Page 59 - Economic Damages Calculation

amount of profits the plaintiff would have been able to achieve if it had not suffered injuries from the
defendants' conduct. However, the plaintiff's expert's expertise was in the area of economic analysis and
was not competent to render opinions as to the scientific or technical aspects of the case or opine on the
plaintiff's likelihood of obtaining the necessary regulatory approvals for the products. The expert relied
on, among other things, the assumptions contained in the plaintiffs' October 2000 business plan and the
representations of management in forming his opinion.

Assumptions relied upon by the expert included but were not limited to the following:

• But for the defendant’s conduct, the plaintiff would have received another $750,000 to
$1,500,000 from its main investor.

• But for the defendant’s conduct in blocking receipt of funding, the plaintiff would have success-
fully completed its research.

• But for the defendant’s conduct, the plaintiff would have capitalized on research to attract large
institutional investors.

• But for the defendant’s conduct, the plaintiff would have secured a manufacturing facility and
manufactured commercial-grade ingredients.

• But for the defendant’s conduct, the plaintiff would have obtained FDA approval.

• But for the defendant’s conduct, the plaintiff would have developed its drug in commercial quan-
tities and marketed the drug during the relevant period.

Ultimately, the damages expert opined that "but for" the defendants conduct, the plaintiff would have
achieved approximately $79 million in profits. The jury returned a verdict for compensatory and puni-
tive damages in excess of $78 million in favor of the plaintiff.

In reversing the verdict and granting judgment in favor of the defendant, the court held that the plaintiff's
expert's reliance concerning technical, scientific, and regulatory aspects of the case did not relieve the
plaintiff of the burden to prove the factual basis on which the assumptions were made. The court found
that while a relaxed burden of proof can be applied to the ascertainment of the amount of damage, a
plaintiff first satisfies its burden of proof to a reasonable certainty that in fact damage occurred as a
proximate or direct consequence of a defendant’s actions. The court stated "[w]hether the individual ‘but
for’ assumptions could be accepted by a reasonable person is one question. Whether the entire scenario
could be accepted by a reasonable person as being reasonably certain is another question."

In this case, the stacking of multiple inferences by the plaintiff’s expert proved fatal. The court held that
the law required that assumptions used to support the conclusions be reasonably certain, not mere best-
case-scenario predictions. Thus, although the court allowed the expert to testify on damages without
demonstrating causation, the court required the plaintiff to prove the assumptions underlying the expert's
testimony, which it failed to do.

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