Page 62 - Economic Damages Calculation

will not do; nor the enduing [sic] of simplistic extrapolation and childish arithmetic with the ap-
pearance of authority by hiring a professor to mouth damages theories that make a joke of the
concept of expert knowledge. The expert should have tried to separate the damages that resulted
from the lawful entry of a powerful competitor — [Defendant] — from the damages that resulted
from particular forms of misconduct allegedly committed by that competitor, of which the theft
of the mailing list, however morally reprehensible, was the slightest. No such effort was made. fn
70

The court’s decision in this case demonstrates how important it is for a damages expert to understand the
specific claims being alleged by the plaintiff and to limit damages to only that which has been caused by
the bad acts. This case appears to be less of an issue of improper methodology and more a matter of ill-
advised case acceptance by the plaintiff’s expert. It is doubtful that any methodology could have over-
come the court’s finding that lawful competition caused the plaintiff’s losses rather than the theft of its
mailing list.

Pharmanetics, Inc. v. Aventis Pharm., Inc.

This case involved an agreement between the plaintiff and the defendant to co-market Enox, a medical
test designed to monitor the blood-clotting effects of Lovenox, an anti-coagulant medication marketed
by the defendant. fn 71 The plaintiff alleged that because the test identified over-coagulation in some pa-
tients and under coagulation in others, the defendant purportedly stopped sales and support given to the
plaintiff, discarded promotional materials and disparaged the medical test as being useless.

The plaintiff's damages expert reviewed multiple sales projections, including those prepared by both the
plaintiff and the defendant, ultimately relying upon the defendant's sales projections of the blood diag-
nostic test to calculate lost profits. The plaintiff’s expert then presented alternative damage estimates
based upon various assumptions.

The court, however, ruled that expert failed to consider other causes for lost sales, which resulted in
speculative damage estimates. As a result, the trial court excluded the plaintiff’s damages expert. In af-
firming the district court’s ruling, the Fourth Circuit opined as follows:

At the time of the court’s ruling, [the Defendant] was not liable under all claims, as the report as-
sumed, because the district court had granted partial summary judgment. Also, the uncontested
evidence showed that multiple sources caused or would cause lost sales. For example, the court
noted that doctor resistance to switch to Enox, low populations of Lovenox patients, [Defend-
ant’s] conduct in telling its representatives not to promote Enox, and the FDA’s limited approval
of Enox all caused lost sales. A lump sum indiscriminately attributed to [Defendant], was not
sufficiently tied to the facts when the evidence showed various factors caused lost sales. Implicit-
ly, the jury had no reasonable method to dissect the report and assess what acts may have caused
particular losses. The evidence, thus, was too misleading to go before a jury as expert testimony
because "too great an analytical gap [existed] between the data and the opinion proffered." fn 72

fn 70 Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 415–16 (7th Cir. 1992) (citations omitted).

fn 71 Pharmanetics, Inc. v. Aventis Pharms., Inc., 182 F. App’x 267 (4th Cir. 2006) (Unpublished).

fn 72 Id. at 271 (citations omitted).

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