## F I LED United States C ourt of Appeals Tenth Circuit 

### August 28,200 7 Elisab eth A. Shumaker C l erk of C ourt 

### PU B L ISH UNI TED S TATES COURT OF AP P EALS

T E N T H C IRC U IT

J OSEPH O ’ TOO LE, P lain tiff-A p p e llan t, v. N O R T H R O P G R U M M A N C O R P ., D efe ndant - A ppel l ee. N o. 05- 2174

A ppeal from t he U ni t ed St at es D i s t ri ct C ourt for t he D i s t ri ct ofN ew M exi co ( D. C. No. Ci v - 9 9 - 1 4 2 6 LH / RL P) A l exande rA . W ol d, J r . , of A l exande rW ol d & A s s oci at es , P. C . , A l buquer que, N e w M e x ico , fo r P lain tiff-A p p e llan t. E dw ar d R i cco ( Scot tD . G or don w i th hi m on the br i ef) , of R odey , D i ckas on, Sl oan, A ki n & R obb, P. A . , A l buquer que, N ew M exi co, forD efe ndant - A ppel l ee. B efor e M UR P HY , S EY M OUR , and TY M KOVI CH , C i rcui tJudg es. S EY M OUR , C i r cui tJ udge.-2-

T hi s i s the thi r d appea l i n thi s cas e conc erni ng M r . O ’ T ool e’ s cl ai m s for cons equent i al damages fl ow i ng fr om N or thr op G rum m an C orpor at i on’ s br eac h of a c o n tr a c t to p a yh is re lo c a tio n e x p e n s e s to L o s A la m o s , N e w M e x ic o . See O ’ Tool e v. Nor thr op G r um m an C or p. , 305 F. 3d 1222, 1225 ( 10th C i r . 2002) ( O ’ Tool e I) ; and O ’ Tool e v. Nor thr op G r um m an C or p. , 113 F. A pp’ x 314, 317- 19 (10 th C ir . 2 0 0 4 ) ( O ’To o le II) . O urj ur i s di ct i on ar i s es under28 U . S. C . § 1291, and w e affirm i n p art , rever se i n p art , and rem and for further proceedings. I P ROCE DURAL HI S TORY T he di s put e i n t hi s cas e ar os e af t erN or thr op C orpor at i on acqui r ed G rum m an A ero sp ac e, fo r w h o m M r. O ’T o o le w o rke d . A t th e re leva n t t im e, M r. O ’ T ool e w as on l oan t o t he fe der al governm entt o w or k on a pr oj ecti n San D i ego u n d e ra fo u r - y e a r“ s e c o n d me n ta g r e e me n t ” a n d Gru mm a n ’ s r e l o c a t i o n p o l i c y . He su b se q u e n tlyre lo c a ted to L o s A lam o s. M r. O ’T o o le s u e d to re c o v e r u n p a id r el ocat i on expens es and cons equent i al damages fl ow i ng fr om al l eged br eac hes of th e G ru m m a n c o n tra c t. In th e las t ap p e a l, w e h e ld th a t th e d istric t co u rt e rre d in d e n y in g c o n s e q u e n tia l d a m a g e s . O ’To o le II, 1 1 3 F . A p p ’ x a t3 1 7 - 1 9 . We r eas oned i tw as undi s put ed thatN or thr op G rum m an di d notpaycert ai n r el ocat i on c o sts it ag re e d w e re d u e , an d it w a s re a so n a b lyfo re se e a b le th a t M r. O ’T o o le w o u ld h a v e to g e t m o n e yf ro m so m e so u rc e to p a yth o se e x p e n se s “ re su lti n g in-3-

extr a cos t s t o hi m . ” Id. at319. N ot i ng thatthes e hol di ngs w er e l aw of the ca s e, w e r emanded w i th di r ect i ons “forentryof an a w ar d of cons equent i al damages t hat i ncl udes atl eas tan amountr ei m bur s i ng the pena l t i es pai d and i nt er es tl os ton t he funds M r . O ’ T ool e w as for ced t o w i thdr aw fr om hi s r et i r ementacc ountt o payfor undi s put ed r el ocat i on cos t s . ” Id. W e f u rth e r d ire c ted th e d istric t co u rt to “cons i deral l othercl ai m s forcons equent i al damages and make s peci fi c fi ndi ngs as t o eac h cl ai m . ” Id. O n r emand, the di s tr i ctcourtcons i der ed pos t - tr i al m emora nda on damages fro m b o th p arti es. O n M ay2 3 , 2 0 0 5 , the c o u rten tered a d ec isi o n g ran ti n g M r. O’ T o o l e th r e e a wa r d s o f c o n s e q u e n t i a l d a ma g e s ( a n d p r ej u d g me n ti n t e r e s to n t wo of those aw ards) and den y i ng his othercl ai m s. II THE DI S TR I CT COURT ’ S AW ARD T he d i stri ctcou rtaw arded o r deni ed the foll ow i ng cl ai m s: ( 1) aw ar ded $15, 540, pl us pr e-j udgm enti nt er es t , forw i thdr aw al s fr om t he G rum m an Savi ngs and I nves t m entPl an ( SI P) t o payt axes and pena l t i es on $15, 230 M r . O ’ T ool e borr ow ed fr om t he SI P t o coverunr ei m bur s ed movi ng expens es i n 1996; ( 2) aw ar ded $13, 400, pl us pr e-j udgm enti nt er es t , forw i thdr aw al s fr om t he S IP to p aytaxe s an d p en alt ies o n the $ 1 3 , 0 0 0 M r. O ’T o o le bo rrow ed fro m the S IP t o coverunr ei m bur s ed expe ns es i n 1998; ( 3) deni ed damages forthe l ack of a mort gage i nt er es tdeduct i on on hi s t ax r eturn forthe t i m e betw een J ul y1, 1997, unt i l Sept ember1998;-4-

