The Comprehensive Guide to Economic Damages, Fourth Edition

April 2016 Hardcover, PDF

Nancy Fannon, Jonathan Dunitz

Business Valuation Resources, LLC

The Comprehensive Guide to Economic Damages, Fourth Edition (formerly The Comprehensive Guide to Lost Profits and Other Commercial Damages), edited by  Nancy J. Fannon and Jonathan Dunitz, bridges the gap between the economics in damages cases and what the courts say about the calculations and evidentiary requirements. It provides a deep and rich resource, found nowhere else, for financial experts and attorneys seeking guidance on damage calculations.

"Fannon and Dunitz’s Comprehensive Guide to Economic Damages, Fourth Edition is a major addition to the common body of knowledge in commercial damage measurement. Their analysis is comprehensive and thorough and provides a firm foundation for a practitioner’s application to specific cases and reports." (P. Dermot O'Neill, CPA, ABV, CFF, CVA, MAFF, ABAR, Glen Mills, Pennsylvania )

Written from the perspectives of financial experts and attorneys, it blends the financial expert’s mastery of accepted methods and procedures with the attorney’s expertise in legal issues while providing in-depth analysis and interpretation of the continually expanding body of case law. It describes the different types of damages and how to calculate them, while presenting the problems that may arise and how stakeholders can address them. With each successive edition of this guide, the authors and editors have drilled deeper on the existing chapters and broadened the scope of damages topics covered.  With nearly 1300 pages containing 39 chapters and over 240 court case digests, the guide provides the most comprehensive analysis of any damages text available. 

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Highlights of the new edition include:

  • A knowledge base that will allow for a better working relationship between a financial expert and the attorney. Experts are most beneficial to attorneys when they’re well-informed about damage remedies and the context in which they are calculated. When an expert is more knowledgeable, he or she can be more valuable to the attorney in terms of the various options for remedies, given a particular context. 

  • Comprehensive materials on a variety of damages measures. This new edition includes measurements on lost profits or value, intellectual property damages, other commercial damages, and personal injury, and wrongful termination.

  • In-depth analysis. This resource includes comprehensive analysis of motions to exclude experts and a review of the concept of reasonable certainty, based on significant research on the topic.

With nine new chapters in Volume One from 14 new contributors and analysis of 100 additional court cases in Volume Two, this much-expanded guide is about financial evidence: how to gather it, interpret it, and tell its story in a lawsuit or litigation setting. Among other topics, new chapters address compensation forfeiture, fraudulent transfer, the use of surveys in trademark litigation, personal injury and wrongful termination, the use of statistics in damages claims, and the use of event studies in securities litigation.

VOLUME 1

PART I. EXPERT TESTIMONY IN THE U.S. COURTS

  • Chapter 1. Professional Standards for Experts
    • 1.0 Certified Public Accountants
    • 2.0 Economists and Other Financial Experts (Non-CPAs)
    • 3.0 Conclusion
  • Chapter 2. The Process: A Brief Introduction to the U.S. Court Systems, From Filing to Appeal
    • 1.0 Introduction and Overview of U.S. Court and Trial System
    • 2.0 The Rules of Evidence
  • Chapter 3. Spoliation of Evidence
    • 1.0 Introduction and Overview
    • 2.0 Spoliation: Defined and Explained
    • 3.0 Spoliation Issues Relating to Experts
    • 4.0 Spoliation Issues Relating to ESI
  • Chapter 4. A Guide to Electronic Discovery and Evidence
    • 1.0 What Is ESI and Where Does It Reside?
    • 2.0 Under What Circumstances Must ESI Be Preserved and What Protocol Should Be Followed for Doing So?
    • 3.0 How Should ESI Be Produced?
    • 4.0 How Should ESI Be Managed During Litigation?
    • 5.0 What Is Required for ESI to Be Admitted Into Evidence at Trial?
    • 6.0 How Can Financial Experts Assist With E-Discovery?
  • Chapter 5. Expert Depositions: Accountants, Economists, and Appraisers
    • 1.0 Expert Depositions, Generally
    • 2.0 Expert Depositions, Financial Experts
  • Chapter 6. The Reasonable Certainty Requirement in Lost Profits Litigation: What It Really Means
    • 1.0 Balancing the Competing Concerns
    • 2.0 The Factors Courts Consider
    • 3.0 Replacing Rules With a Standard
  • Chapter 7. Motions to Exclude Financial Experts
    • 1.0 Basic Legal Predicate
    • 2.0 Factors to Consider in Making a Motion to Exclude an Expert

