or Demonstrate Causa-
tion

The previous section highlighted cases in which the courts allowed the testimony of damages experts as
evidence of causation. The following cases illustrate examples in which the courts determined that dam-
ages experts failed to address issues of causation in rendering their opinions. In each of these cases, the
courts determined that the respective experts’ testimony should be excluded or awards reversed, at least
in part, as a result of the questions pertaining to causation.

McGlinchy v. Shell Chem. Co.

This case involved the termination of various contracts. fn 41 These contracts gave the plaintiff the rights
to market and promote an industrial product on behalf of the defendants in various countries throughout
Southeast Asia, the Middle East, Africa, and South America. The plaintiff sued for lost profits resulting
from the defendant’s alleged breach of its obligations and tortious interference with the plaintiff’s con-
tracts and business opportunities.

The plaintiff's damages expert calculated damages using a before-and-after method, attributing all losses
to actions of the defendant. The trial court ruled, however, that the plaintiff's expert could neither relate
the plaintiff’s losses to specific acts nor could he recall any specific acts of the defendant. The Appellate
Circuit observed the following:

[A]ppellants' causes of action specify that... defendants breached obligations and tortiously inter-
fered with appellants' contracts and business opportunities involving particular product lines and
in particular overseas countries and territories....[the Plaintiff’s expert] stated that he did not
know which of appellants' product lines had declined in sales, or in which geographic areas —
even as between the United States and the rest of the world. fn 42

Ultimately, the expert acknowledged that he did not relate the losses to any specific acts of the defend-
ant. Further, he acknowledged that the plaintiff's decline in sales could have been theoretically caused by
anything. The Ninth Circuit ruled as follows:

Given this inconsistency, [Plaintiff’s expert’s] report and testimony would pose a great danger of
confusing the fact and cause of damages with the amount of damages. . . . [Plaintiff’s expert’s]
speculation about the amount of [Plaintiff’s] "lost profits" has no basis in the record. His study
rests on unsupported assumptions and ignores distinctions crucial to arriving at a valid conclu-
sion. . . . The district court did not abuse its discretion in excluding [Plaintiff’s expert’s] study
and future testimony. fn 43

While the court opined that the exclusion of the plaintiff’s damages expert and subsequent granting of
the defendant’s motion for summary judgment were made on numerous grounds, the plaintiff’s failure to
establish causation was indicated as a factor in the court’s decisions:

fn 41 McGlinchy v. Shell Chem. Co., 845 F.2d 802 (9th Cir. 1988).

fn 42 Id. at 807.

fn 43 Id. at 806–07.

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