( 4) aw ar ded $2000, w i thouti nt er es t , forl os tequi tyi n a home pur chas e; (5 ) d e n ied d a m a g e s fo r lo st v a c a tio n p a ya n d m o v in g c o sts fo r th e m o v e s to the seco nd and thir d rent al ho m es; (6) den i ed d am ages i n ex cess of $1 00 0 fo r i ncident al m ov i ng exp enses; ( 7) deni ed damages fors el l i ng hi s curr enthom e and buy i ng a home he c o u l d h a v e a ffo r d e d i f N o r th r o p G ru m m a n h a d fo l l o w e d i t s p o l i c i e s c o rr e c t l y; ( 8) deni ed l os tearni ngs , and l os tearni ngs on earni ngs , on the money M r. O ’To ole w i thd rew from t he S IP t o co ver unrei m bu rs ed rel ocati on exp enses; (9 ) d e n ied d a m a g e s fo r N o rth ro p G ru m m a n ’s fa ilu re to re c a ll h im to h is pr i orj ob i n B ethpage, N ew Y or k; (1 0 ) d e n ied d a m a g e s fo r N o rth ro p G ru m m a n ’s fa ilu re to fo llo w its g r i e v a n c e p o l i c y; ( 11) deni ed gr os s - up on damages i taw ar ded; ( 12) aw ar ded i nt er es ton the damages atthe fe der al r es erve r at e i ns t ead of aw ar di ng l os tearni ngs and l os tearni ngs on earni ngs forw i thdr aw al s fr om the SI P; and (13) aw arded, i n tot al , $3 1, 97 0 p l us cost s. See A pl t . O peni ng B r . at9- 10 ( pr ovi di ng ci t at i ons t o di s tr i ctcour t ’ s m emora ndum o p inion ). M r. O ’T o o le co n tend s the d istri ct co u rterred in it em s (3), (4), (5), ( 8 ), ( 11) , ( 12) , and ( 13) of i t s aw ar d. H e ar gues i n addi t i on thatthe courterr ed by fa ili n g to a d d re ss h is c laim fo r lo st e a rn in g s o n th e u n c o n tes ted d a m a g e s p a id in the p arti al sett lem en t i n 2 0 0 1 , an d h is cl aim fo r pe n alt ies an d taxe s o n S IPB as ed on the ar gum ent s i n hi s openi ng br i ef, M r . O ’ T ool e has abandone d 1 fourcl ai m s , i t ems ( 6) , ( 7) , ( 9) , and ( 10) fr om t he number ed l i s tof the di s tr i ct c o u rt ’s a w a rd s a n d d e n ia ls s e t o u t a b o v e . S e e , e .g ., A p lt . O p en ing B r. at 10 . In addi t i on, M r . O ’ T ool e no l ongercl ai m s he i s ent i t l ed t o cons equent i al damages b a se d o n re n tin g fo r th e first y e a r h e w a s in L o s A lam o s, f ro m a p p ro x im a tely m id -1 9 9 6 to m id -1 9 9 7 . See A pl t . R epl yB r . at12. -5- w i thd raw al s m ade to cov er i ncreased t axes be cause h e had no m ort gag e i nter est deduct i on i n 1997 and 1998. 1 III A N A L Y S IS W e d e te rm in e d in th e fir s t a p p e a l th a t N e w Y o rk la w a p p lie s to th is c a s e . O ’ Tool e I, 305 F. 3d at1225. W e s t at ed thatM r . O ’ T ool e i s ent i t l ed t o damages th a t w ill p u t h im in th e sa m e e c o n o m ic p o sitio n in w h ich h e w o u ld h a v e b e e n if N or thr op G rum m an had notbr eac hed the contr actw i th hi m , i ncl udi ng any fo re s e e a b le e c o n o m ic inju ry re s u ltin g f ro m th e b re a c h a n d th e c o s ts o f m itig a tio n . See i d. at1226. W e r evi ew the di s tr i ctcourt ’ s fi ndi ngs on damages forcl ear e rr o r. S e e E a sley v . C ro m a rtie , 5 3 2 U .S . 2 3 4 , 2 4 2 (2 0 0 1 ); Fur rv. A T&T Tech . , Inc. , 8 2 4 F . 2 d 1 5 3 7 , 1 5 4 7 (10 th C ir . 1 9 8 7 ). T o rev erse u n d er this st an d ard req u ir es th at, b ase d o n the e n ti re e v iden ce , w e h av e a “d efinit e a n d firm convi ct i on t hata mi s t ake ha s been c om m i t t ed. ” E as l ey , 5 3 2 U . S . a t2 4 2 . We re v ie w th e d is tr ic t c o u rt ’s le g a l c o n c lu s io n s d e n o v o . D an g v. U N U ML i f e Ins. Co . o f A m. , 1 7 5 F . 3 d 1 1 8 6 , 1 1 8 9 (10 th C ir . 1 9 9 9 ).-6-

M r. O ’T o o le d o e s n o t d isp u te th e a m o u n ts th e d istric t co u rt a w a rd e d to re im b u rse h im fo r th e tax e s a n d p e n a lti e s h e p a id o n w ith d ra w a ls f ro m h is r et i r ementacc ountt o payundi s put ed r el ocat i on cos t s . I n 1996, $15, 540 w as w ith d raw n to p aytaxe s an d p en alt ies, as sh o w n in it em (1) o f th e d istri ct co u rt ’s o r d e r , a n d i n 1 9 9 8 , $ 1 3 , 4 0 0 wa s wi th d r a wn t o p a yt a x e s a n d p e n a l t i e s , a s s h o wn in it em (2). R athe r, as e x p lai n ed b elow , M r. O ’T o o le disp u tes th e d istri ct co u rt ’s fai l ur e t o aw ar d l os tearni ngs on thes e amount s , pl us earni ngs on earni ngs , al ong w i th o ther i t em s of co nsequ enti al dam ages.

