Page 95 - Economic Damages Calculation

sources for the data used; and (4) Alra Labs’ own expert "admitted that Milex would have lost profits." fn
117

On appeal, the Appellate Court of Illinois affirmed the trial court’s original ruling: [W]hile the
product is a new one, the evidence showed it to have an established market. Given that fact, to-
gether with [Milex’s expert’s] testimony, we conclude that the proof of lost profits was neither
speculative nor the product of conjecture but was based upon a reasonable degree of certainty. fn
118

The Appellate Court focused on the nature of the market for the new product in question. In doing so,
the court appeared to gain comfort that the analyses and methodologies used by Milex’s expert were
grounded in actual product experience, enabling the court to find "reasonable certainty" in the damages
calculation, and not apply the new business rule. It appears that the fact that Milex’s expert’s testimony
was found "credible" and Alra Labs’ own expert admitted that some harm had occurred played a role in
the decision by the Appellate Court of Illinois.

Lockheed Info. Mgmt. Sys., Co., Inc. v. Maximus, Inc.

Lockheed Information Management Systems Company, Inc. (Lockheed) and Maximus, Inc. (Maximus)
both responded to a November 1994 request for proposals to privatize two child support enforcement of-
fices in Northern Virginia. fn 119 In April 1995, the Virginia Department of Social Services (DSS) issued
a notice of intent to award the contract to Maximus. Lockheed filed a protest alleging that, among other
things, members of the evaluation panel had undisclosed conflicts of interest. Subsequently, the DSS
canceled the notice of intent to award the contract to Maximus, leading Maximus to file a lawsuit against
Lockheed, alleging tortious interference with its contract expectancy, as well as conspiracy claims.

After going through multiple proceedings, ultimately a second trial regarding the issues was held. At the
second trial, a jury found in favor of Maximus on the tortious interference and conspiracy claims, award-
ing damages — including lost profits. Lockheed appealed the jury verdict, challenging a number of rul-
ings by the trial court — including rulings on damages issues. Lockheed claimed at trial that an applica-
tion of the new business rule precluded Maximus from recovering lost profits.

Lockheed argued that "Maximus had not previously engaged in the collection of child support payments
in Virginia" and therefore, Maximus’ proposal to the DSS in Virginia was a new business. fn 120 The trial
court ruled that the new business rule should not be applied in this case because to do so would result in
bad law:

"Anybody anywhere in Virginia could lie, cheat, and steal to deprive any new business, or any
existing business that has never operated in Virginia, of a contract expectancy with complete civ-

fn 117 Id.

fn 118 Id. at 1237.

fn 119 Lockheed Info. Mgmt. Sys., Co., Inc. v. Maximus, Inc., 524 S.E.2d 420 (Va. 2000).

fn 120 Id. at 429.

© 2020, Association of International Certified Professional Accountants 93