Page 99 - Economic Damages Calculation

Id. at *11.

a. The plaintiff’s expert failed to account for other variables that could have impacted the plaintiff’s
sales including sales of premium dog food by supermarkets in addition to specialty pet stores and
the defendant’s entrance into mass market outlets, which the defendant’s owner described as a
seminal event.

b. The plaintiff’s expert failed to examine whether increases in the defendant’s feeding guidelines
had an opposite impact (that is, reductions in consumer purchases as a result of a perceived in-
crease in pricing).

As a result of what was characterized by the court as flaws in methodology used to establish causation,
the plaintiff's damages and causation expert was excluded.

El Aguila Food Prod. Inc. v. Gruma Corp., 131 F. App’x 450 (5th Cir. 2005)

The plaintiffs in this case, comprising 17 manufacturers of tortillas and other food products, accused the
defendant of paying improper slotting fees to grocery stores in exchange for exclusivity, restricting legal
competition. The plaintiffs sued under the Clayton Act, which requires that a plaintiff show "(1) a viola-
tion of the antitrust laws, (2) the fact of damage, and (3) some indication of the amount of damage. The
fact of damage requirement is one of causation; the plaintiff must show that the defendant’s unlawful
conduct was a material cause of injury to its business." Id. at 452 (citations omitted).

The plaintiffs’ damages expert employed a yardstick method to establish lost profits, comparing the
plaintiffs’ sales history to sales data and historical projections of a tortilla industry trade association.
Any differences between the plaintiffs’ sales and the trade association data were deemed by the plain-
tiffs’ expert to have resulted solely from the defendant’s payment of the allegedly illegal slotting fees to
grocers. At the trial court level, in addition to issues involving the amount of damages, the plaintiffs’ ex-
pert was also excluded for failing to establish that defendant's actions caused any damage, with the court
ruling that the plaintiffs’ expert did the following:

• Failed to examine data to determine if space allocation among the 17 plaintiff companies was
disproportionate to their sales.

• Assumed that the space allocation allotted by retailers to the defendant was a result of illegal
slotting fees without performing any analysis to tying the allocation to fees paid,

• Failed to account for alternative causes in the plaintiffs’ reduction in shelf space — that is, not
offering incentives to retailers or retailers’ increased usage of private labels.

In affirming the trial court’s decision to exclude the plaintiffs’ damages expert, the Fifth Circuit ruled
that jury inferences over causation may be allowed in some cases, but the causal link "must be proved as
a matter of fact and with a fair degree of certainty," especially when there are alternative factors that ex-
plain the losses being attributed to the defendant. Id. at 454.

Avidyne Corp. v. L-3 Commc'ns. Avionics Sys., Inc., 2012 U.S. Dist. LEXIS 43149 (D. Mass. Mar. 29,
2012)

In this patent infringement case, the counter-plaintiff claimed infringement of a patent that provided the
technology to manufacture a device sold for use in an airplane cockpit. At the time of the alleged in-

© 2020, Association of International Certified Professional Accountants 97