PART II. LOST PROFITS DAMAGES

  • Chapter 8. Motions to Exclude Expert Testimony
    • 1.0 Expert Qualifications
    • 2.0 Methodology
    • 3.0 Data
    • 4.0 Assumptions
    • 5.0 Failure to Deal With Inconsistent Facts
    • 6.0 Conclusion
  • Chapter 9. Context of the Lost Profits Damages Claim
    • 1.0 How a Claim for Lost Profits Arises
    • 2.0 Common Elements of Lost Profits Damages Cases
  • Chapter 10. Performing Credible Lost Profits Analyses
    • 1.0 Planning
    • 2.0 Proper Damages Period
    • 3.0 Estimating the Relevant Lost Revenues and Associated Costs
    • 4.0 Professional Standards
    • 5.0 Summary
  • Chapter 11. Projecting But-For Profits
    • 1.0 Methods for Determining Lost Revenue
    • 2.0 Whether and the Extent to Which Historical Information May Be an Indicator of the Future
    • 3.0 Alternatives to the Average, Weighted Average, or Most Recent Year
    • 4.0 Startup Companies, Businesses in a New Industry, and Businesses With Limited Operating Histories
    • 5.0. Use of Projections Prepared in the Ordinary Course of Business
    • 6.0 Consideration of Growth
    • 7.0 Consideration of Industry and Economic Information
    • 8.0 Methods to Forecast Expenses
  • Chapter 12. Establishing Evidence in Lost Profits Cases
    • 1.0 Introduction
    • 2.0 Establishing a Reliable Foundation for the Claim
    • 3.0 Data and Information Generally Available From the Parties
    • 4.0 Market and Demand for Plaintiff’s Product
    • 5.0 Industry and Economic Data
    • 6.0 Adequate Consideration of All Available Data
  • Chapter 13. Calculating Damages for Early-Stage Companies
    • 1.0 Legal Requirements: The Basic Parameters
    • 2.0 Methods for Proving Lost Profits for New Businesses
  • Chapter 14. Lost Profits Versus Lost Business Value
    • 1.0 Introduction
    • 2.0 Definition of Value in a Loss of Business Value Claim
    • 3.0 Considerations in Making the Claim for Lost Business or Lost Profits
    • 4.0 Comparison of Lost Profits Versus the Lost Value of a Business
    • 5.0 Can Plaintiffs Recover Both Lost Profits and Lost Business Value?
    • 6.0 Conclusion
    • 7.0 Additional Resources
  • Chapter 15. Discounting Lost Profits in Damage Measurements
    • 1.0 Introduction
    • 2.0 Objective of Compensatory Damages: Making the Plaintiff Whole
    • 3.0 Interest Rates, Rates of Return, and Discount Rates
    • 4.0 Conclusion
  • Chapter 16. Discounting Damages: Case Law
    • 1.0 Cases Allowing a Risk-Free Rate
    • 2.0 Cases Requiring a Risk-Adjusted Rate
    • 3.0 Cases Allowing a Reinvestment Rate
    • 4.0 Other Opinions Discussing the Discount Rate
    • 5.0 Alternatives to Challenging the Discount Rate
    • 6.0 Conclusion . 381
  • Chapter 17. Use of Forensic Evidence in a Lost Profits Case
    • 1.0 Introduction
    • 2.0 Indicators That Forensic Evidence Is Needed
    • 3.0 Admissibility of Forensic Evidence
    • 4.0 Cases Demonstrating the Use of Forensic Evidence
  • Chapter 18. Financial Forensic Services for Internal Investigations
    • 1.0 Introduction
    • 2.0 White-Collar Crimes and Associated Financial Forensic Services
    • 3.0 Distinguishing a Financial Audit From Financial Forensic Services
    • 4.0 Indicators of Fraud
    • 5.0 Financial Forensic Services and Internal Investigations
    • 6.0 Internal Investigation Areas
    • 7.0 Common Mistakes in Internal Investigations
  • Chapter 19. Business Interruption and Damage Claims
    • 1.0 Introduction
    • 2.0 Business Interruption Insurance Policy Issues
    • 3.0 Valuing Business Interruption
  • Chapter 20. Lost Profits for Physician Practices and Violation of
    • Noncompete Agreements
    • 1.0 Overview
    • 2.0 Basic Factors to Consider
    • 3.0 In-Depth Look at Special Issues in Identifying Damages
    • 4.0 Conclusion
    • 5.0 Glossary of Terms
  • Chapter 21. Lost Profits Issues Unique to the Government Contracts Industry
    • 1.0 Government Contract Types
    • 2.0 Government Contract Cost Analysis
    • 3.0 Application of Government Contract Principles to Lost Profits Disputes
    • 4.0 Conclusion
  • Chapter 22. Construction Claims
    • 1.0 Introduction: Definition and Presentation of Construction Claims
    • 2.0 Claim Pricing Methodologies
    • 3.0 Claims for Delay
    • 4.0 Disruption
    • 5.0 Acceleration
    • 6.0 Typical Causes of Construction Claims
    • 7.0 Lost Profits on Impairment of Working Capital and Bonding Capacity
    • 8.0 Summary
  • Chapter 23. Lost Profits for Automobile Dealerships
    • 1.0 Franchise Relationships
    • 2.0 Lost Profits Considerations
    • 3.0 Understanding the Dealership Business
    • 4.0 Relevant Resources
    • 5.0 General Bibliography
  • Chapter 24. Lost Profits Analysis in Eating Establishments
    • 1.0 Introduction
    • 2.0 General Background of Restaurant Industry
    • 3.0 Financial Performance
    • 4.0 Establishing Causation for Losses of Eating Establishments
    • 5.0 Forensic Considerations
    • 6.0 Examples of Lost Profits in Restaurants
    • 7.0 Restaurant Industry Resources
    • 8.0 Notable Case Law Relating to Restaurants