A . M ovi ng E xpens es and the V al ue of V aca t i on T i m e U s ed t o M ove ( I t em 5) W e affi r m the deni al of M r . O ’ T ool e’ s cl ai m form ovi ng expens es . T he d i s tr i c tc o u r td e n i e d th i s c l a i m b e c a u s e M r . O ’ T o o l e d i d n o th i r e m o v e r s o rp a y a m o v ing fe e to a n yb o d y , an d h e h as p rov ided n o lega l auth o ri tyto justi fyan aw ard fo r th e v alue o f h is ow n labo r. W e al s o aff

i r m the deni al of M r . O ’ T ool e’ s cl ai m fort he val ue of va cat i on t i m e he us ed t o m ove tw i ce be tw een r ent al hous es i n L os A l amos. A l though t he di s tr i ctcourterr oneous l ydeni ed r el i ef be caus e M r . O ’ T ool e no l ongerw or ked for N or thr op G rum m an atthe t i m e he made thes e moves, M r . O ’ T ool e di d not cont end hi s vaca t i on t i m e had a cas h val ue orci t e anyl egal author i tys how i ng he can c l ai m hi s s al aryas the val ue of hi s vaca t i on t i m e.-7-

B . L os tM or t gage I nt er es tD educt i on ( I t em 3) T he di s tr i ctcourtdeni ed M r . O ’ T ool e’ s cl ai m fordamages forthe l ack of a m or t gage i nt er es tdeduct i on on hi s t ax r eturns forthe t i m e betw een J ul y1, 1997, unt i l Sept ember1998. W e r emand t hi s cl ai m forr econs i der at i on. M r. O ’To ole ar gu ed thathe w as ent i t l ed to a l ostm ort gag e i nter est d e d u c tio n b e c a u se N o rth ro p G ru m m a n ’s fa ilu re to p a yh is re lo c a tio n c o sts p r e v e n t e d h i m f

r o m b u y i n g a h o u s e i n L o s Al a mo s b e fo r e S e p t e mb e r1 9 9 8 . He a ss e rte d th a t th e lac k o f a n in ter e st d e d u c tio n ra ise d h is ta x e s, w h ich c a u se d h im t o w i thdr aw funds fr om hi s SI P t o payhi s i ncr eas ed t axes i n 1997 and 1998, and i ncurt axes and pena l t i es on the SI P w i thdr aw al . H e al s o cl ai m s w e di r ect ed that s uch an a w ar d be made, A pl t . O peni ng B r . at12, butw e ac tual l yhel d onl ythat s u c h a c la im w a s n o t fo re c lo s e d a n d th a t th e d is tr ic t c o u rt s h o u ld c o n s id e r i t. O ’To o le II, 113 F. A pp’ x at319 & n. 1. M r . O ’ T ool e pr es ent ed t ax r eturns for 19 96 , 19 98 , and 20 00 i n sup po rtof these cl ai m s. T he di s tr i ctcourtagr eed thatM r . O ’ T ool e “s us t ai ned s om e damage byw ay of havi ng t o paym or e i ncome t ax than he otherw i s e w oul d have pa i d comm enci ng in m id -1 9 9 7 .” A p lt. A p p ., v o l. V a t 9 9 2 . T h e c o u rt c o n c lu d e d , h o w e v e r, th a t it w oul d be “vi r tual l yi m pos s i bl e” t o cal cul at e the l os s due t o nothavi ng a mort gage in te re s t d e d u c tio n . Id. T he courts t at ed thatbeca us e M r . O ’ T ool e di d noti t emi ze-8-

i n 1 99 8 an d d i d n ot pr ov i de a 1 99 7 return, i tw as unclearw hat hi s other d e d u c tio n s w o u ld h a v e b e e n . See i d. M r . O ’ T ool e ar gues thathe pr ovi ded s uffi ci entevi dence t o s uppor tan aw ar d forhi s l os tm or t gage i nt er es tdeduct i on. W e agr ee thi s cl ai m i s not s pecul at i ve, as s um i ng M r . O ’ T ool e s eeks a mi ni m um aw ar d. H e corr ect l ys t at es th a t th e tax sa v in g s o n a m o rtg a g e in ter e st d e d u c tio n a re d e ter m in e d b yh is fede r al and s t at e t ax r at es and the amountof m ort gage i nt er es tcl ai m ed, notbyt he a m o u n t o f

h is o th e r d e d u c tio n s . See A pl t . O peni ng B r . at17- 18. T he evi dence c o u ld su p p o rt a n a w a rd , fo r e x a m p le, a s lo n g a s th e m o rtg a g e in ter e st h e w o u ld have be en abl e t o cl ai m on hi s fede r al t axes exce eded the s t andar d deduct i on, and as l ong as the ca l cul at i on of damages i ncl uded onl ythe amountof an i t emi zed i nt er es tdeduct i on t hatw oul d have e xcee ded the s t andar d deduct i on. M r . O’ To o l e t e s t i fi e d t h a t$ 1 5 0 0 a mo n th wa s a r e a s o n a b l e fi g u r e t o a s s u me w o u ld h a v e g o n e to in ter e st p a ym e n ts, b a se d o n th e re n t h e h a d b e e n p a y in g in L o s A la m o s . See A plt . A pp . , vo l . 1A at16 9-71. H e show ed thatthis i s l ess m o rtg a g e in ter e st th a n h e a c tu a llyp a id in 1 9 9 6 o n h is h o u se in C a lifo rn ia o r p a id i n the y ear2000 on hi s hous e i n L os A l amos. A pl t . O peni ng B r . at18 & n. 77 ( ci t i ng t ax r eturns atA pl t . A pp. , vol . I I at473, 498) . M r . O ’ T ool e’ s pr es ent c a lc u la tio n o f

