Blog Banner Image

The Franchise Memorandum

Court Denies Motion to Exclude Expert Testimony on Lost Profits

A federal court in South Dakota recently denied a motion to exclude a dealer's expert testimony in a dispute over lost profits resulting from the termination of a distributor agreement. Black Hills Truck & Trailer, Inc. v. Mac Trailer Mfg., Inc., 2014 WL 5782452 (D.S.D. July 10, 2017). MAC had entered into a written distributor agreement with Black Hills. Less than a year later, MAC sent Black Hills proposed modifications to the agreement and required Black Hills to accept the modifications. Black Hills filed a lawsuit in response, alleging that MAC's actions constituted a wrongful termination. MAC and joined defendant Siouxland later moved to exclude the testimony of an expert Black Hills had retained to testify as to its lost profits resulting from the termination.

In support of their position, MAC and Siouxland took issue with: (1) the original data applied to the expert's formula for lost profits; (2) the expert's "blind trust" in Black Hills' representations; and (3) the expert's "utterly unreliable" methodology. The court disagreed with all three arguments. The court found that factual objections to the original data were better addressed during cross-examination. Additionally, the court acknowledged that Black Hills was in the best position to provide the expert with the necessary factual information. Further, the court held that the expert's method of subtracting variable expenses from gross profits was a proper methodology commonly seen in calculating lost profits. Finally, and importantly, the court recognized that it was impossible to create a forecast without some degree of speculation. Therefore, the court used its wide discretion to allow the expert testimony, finding that the benefit to the jury of the testimony was far more probative than prejudicial.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here




















Blog Authors