PART III. INTELLECTUAL PROPERTY DAMAGES

  • Chapter 25. Intellectual Property Overview
    • 1.0 Overview: Comparing IP Valuation to IP Damages Measurements
    • 2.0 Summary
  • Chapter 26. Patent Infringement Damages: Lost Profits and Royalties
    • 1.0 Federal Law Governing Patent Infringement
    • 2.0 The Patented Technology at Issue
    • 3.0 Lost Profits in Patent Infringement Cases
    • 4.0 Market Share Damages
    • 5.0 Price Erosion
    • 6.0 Collateral Sales—Lost Profits
    • 7.0 Royalty Damages
    • 8.0 RAND Royalties—Standard Essential Patents
    • 9.0 Post-Verdict Royalties
    • 10.0 Limitations on Damages
    • 11.0 Damages Against the U.S. Government Under §1498
    • 12.0 Prejudgment Interest
  • Chapter 27. Lost Profits (and Other Damages) in Trademark and Copyright Cases
    • 1.0 Trademark Damages
    • 2.0 Copyright Damages
  • Chapter 28. Uses of Survey Research in Damages Estimation
    • 1.0 Introduction
    • 2.0 Guidelines and the Impact of Daubert
    • 3.0 Federal Judiciary Guidelines
    • 4.0 Industry Guidelines
    • 5.0 Case Studies
    • 6.0 Special Topics
    • 7.0 Summary
  • Chapter 29. Using Internet Analytic Tools for Valuation and Damages Calculations in Internet IP Infringement and Defamation Cases
    • 1.0 Introduction
    • 2.0 Key Concepts of Internet and Social Media Analysis
    • 3.0 How to Use the Tools: Incorporating Internet and Social Media Data and Information Into Your Valuation and Damages Analyses
    • 4.0 Conclusion