th e re s u ltin g lo s s d o e s n o t m a tc h h is te s tim o n ya t tr ia l. C ompa re A pl t . O peni ng B r . at18 w ith A p l t . A p p . , v o l . 1 A a t1 6 9 - 7 1 . M o r e i m p o r t a n t l y,-9-

how ever , M r . O ’ T ool e di d nots ubtr actthe amountof the s t andar d deduct i on, w h ich h e c o u ld h a v e c laim e d o n h is ta x e s in a n ye v e n t. F o r th is re a so n , h is c laim e d lo ss is in flate d . N e v e rth e les s, M r. O ’T o o le’ s e v id e n c e b rin g s in to ques t i on the di s tr i ctcourt ’ s fi ndi ng thathi s cl ai m w as “s pecul at i ve” be caus e he did not pr ov e w hat hi s otherd e d u c tio n s w o u ld h a v e b e e n . See A p lt. A p p ., v o l. V at992. T h e d istric t co u rt d e ter m in e d M r. O ’T o o le w o u ld b e e n tit led , at m o st, to damages fora l os tm or t gage i nt er es tdeduct i on fors i x m onths i n 1997 and ni ne m o n th s in 1 9 9 8 . See i d. T he courtdi d nots t at e, how ever , w hetheri tacc ept ed or rejec ted M r. O ’T o o le’ s te stim o n ya s to th e a m o u n t o f in ter e st h e w o u ld h a v e p a id if h e h a d p u rc h a se d a h o u se e a rlier . A c c e p tin g th a t M r. O ’T o o le w o u ld h a v e p a id $ 1 5 0 0 p e r m o n th in in te re s t o n a m o rt g a g e in s te a d o f s p e n d in g it o n re n t, s ee A p lt. A p p ., v o l. 1A a t 1 6 9 -7 1 , h e w o u ld h a v e sp e n t $ 9 0 0 0 in in ter e st o v e r six m o n th s a n d $ 1 2 ,0 0 0 in in ter e st o v e r n in e m o n th s. C o m p a rin g th e se a m o u n ts to th e fe d e ra l s ta n d a rd ta x d e d u c tio n o f $ 7 1 0 0 , s ee A p lt . A p p . v o l. V at 99 2 , M r. O ’ T ool e cl ear l yw oul d have be nefi t t ed fi nanci al l ybyi t emi zi ng deduct i ons bas ed o n m o rtg a g e in ter e st a lo n e fo r six m o n th s in 1 9 9 7 a n d n in e m o n th s in 1 9 9 8 . T h is i s true w i t houtr egar d t o otherdeduct i bl e expe ns es . M r . O ’ T ool e’ s m i ni m um t ax co st can b e c alcu lat ed u sing h is fed era l and stat e tax rates. H o w ev er, M r. O ’ T ool e al s o t es t i fi ed thati f N or thr op G rum m an had t i m el ypai d hi s r el ocat i on-10-

cos t s , he w oul d have boughta more expens i ve hous e than he ul t i m at el ydi d, and he w oul d have putdow n 20% i ns t ead of the 5% he ac tual l yputdow n w hen he b o u g h t h is h o u s e in L o s A la m o s in la te 1 9 9 8 . See A pl t . A pp. , vol . 1A at169- 72; A pl t . O peni ng B r . at9. A hi gherl oan- t o- val ue r at i o m ayhave i ncr eas ed or decr eas ed the amountof i nt er es the w oul d have pa i d, dependi ng on t he cos tof the hous e. B ec au se a m inim u m aw ard is sup p o rt ab le bythe e v iden ce , w e c an n o t affirm th e d istric t co u rt’s d e n ial o n th e b a sis th a t any aw ar d w oul d have be en speculat i ve. W e con cl ud e t hat M r. O ’To ole’ s cl ai m for a l ostm ort gag e i nter est deduct i on s houl d be r econs i der ed, and ther efor e thathi s cl ai m forthe t axes and penal t i es on the SI P w i thdr aw al m ade t o coverthes e t axes s houl d al s o be r econs i der ed. T he di s tr i ctcourthas al r eadydet erm i ned thatt axes and pena l t i es c o n s titu te d 5 1 % o f

S IP w ith d ra w a ls . See A p l t . A p p . , v o l . V a t9 9 0 - 9 1 . We r e ma n d fo rf

u r th e rn e c e s s a r yfa c tfi n d i n g o n th i s c l a i m. C . L os tE arni ngs and LostE arni ngs on E arni ngs ( I t em 8) B ecause M r. O ’To ole w i thd rew m on eyfrom his ret i rem ent accoun t , he lost th e e a rn in g s th a t h is m o n e yw o u ld h a v e a c c u m u late d if it h a d re m a in e d in h is s t ock funds . C ons equent l y , he s eeks l os tearni ngs on hi s s t ock funds fr om the d a te o f th e S IP w ith d ra w a ls in 1 9 9 6 a n d 1 9 9 8 u n til N o rth ro p G ru m m a n p a id undi s put ed r el ocat i on expens es i n J une 2001, and l os tearni ngs on unpai d earni ngs-11-

