Court shoots down damages expert's causation theory

Rowe v. DPI Specialty Foods, 2015 U.S. Dist. LEXIS 110605 (Aug. 19, 2015)

How does a damages expert handle the issue of causation? A recent Daubert case illustrates how easily this question can trip up even a seasoned valuator. The trial court’s response that the appraiser “should understand causation and base his opinions on sound causation but is not to argue causation or prove it” does not necessarily clarify the issue.

After the plaintiff was terminated, he filed suit claiming an employee of the defendant had made defamatory statements about him that eventually cost him his job. From a legal perspective, whether and to what extent the alleged defamatory statements caused the plaintiff’s termination was the crux of the case. The more problematic question for the economic expert was how to address causation in calculating damages.

The plaintiff’s expert was told to assume liability and did so. In his report, he stated, “I have done no work to determine liability and do not expect to do any such work.”

The defense offered a rebuttal expert who challenged the assumptions underlying the rivaling expert’s damages calculations. But he went further, proposing a theory of causation that would require the economic expert “to understand and prove that a causal link exists between the incident and each of the damages elements.” As the rebuttal expert saw it, “an expert is specifically precluded from relying upon an assumption that economic causation exists.” He concluded that, “based on the economics and my review of the economics,” the plaintiff in this case was terminated for reasons other than claimed.

The court firmly rejected the rebuttal expert’s expanded view of causation and the role of the damages expert.

Find out more about the court’s reaction and its evidentiary ruling here.