Mod 4 - Quantification of Damages Flashcards
Types of “Damages”
1) General Damages - Compensates for non-monetary/quantifiable harm that is suffered. Includes physical and emotional pain, loss of reputation, or mental impairment.
* Generally, CBVs are not retained to quantify General Damages.
2) Special Damages - compensates for harm that can be quntified, incdluing lost profits, incremental expenses arising from defendants actions, and property replacement costs.
* CBVs regularly are retained to work in this area.
3) Statutory Damages - pre-specificed amounts payable to plaintiffs that are set out by law. (ie trademark violations). This sets a formual for the amount payable in cases where the calculation of damages is too time consuming or costly to quantify.
* Generally, CBVs are not retained to quantify General Damages.
4) Nominal Damages - small sums of money awarded when plaintiff has been wronged but not able to prove financial loss has occurred. ie person proves that his freedom of speech was violated is rewarded $2.00 to acknowledge the liability but any actual damages to the plaintiff is hard to determine and not of meaningful value.
* Generally, CBVs are not retained to quantify General Damages.
5) Punitive Damages - designed to punish defendant for particularly blatant or cynical violations of the law. Used as deterrent to set example.
* CBVs do not typically value punitive damages.
6) Restitutionary or Disgorgment Damages - forces defendant to give up profits earned through illegal means. If CoA patent infringes on CoB and makes millions in profits from the sale of the product.. CoA may need to pay CoB those “accounting profits”. also known as disgore the profits to CoB.
* Generally, CBVs are not retained to quantify General Damages.
Define “Financial Loss”
the past, present, or future loss of money or opportunity suffered by a plaintiff as a result of the alleged harmful actions of a defendant, as expressed in terms of money, and determined at particular assessment date.
The purpose of loss quantification is to calculate, in an objective and independent manner, with due diligence and with due consideration of the available facts, assumptions, and restrictions of each situation, the financial loss incurred by a plaintiff, if any, as a result of the alleged actions of a defendant.
Key components of measuring financial loss in litigation for a CBV
1) Financial loss focuses on financial harm (meaning, it must be in terms of money and quantifiable, unlike emotional damages which wouldn’t typically be looked at by a CBV).
2) The Financial Loss must be expressed in terms of money. (present value of dollars at the assessment date)
3) Loss incurred must be caused by the Defendant
What are “heads of damages”
A process of separating a total claim into different categories or “heads” which can be analyzed, valued, and ruled on by the courts separately.
Example:
• Lost profits from existing customers.
• Lost profits from future customers.
• Lost profits from increased costs in dealing with a unionized work force.
Most common heads are
1) loss of profits or cashflow - difference between profit that a business would have earned if not for alleged harmful act, less the profits actually earned.
2) loss of revenues - used when no differential in costs between the scenario or wrong-doing and the expected scenario.
3) Loss of opportunity - situations where it can be determined that there was a reasonable probability (>50%) that an injured party would have realized some benefit had the breach not occurred.
4) Liquidated Damages - pre-determined sum of money specified in contract that a breaching party would have to pay.
5) Loss of commercial goods - plaintiff lost inventory or raw materials as a result of wrongful actions. (ie in the case of a fire).
6) Nominal Damages - if defendant is found liable but the damages cannot be quantified. (usually small amounts).
7) Loss of Value of a Business - Resulted in the closure of the plaintiff’s company is an example.
8) Loss of Earning Capacity - because of defendant’s actions, the plaintiff cannot earn the same level of income he might have earned had the actions not happened.
Common situations requiring Quantification of financial losses by CBV
1) Breach of contract - quantify cashflow that would have been earned less actual earned cash flows
2) Patent infringement - quantify lost profits from infringement or to determine “accounting profits” earned which are to be disgorged.
3) Theft of IP or trade secrets - quantify lost profits from infringement or to determine “accounting profits” earned which are to be disgorged.
4) Expropriation - quantify the profits that would have been generated less the actual profits earned.
5) Class actions - quantify the improperly charges made by defendant against class of plaintiffs.
6) Fraud - quantify monetary losses resulting from fraudulent actions.
7) Negligence - financial loss arising from defendants lack of due care less acutal cash flows earned.