aft erthatdat e unt i l t he dat e theyar e pai d. T he di s tr i ctcourtcons i der ed w hether to a w a rd lo s t e a rn in g s a s a n ite m o f c o n s e q u e n tia l d a m a g e s a n d d e c lin e d to d o s o . See i d. at995- 97. T he courtdeni ed ea rni ngs bas ed on part i al l yfaul tyr eas oni ng and w i thoutaddr es s i ng al l of M r . O ’ T ool e’ s ar gum ent s . B eca us e w e conc l ude M r . O’ T o o l e i s e n t i t l e d t o a n a wa r d o f l o s te a rn i n g s a n d e a rn i n g s o n e a rn i n g s , we re m a n d th is c laim fo r re c o n sid e ra tio n a s w e ll. T he di s tr i ctcourtdeni ed l os tearni ngs forthr ee r eas ons , al l of them e rr o n e o u s . See id . at995- 97. Fi r s t , the courts ai d M r . O ’ T ool e w i thdr ew m uch m o re m o n e yth a n h e n e e d e d fo r u n p a id re lo c a tio n c o s ts . Id. a t 9 9 6 . M r. O ’T o o le h a s s h o w n , h o w e v e r, th a t th e a m o u n ts h e w ith d re w f ro m th e S IP in 1 9 9 6 a n d in 1 9 9 8 h a d to b e m u c h m o re th a n ju st th e a m o u n t n e e d e d to p a yh is u n p a id r el ocat i on cos t s i n or dert o payt he pena l t i es and t axes on the w i thdr aw n funds , as thi s m or e than doubl ed the t ot al amount he nee ded t o w i thdr aw . I ndeed, the aw ar ds the di s tr i ctcourtm ade r efl ect ed w hatM r . O ’ T ool e w as for ced t o w i thdr aw to p a ytax e s a n d p e n a lti e s o n w ith d ra w a ls, a s w e ll as th e w ith d ra w a ls n e c e ss a ryto p a yu n d is p u te d re lo c a tio n c o s ts . See i d. at989- 991. M r . O ’ T ool e cl ai m ed he ha d t o w i thd raw fun ds t o p ayhis i ncreased t axes be cause h e had no m ort gag e i nter est deduct i on fornear l yt w o y ear s , t o payforthr ee moves w i thi n L os A l amos ( fr om r ent al hous e t o r ent al hous e t o r ent al hous e t o pur chas ed hous e) , and t o coverthe t axes an d p enalt i es on the add i t i on al w i thd raw al s fr om the S IPs.-12-

S e c o n d , t h e d i s tr i c tc o u r ts a i d th e f u n d r e s u l t s s h o we d e a rn i n g s i n s o me y e a rs b u t lo s s e s in o th e rs . Id. at 99 6 . M r. O ’T o o le ha s clea rl ysh o w n , h o w ev er, thatthe courtw as l ooki ng atthe w r ong fund r es ul t s . G rum m an and l at er N o rth ro p G ru m m a n h a d se v e ra l in v e stm e n t f u n d s fo r e m p lo y e e s. M r. O ’T o o le tes tifie d th a t h e k e p t h is m o n e yin tw o f u n d s, th e U .S . E q u ityF u n d a n d th e E q u ity G r ow th ( M agel l an) Fund. A pl t . A pp. , vol . 1A at179. H e poi nt s t o evi dence s how i ng thatthes e tw o funds had pos i t i ve ea rni ngs eac h y earbetw een 1990 a nd 1 9 9 9 . See i d. , vol . I I at518. B as ed on the di s tr i ctcour t ’ s comm ent s aboutl os s es i n the fund, the courtm us thave l ooked atthe r es ul t s foran ent i r el ydi ffe r ent f u n d , the N o rth ro p G ru m m a n F u n d , b e c a u se it i s th e o n lyf u n d th a t h a d lo ss e s in a n yy e a rs u p to 1 9 9 9 . See i d. a t 5 1 9 . T h e d istric t co u rt’s s tate d re a so n is therefore cl earl yerr on eou s. T hi r d, the courts ai d thatM r . O ’ T ool e had no e vi dence of fund r es ul t s aft er 1 9 9 9 , an d th e re w a s n o su p p o rt fo r h is te stim o n yth a t 1 2 % w a s a fa ir ap p rox im ati o n o f e arn ing s. A p lt . A p p . , v o l. V at 99 6 . B u t th e d istri ct co u rt s houl d have t aken j udi ci al not i ce unde rFeder al R ul e of Evi dence 201( b) ( 2) of h ist o ri ca l r eti rem en t fu n d ea rnin g s o n N o rth rop G rum m an ’s w eb sit e, as M r. O ’T o o le req u ested in h is po st- tr ial m em o ran d u m o n d am ag es. A p lt . O p en ing B r. at14- 15; A pl t . A pp. , vol . V at941- 58.-13-

Feder al R ul e of Evi dence 201( b) s t at es : “A j udi ci al l ynot i ced factm us tbe o n e n o ts u bj e c tt o r e a s o n a b l e d i s p u t e i n th a ti ti s e i th e r( 1 ) g e n e r a l l yk n o wn w i thi n the t err i t or i al j ur i s di ct i on of the tr i al courtor( 2) capa bl e of a ccur at e and r eadydet erm i nat i on byr es or tt o s our ces w hos e ac cur acycannotr eas onabl ybe qu est i on ed. ” M r. O ’To ole’ s r equ estfal l s und er ( b)( 2). A s he correct l yassert s, R ul e 201( d) m akes the rul e mandat or yw hen i tappl i es : “A courts hal l t ake jud ici al no ti ce if req u ested b ya p artyan d su p p li ed w ith the n ec essa ry i nform at i on. ” W e r evi ew t he di s tr i ctcour t ’ s deci s i on nott o t ake j udi ci al not i ce fo r a b u s e o f

