GHJ (GHJ) assists attorneys, including outside/inside counsel, business leaders and business owners, with a wide range of litigation support services. The firm provides financial insight and clarity during all stages of a business dispute, from pre-litigation services case development and discovery to expert witness testimony and conflict resolution. The below case study takes an in-depth look at recent work with a client going through litigation and highlights the need for strategic thought when considering an expert to assist in litigation support.
GHJ was engaged to assist the principals of a new credit card processing company being sued for misappropriating a customer list from their prior employer, another credit card processing company. The defendants admitted to liability and were facing a mid-seven-figure damages estimation. This opinion, offered by a respected Ph.D. economist was based on forecasted sales that a single Los Angeles-based office should have achieved, purportedly but for the misappropriation. GHJ was tasked with presenting the jury with an alternative view of the damages, as well as explaining why the economist’s damages should not be used by the jury.
Determining economic damages for trade secret misappropriation is based on identifying business losses specifically related to the misappropriation event. In certain situations, these types of damages can simply be defined as sales lost by the plaintiff, which were obtained by the defendant, for no other identifiable reason than the misappropriation.
As for the alternative view of damages, GHJ used a list of 13,000 customers recently lost by the plaintiff across the country to prepare an analysis, which matched the customers lost by the plaintiff for that one office to those later gained by the defendant. Knowing that this industry suffers significant customer churn, GHJ projected plaintiff’s lost sales for these customers based on the plaintiff’s own reported revenues, costs and average customer tenure. Using these parameters, GHJ presented the jury with a low six-figure damages opinion.
As for exploring the faults in the economist’s analysis, GHJ performed a detailed reverse engineering of methodology, data and assumptions. While numerous material errors were found in how the economist assembled his calculations, GHJ was most effective in directing the jury to consider why the economist did not attempt to determine whether other issues could have adversely affected the sales for this office. For instance, neither the plaintiff nor the economist investigated the various reasons why the plaintiff recently lost 13,000 customers. In the end, GHJ was able to explain that the economist’s calculations were not a calculation of damages related to this event but merely a measure of plaintiff’s failure to address change in a very competitive marketplace.
The jury returned a low six-figure verdict – albeit slightly higher than GHJ’s damage calculations – but still far below the mid seven-figure calculations offered by the Ph.D. economist.
GHJ Litigation and Forensic Consulting Practice regularly works with companies to provide support through a trial, mediation or arbitration. The team has extensive experience in providing reviews and critiques of opposing expert opinions and testimonies. If your companies is at a crossroad or in the midst of litigation, contact GHJ Litigation Support experts here.