PART IV. THE UNJUST ENRICHMENT REMEDY

  • Chapter 30. Introduction to Remedies in Equity
    • 1.0 Advantages
    • 2.0 Disadvantages
    • 3.0 Basis of Equitable Remedy
    • 4.0 Variation by Jurisdiction
    • 5.0 Discretion and Limited Jurisdiction
    • 6.0 Decline in Familiarity
    • 7.0 Conclusion
  • Chapter 31. Counting the Beans: Unjust Enrichment and the Defendant’s Overhead
    • 1.0 Introduction
    • 2.0 Relevance
    • 3.0 Semantics
    • 4.0 The Origins of Unjust Enrichment: Defendant as Quasi-Trustee
    • 5.0 The Origins of Unjust Enrichment: The Americanization of ‘Profit’
    • 6.0 Remedy Measurement in Related Areas of the Law
    • 7.0 The 2nd Circuit: An Uneven Commitment to Consistency?
    • 8.0 Willfulness and Overhead
    • 9.0 Survey by Circuit
    • 10.0 Incremental Versus Full-Absorption
    • 11.0 Conclusions
  • Chapter 32. Restitution Rollout: The Restatement (Third) of Restitution & Unjust Enrichment: Counter-Restitution for Monetary Remedies in Equity
    • 1.0 Introduction
    • 2.0 Anti-Netting Doctrine as a Genetic Marker for Monetary Remedies in Equity
    • 3.0 Monetary Remedies in 19th Century IP Case Opinions
    • 4.0 Semantics
    • 5.0 Quasi-Trustee
    • 6.0 Counter-Restitution
    • 7.0 Disgorgement by Default
    • 8.0 Gross Disgorgement Cases
    • 9.0 FTC Claims for Gross Disgorgement
    • 10.0 Conclusion

PART V. OTHER COMMERCIAL DAMAGES

  • Chapter 33. An Overview of Accounting and Financial Analysis in Fraudulent Transfer Matters
    • 1.0 Background
    • 2.0 Reasonably Equivalent Value
    • 3.0 Defining Insolvency
    • 4.0 Summary
  • Chapter 34. Compensation Forfeiture: Stacking Remedies Against Disloyal Agents and Employees
    • 1.0. Introduction
    • 2.0 Corporate Outlaws
    • 3.0 Breach of Fiduciary Duty
    • 4.0 Forfeiture
    • 5.0 Other Claims and Remedies
    • 6.0 Conclusion
  • Chapter 35. Post-Acquisition Disputes and Related Damages
    • 1.0 Introduction
    • 2.0 Overview of the Transaction Process
    • 3.0 Breach of Contract Claims in Post-Acquisition Disputes
    • 4.0 Pitfalls to Avoid in Assessing Breach of Contract Damages
    • 5.0 General Process for Resolving Post-Acquisition Disputes
    • 6.0 Case Study
    • 7.0 Insights and Observations Regarding Merger and Acquisition Disputes
    • 8.0 Conclusion
  • Chapter 36. Event Studies in Securities Litigation
    • 1.0 The Impact of Halliburton II on Event Study Timing
    • 2.0 Efficient Market Hypothesis
    • 3.0 Event Study Methodology: A Primer
    • 4.0 The Strategic Use of Event Studies: Robustness Tests
    • 5.0. Event Study Methodology: Complications
    • 6.0 Conclusion

PART VI PERSONAL INJURY AND WRONGFUL TERMINATION

  • Chapter 37. Use of Statistical Analysis to Measure Damages
    • 1.0 Three Types of Questions
    • 2.0 Scenarios for Computing Damages
    • 3.0 Summary
  • Chapter 38. Economic Damages From Personal Injuries
    • 1.0 Introduction
    • 2.0 The Defendant’s Perspective
    • 3.0 Standards and Burden
    • 4.0 Some Components of Economic Damage Analysis
    • 5.0 Discounting Lost Earnings
    • 6.0 Discounting of Personal Injury Damages
    • 7.0 Personal Injury, Wrongful Death, and Wrongful Termination Cases
    • 8.0 Diminished Earnings Capacity
    • 9.0 Work-Life Expectancy
    • 10.0 Taxability of Damage Awards
    • 11.0 Appropriate Economic Expert Testimony
    • 12.0 References/Bibliography
  • Chapter 39. Damages in Common-Law Employment Cases
    • 1.0 Contract Damages
    • 2.0 Promissory Estoppel
    • 3.0 Tort Damages
    • 4.0 Taxation
  • Changes to Rule 26 effective 12/1/101

VOLUME 2

  • Case Law