d is c re tio n . S e e L o za n o v . A sh c ro ft , 2 5 8 F . 3 d 1 1 6 0 , 1 1 6 4 (10 th C ir . 2 0 0 1 ). R ul e 201 “gove r ns onl yj udi ci al not i ce of adj udi cat i ve fa ct s . ” Fed. R . E vi d. 201( a) . “‘ A dj udi cat i ve fa ct s ar e s i m pl ythe fa ct s of the part i cul arcas e. ’ ” Uni t ed Stat es v. Wolny , 133 F. 3d 758, 764 ( 10th C i r . 1998) ( quot i ng advi s orycomm i t t ee not es t o R ul e 201) . M r . O ’ T ool e as ked the di s tr i ctcourtt o t ake j udi ci al not i ce of the ac tual earni ngs hi s t oryon N or thr op G rum m an’ s w ebs i t e and ga ve the co m p let e a d d ress fo r th e p ag e to w h ich N o rth rop G rum m an ’s qu arterl yrep o rt s are l i nked. A pl t . A pp. , vol . V at953 n. 60. T hatpage i s s t i l l found at h ttp ://b e n e fits.n o rth ro p g ru m m a n .co m /sa v in g s/s ip

_ u p d a te/. M r. O ’T o o le cont ended thatthe i nform at i on s houl d notbe s ubj ectt o di s put e byN or thr op-14-

G rum m an bec aus e N or thr op G rum m an cr eat ed i t . T hus , M r . O ’ T ool e addr es s ed all the fac tors relev an t t o the a p p li ca ti o n o f R u le 20 1 (b)(2 ). N o rth rop G rum m an ’s arg u m en ts fo r no t t ak ing jud ici al no ti ce are u n p e rs u a s iv e . It d id n o t e x p la in in th e d is tr ic t c o u rt , s ee A pl t . A pp. , vol . V at 968, and has notexpl ai ned t o us , w hyi t s ow n w ebs i t e’ s pos t i ng of hi s t or i cal r et i r ementfund ea r ni ngs i s unr el i abl e. M or eover , N or thr op G rum m an coul d have ask ed the d istri ct co u rtfo r a h ea ri n g u n d er R u le 20 1 (e), b u t did n o t do so . In sh o rt, N o rth ro p G ru m m a n ’s fa ilu re to d isp u te its o w n in fo rm a tio n , co n trib u tes to its in d is p u ta b ility. See Hennes sy v. P enr i lD atacom m Netw orks , Inc. , 69 F. 3d 1344, 1354 ( 7th C i r . 1995) ( “I n or derfora fa ctt o be j udi ci al l ynot i ced, ind ispu tabili tyis a p rereq u isi te. ”). I ti s notuncomm on forcour t s t o t ake j udi ci al not i ce of fac tual i nform at i on fo u n d o n th e w o rl d w id e w e b . See Ci t y of Monr oe Empl oyee s R et . Sys . v. B ri dg est on e C orp . , 399 F. 3d 651, 655 n. 1 ( 6th C i r . 2005) ( t aki ng j udi ci al not i ce of a t erm defined o n the w ebsi t e of the N at i on al A ssoci at i on of S ecuri t i es D eal ers , In c .); Schaf

f erv. C l i nt on , 240 F. 3d 878, 885 n. 8 ( 10th C i r . 2001) ( t aki ng j udi ci al not i ce of

i nform at i on found i n a pol i t i cal r efe r ence al m anac and ci t i ng t o the a lm a n a c ’s w e b s ite ). C f . G r i m es NavigantC ons ul t i ng, Inc . , 185 F. Supp. 2d 906, 913 ( N . D . I l l . 2002) ( t aki ng j udi ci al not i ce of publ i s hed s t ock pr i ces found on the w or l d w i de w eb) . U nderthe ci r cumst ance s of thi s cas e, w e conc l ude the di s tr i ctB eca us e M r . O ’ T ool e w i l l be made w hol e byt he aw ar d of ea rni ngs and 2 earni ngs on earni ngs , he i s notent i t l ed t o pr ej udgm enti nt er es ton thes e port i ons of hi s j udgm ent . I ndeed, M r . O ’ T ool e onl yas ked forpr ej udgm enti nt er es ti n t he al t ernat i ve t o earni ngs and ea r ni ngs on earni ngs . A pl t . O peni ng B r . at39- 43. -15- courtabus ed i t s di s cr et i on byfai l i ng t o t ake j udi ci al not i ce of the ac tual earni ngs h isto ryp ro v id e d b yN o rth ro p G ru m m a n o n th e in ter n e t as re q u ire d b yR u le 2 0 1 (d). M r. O ’T o o le te stified th a t h e in v e ste d in o n lytw o f u n d s. H e se t o u t h is c a l c u l a t i o n s t o s h o w t h a th e wo u l d h a v e ma d e mo n e y , d e s p i t e l o s s e s i n s o me y ear s , i f hi s m oneyhad r emai ned i n the U . S. E qui tyFund, the one f und i n w hi ch h e w a s in v e s te d th a t is s till o ffe re d b yN o rt h ro p G ru m m a n . See A p lt . O p en ing B r. at 29 (rely ing o n P lai n ti ff E x . 1 1 , p . 5 1 8 an d N o rth rop G rum m an w eb sit e). I t s eems r eas onabl e t o as s um e thatM r . O ’ T ool e w oul d have l efthi s m oneyi nves t ed in th is f u n d a f te r t h e o th e r f

u n d in w h ic h h e w a s in v e s te d w a s d is c o n tin u e d . T hes e s ame cal cul at i ons s uppor tM r . O ’ T ool e’ s as s er t i on that12% m aybe a re a s o n a b le fig u re to u s e a s a v e ra g e g a in fo r a ll ye a rs . See i d. at29- 30. W e r emand t hi s cl ai m s o thatthe di s tr i ctcourtcan de t erm i ne an a w ar d of earni ngs and earni ngs on the unpai d earni ngs . T he courts houl d t ake j udi ci al 2 not i ce of

pr oof of e arni ngs aft er1999 fr om N or thr op G rum m an’ s w ebs i t e, and shou l d co nsi der w hether12 % i s a r easona ble average for al l y ears for l ost-16-

e a rn in g s a n d e a rn in g s o n e a rn in g s a n d w h e th e r M r. O ’T o o le w o u ld h a v e lef t h is m oneyi nves t ed i n thi s fund as he as s er t ed.