8) Insurance Claims - quantify cash flow that business would have realized compared to actual profits earned after the incident.
9) Personal Injury - quantify loss arising from loss of earnings, medical and related costs.
10) Wrongful Termination - quantification of losses in income, potential bonus packages, options, etc. that should have been earned prior to the wrongful termination.
Commonary Monetary Awards issued
1) Special Damages - Amount of money that restores plaintiff to same position in which he would have been had the matter not taken place. This is most common remedy granted and frequently relies on CBV.
2) Disgorgement of
Accounting profits - Rather than putting back in place they would have been, plaintiff are awarded all the profits that were made due to the wrongdoing. Much less common remedy and is only typically used in cases such as patent infringement or breach of fiduciary duty.
3) Relief from Acts of Oppression - Non-monetary remedies (forcing maj shareholders to purchase min shareholders shares, reverse a transaction, transfer over an asset, etc.).
4) Family Law Obligations - things like spousal support, child support, and equalization payments may be imposed on on individual in dissolution of a marriage.
Non-monetary awards
Specific performance, injunctions, etc.
To establish Liability in Breach of Contract Case, what factors must be proven
1) Existence of a Contract - May be oral or written (transfer of property must be written) and must have consideration. CBV can assist in drafting a contract and also determine the means of quantifying damages.
2) The Contract was Breached - Must prove a breach occurred and that monetary impact to the plaintiff occured (if no financial damages occured, no damages were suffered).
3) Damages suffered must be directly caused by breach.
Common types of breachs
- refusal to honour sales contracts
- breach of warranty
- refusal to honour service contract
- exclusive agency contracts
- breach of covenants to compete
- leases
- construction contracts
- manufacturing contracts
- contracts to provide loans.
Establishing Liability in Tort Cases
1) There was a duty of care by the defendant to the plaintiff. This deals with the case of proximity, where people own due care to those in direct surroundings.
2) Breach of Duty - prove that a breach of duty of care had occured.
3) Causation - the tory resulted in damages that the defendant should have foreseen.
Example. Driver is texting and driving, runs off the road and crashes into a grocery store. As a driver, he has the duty of care to people and assets in his proximity. By texting and driving he is breaching his duty of care to those in proximity, and the physical damage to the store and loss of business following the crash are directly caused by the tort.
Common types of Torts
- Negligence
- Negligent Misrepresentation
- Intentional torts
- Usurping ones public identity or invasion of privacy (brand imitation for example)
- Breach of confidence
- Inducement of breach of contract
- Intentional injury to property
- Trespass to land
- Trespass to personal property.
What is meant by “Damages are Restorative”?
Damages are typically plaintiff-focused, and do not take into consideration the profits or cashflows made by the defendant.
Foreseeability
In breach of contract scenario, foreseeability is when the defendant should have realized that the injured party would be replying on his/her efforts. Foreseeability is assessed relative to the time a contract is entered into.
In tort, foreseeability is assessed at the time of alleged wrongdoing and is usually.
Damages in Tort and Breach of Contract
For both (forget what we learnt in module one apparently), the goal is to put the plaintiff in the position they would be if not for the wrongdoing. However, this can differ for the same case, depending if breach of contract or tort.
For example, you accidentally break my vase, which was worth $1,000) because of your negligence. To put me back in the position I would have been had you not broke it..you would give me $1,000. Not lets say I have a contract signed with you where after 3 weeks you were going to buy that vase off of me for $6,000. Because you violated the terms of our contract, the accident was not negligence, but rather a breach of contract. If it weren’t for the wrongdoing, you would have bought it from me and spent $6,000, which is where I would have been.
What is Plaintiffs Responsibility for Mitigation
For damages to be awarded, the plaintiff must take all reasonable steps to reduce his/her damages. However, the plaintiff does not need to out themselves at significant risk.
For example, say I am wrongfully terminated and I am sueing you for damages becuase i couldn’t pay my mortgage and I lost my home! The plaintiff must show that they took steps to attempt to find a job (to mitigate their damages) instead of sitting around waiting to sue. However, the plaintiff will not be denied damages if they didn’t take a job at a lower salary or in an industry completely unrelated to their profession.
