Flawed yardstick analysis survives Daubert attack

Washington v. Kellwood Co., 2015 U.S. Dist. LEXIS 63457 (April 21, 2015)

Since it has become de rigueur for parties to challenge the opposing expert’s financial analysis before trial, Daubert cases have become a dime a dozen. But a recent Daubert ruling commands special attention.

Valuators will note that it features the yardstick method—a damages calculation tool that is not used much these days. Also, the defendants presented a strong argument why the plaintiff expert’s yardstick analysis was unreliable and inadmissible. The court allowed that there might be flaws, particularly in terms of the expert’s choice of a benchmark company and his conclusion that the plaintiff company, a floundering startup, could ever have followed the trajectory of the comparator, which became the leader in the market in which the plaintiff wanted to gain a foothold.

Still, the court deemed the testimony admissible. There was, it said, precedent for “allowing a questionable yardstick analysis to be presented to the fact-finder.” Read more about the court's reasoning here.

To find out what the seasoned valuator and go-to expert on lost profits, Nancy Fannon, makes of the court’s position, click here.