D . C l ai m forPr ej udgm entI nt er es ton A w ar d forL os tE qui ty( I t em 4) A s w e h a v e n o ted , the d istric t co u rt a w a rd e d M r. O ’T o o le $ 2 0 0 0 to r e p r e s e n tth e a m o u n to f e q u i ty h e fa i l e d t o a c c ru e b e c a u s e h e w a s u n a b l e t o b u y a hous e fornear l yt w o y ear s aft erhe moved t o L os A l amos. T he courts t at ed that th e lo st e q u itya w a rd w o u ld n o t ca rryp reju d g m e n t in ter e st, b u t d id n o t ex p lain w h yn o t. A p lt. A p p ., v o l. V a t 9 9 3 . M r. O ’T o o le liste d th e lac k o f in ter e st o n h is l os tequi tyaw ar d as an i s s ue on appe al , buthe makes onl ya s um m aryar gum ent fo r i n te re s t o n th is a w a rd o f lo s t p ri n c ip a l/e q u ity. A p lt. O p e n in g B ri e f a t 4 3 , 4 4 . Pr ej udgm enti nt er es ti s compensa t oryi n natur e, r epay i ng the pl ai nt i ff for th e lo s t u s e o f

p ri n c ip a l. R ol

f v. B l yth, E as tm an D i l l on & Co. , 637 F. 2d 77, 87 ( 2d C i r . 1980) . T he di s tr i ctcourtappea r s t o have de t erm i ned i tw as N or thr op G ru m m a n ’s fa u lt th a t M r. O ’T o o le c o u ld n o t b u ya h o u s e e a rl ie r t h a n h e d id , s ee A p lt. A p p ., v o l. V a t 9 9 2 , an d it i s lo st p rin c ip a l th a t th e a w a rd o f lo st e q u ity repr esent s. N orthrop G rum m an co ntends the clai m i s unli qu i dated and i nter est w as ther efor e w i thi n the di s tr i ctcour t ’ s di s cr et i on underN ew Y or k l aw , ci t i ng an u n p u b lis h e d c a s e in s u p p o rt o f its a rg u m e n t. Wi ckham C ontr act i ng C o. v. Local Union No. 3, Int ’lB hd . of Elec. Workers , N o . 7 4 C I V . 3 2 4 8 ( MB M) , 1 9 9 1 WL-17-

8 4 5 9 5 (S .D .N .Y . M a y1 5 , 1 9 9 1 ), a ff’d , 9 5 5 F . 2 d 8 3 1 (2d C ir . 1 9 9 2 ). E v en w ere w e to c o n sid e r th e c a se , h o w e v e r, N o rth ro p G ru m m a n a d m its th a t th e d e c isio n to aw ar d ordenyi nt er es ts houl d be “gui ded by‘ fundament al cons i der at i ons of fai rnes s . ’ ” Id. at*1 ( quot i ng R o lf , 6 3 7 F . 2 d at 87 ). B ec au se th e d istri ct co u rt g a v e n o e x p lan a tio n fo r d e n y in g p reju d g m e n t in ter e st, it i s d ifficu lt t o re v iew its e x e rc is e o f

d is c re tio n . See Fo m a n v . D a v is , 3 7 1 U .S . 1 7 8 , 1 8 2 (1 9 6 2 ); ARW Explorat i on C orp. v. A gu i rre , 4 5 F . 3 d 1 4 5 5 , 1 4 5 9 (10 th C ir . 1 9 9 5 ). M r . O ’ T ool e ar gues i n hi s r epl ybr i ef thatthi s cl ai m w as l i qui dat ed, ci t i ng E x h ib it 1 5 , a m o rtg a g e p a ym e n t su m m a ryfo r 2 0 0 3 fo r M r. O ’T o o le’ s h o u se in L os A l amos. A pl t . R epl yB r . at20 ( ci t i ng A pl t . A pp. , vol . I I at520- 26) . T he d is tr ic t c o u rt e x p re s s ly re lie d o n E x h ib it 1 5 , s ee A p lt. A p p ., v o l. V a t 9 9 3 , an d it th e re fo re a p p e a rs th e c o u rt u se d M r. O ’T o o le’ s a c tu a l m o rtg a g e p a ym e n ts to appr oxi m at e the amountof m oneyhe w oul d have pa i d t o pr i nci pal i f he ha d b o u g h t a h o u s e e a rl ie r. T h e d is tr ic t c o u rt ’s fin d in g s w e re n o t e x p lic it, h o w e v e r. See i d. W e ther efor e r emand t hi s cl ai m forfur therel abor at i on. E . G r os s - up ( I t em 11) “G r os s - up” i s the name gi ven t o an i ncr eas e i n the damage aw ar d t o offs et the t axes thatw i l l be pay abl e on the aw ar d. T he di s tr i ctcourts um m ar i l ydeni ed gr os s - up on M r . O ’ T ool e’ s r emai ni ng cons equent i al damages cl ai m s beca us e he t es t i fi ed thathe w as notent i t l ed t o gr os s - up on cons equent i al damages . T he-18-

