Flawed yardstick analysis sinks lost profits award

Washington v. Kellwood Co., 2016 U.S. Dist. LEXIS 92309 (July 15, 2016) (Kellwood II); Washington v. Kellwood Co., 2016 U.S. Dist. LEXIS 136612 (Sept. 30, 2016) (Kellwood III)

A drawn-out damages case in which a startup compression sportswear company sued the defendant "private label" manufacturer over an abandoned licensing deal promised to make the plaintiff rich but ultimately ended with nominal damages.

To its detriment, the plaintiff relied on a yardstick analysis in which the plaintiff expert calculated damages based on the market leader's sales. The testimony survived a Daubert challenge and formed the basis of a $4.35 million lost profits award (exceeding by $567,000 the amount the expert had calculated).

But, when ruling on the defendant manufacturer's post-trial motions to strike the award, the court agreed that the plaintiff's yardstick analysis was fatally flawed and could not support the jury's verdict. The expert testimony was “sheer surmise and conjecture,” the court ruled.

Read more about the court's analysis and decision here.