Disclosing damages--a key part of your case
James Smith
Trial Lawyer/Neutral (retired judge) focusing on complex commercial litigation
A surprising stumbling block for some parties is disclosing damages calculations. Problematic disclosures can range from, “Plaintiff suffered lost profits in an amount to be proven at trial of at least $1.75 million” to “Plaintiff is entitled to damages of at least $750,000 for Defendant’s interference with the XYZ contract” (without explaining how that party arrived at that number). Some disclosures are even more general: “Plaintiff will seek damages for breaching the ABC contract and lost profits in an amount to be proven at trial.” I encourage lawyers to avoid that practice.??
The Arizona rule requires disclosing “a computation and measure” of each category of damages with the documents and witnesses supporting those. Ariz. R. Civ. P. 26.1(a)(7). So those are two components—computation *and* measure. Give us a calculated number and your methodology. And do that for each category (e.g., lost future profits, cost of cover, contract lost to improper interference).??
The federal rule and court interpretations are similar. Fed. R. Civ. P. 26(a)(1)(A)(iii). In fact, the Advisory Committee Notes to the 1993 amendments compare that obligation to a standing request for production. Indeed, it truly is a standing interrogatory. It isn’t enough to give your opponent a figurative shoebox of receipts and expect your opponent to figure it out. One of the leading cases interpreting the federal rule is Design Strategy, Inc. v. Davis, 469 F.3d 284, 297 (2d Cir. 2006).?
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Of course, there are realistic limits. If you’re seeking disgorgement, then it is likely only your opponent has information about how it benefited from its wrongful conduct. But once you learn that information, you should disclose that you’ll ask for disgorgement of X (whatever those wrongful benefits are). Or maybe your damages are tied to your opponent’s revenue (e.g., “The contract called for Plaintiff to receive 25% of revenue from commercial sales of the Widget.”); you understandably need data from your opponent to calculate that number.
In many cases, your expert reports/disclosures should cover these topics; your disclosure statements should incorporate those. The takeaway, however, is don’t risk having the court preclude you from proving a component of damages. Ensure your disclosures are complete.
Founder @ Commerce Law Partners | Asset Protection/ Risk Management/ Compliance Legal Consultant | Trial Attorney
2 年Thank you Judge James D. Smith. The Federal rule also requires that the documents upon which the computation is made by produced to the defendant for inspection. I’ve used that rule to obtain an order preclude damages claims. Judges usually order production first and then can preclude the damages all together for violations.
Insurance Coverage Professional
2 年I can't tell you how many claims I handle in which getting a calculation of damages from the plaintiff is like pulling teeth. Putting aside the procedural requirements, how do you expect an insurer or any defendant to justify cutting you a big, fat check if you don't even demonstrate why you're entitled to the amount you seek?