di s tr i ctcourt ’ s deci s i on appea r s t o s t em from a m i s under s t andi ng or m i s char act er i zat i on of M r . O ’ T ool e’ s tr i al t es t i m onyr egar di ng w hetherhe b e liev e d h e w a s e n tit led to g ro ss -u p o n c o n se q u e n tial d a m a g e s. A p lt. A p p ., v o l. V at 99 7 (cit ing A p lt . A p p . , v o l. 1 A at 31 9 ). T he ques t i oni ng attr i al appea r s t o have be en ai m ed atm aki ng a di s t i nct i on betw een r el ocat i on expens es ( di r ectdamages ) , w hi ch w er e ent i t l ed t o gr os s - up underthe contr act , and cons equent i al damages , forw hi ch gr os s - up w as not s peci fi cal l ym ent i oned byei thercontr act . T he di s tr i ctcour tdi d notr el yon s uch a d istin c tio n , h o w e v e r. Its re a so n fo r d e n y in g g ro ss -u p re su lted f ro m a fa ilu re to careful l yrevi ew M r. O ’To ole’ s t est i m on yand w as therefore cl earl yerr on eou s. M r. O ’T o o le stresse s tw o p o ints on ap p ea l: (1) c o n seq u en ti al da m ag es a re t axabl e; and ( 2) t hi s courthas al r eadyhel d thatN ew Y or k l aw r equi r es he be put back i n the s ame economi c pos i t i on as he w oul d have be en i n i f N or thr op G rum m an had notbr eac hed the contr act . A pl t . O peni ng B r . at36- 38 ( ci t i ng O ’ Tool e I, 3 0 5 F .3 d a t 1 2 2 6 ). F o r th e se re a so n s, M r. O ’T o o le c o n ten d s h is c o n se q u e n tial d a m a g e s m u st b e g ro ss e d -u p so th a t h is m o v e to L o s A lam o s w ill be made fi nanci al l yneutr al t o hi m , and hi s ar gum enthas s om e for ce. N o rth ro p G ru m m a n c o n ten d s th e d istric t co u rt d id n o t er r in its re f u sa l to g ro ss -u p th e c o n se q u e n tial d a m a g e s. N o rth ro p G ru m m a n in iti a llyc o n c e d e d in its br i ef thatM r . O ’ T ool e w as cover ed byG rum m an’ s fi el d as s i gnm entpol i cy , not-19-

N o rth ro p G ru m m a n ’s r e lo c a tio n p o licy . A p le. B r. at 1 -2 (c iti n g A p lt. A p p ., v o l. I I I at695) . T heor et i cal l y , the G rum m an pol i cypr ovi des forgr os s - up on cons equent i al damages i n thati tw as G rum m an’ s pol i cyt o m ake r el ocat i ons fi nanci al l yneutr al t o empl oy ees . A pl t . A pp. , vol . I at35- 36; vol . I I I at698 (“ [ T ]h e se p o licie s a re in ten d e d to a ss u re th a t all . . . p e rso n n e l re c e iv e e q u itab le c o m p e n s a tio n fo r e x p e n s e s in c id e n t to , o r i n c u rr e d o n , a F ie ld A s s ig n m e n t.” ). N or thr op G rum m an l at erar gues thati t s ow n r el ocat i on pol i cypr ovi ded for gr os s - up on di r ectdamages , butnotforgr os s - up on cons equent i al damages and th e re fo re , M r. O ’T o o le is n o t e n title d to g ro s s -u p o n c o n s e q u e n tia l d a m a g e s . Ap l e . Br . a t2 7 - 2 8 . Bu tNo r th r o p Gru mm a n ’ s a r g u me n tb a s e d o n i t s o wn r el ocat i on pol i cycontr adi ct s i t s ear l i erconce s s i on thatM r . O ’ T ool e w as cover ed b yth e G ru m m a n p o lic y , s ee i d. at1- 2 ( ci t i ng A pl t . A pp. , vol . I I I at695) , as does its c o n c e s s io n a t tr ia l th a t s u c h w a s th e c a s e . See A pl t . A pp. , vol . I B at377- 78. N or thr op G rum m an poi nt s outthatcour t s gener al l ydo noti ncr eas e damage a w a rd s to o ffs e t th e e ffe c t o f ta x e s . See Medcom Holdi ng C o. v. B axt erTrav enol Labs. , Inc. , 106 F. 3d 1388, 1404 ( 7th C i r . 1997) . B uti tadmi t s thatcourt s do gross- up dam age aw ards “w hen a t axab l e aw ard com pen sat es a pl ai nti ff fo r l ost m oni es thatw oul d nothave be en t axabl e. ” Hom e Sav. of A m . v. Uni t ed Stat es , 399 F. 3d 1341, 1356 ( Fed. C i r . 2005) . N or thr op G rum m an fa i l s t o go thr ough t he di s tr i ctcourt ’ s damage aw ar ds t o s how how thes e pr i nci pl es appl yt o the fa ct s ofT o the ext entthatM r . O ’ T ool e s eeks cos t s i n thi s m at t er , he s houl d fi l e an 3 appr opr i at e mot i on underFed. R . A pp. P. 39. -20- this case , an d w e a re u n ab le t o m ak e this d eterm ination . T h is i ssu e is th ere fo re r emanded forr econs i der at i on i n or derthatthe part i es can e xpl ai n t o the di s tr i ct courtw hetherM r . O ’ T ool e’ s damage aw ar ds ar e t axabl e and w hethertheyr epl ace m oni es thatw oul d nothave be en t axabl e. G i ven thatM r . O ’ T ool e w as aw ar ded both earni ngs and ea r ni ngs on earni ngs , as w el l as r ei m bur s ementforfunds w i thdr aw n fr om hi s r et i r ementacc ountt o payt axes and pena l t i es on funds w i thdr aw n t o payundi s put ed r el ocat i on cos t s , ther e mayw el l be s om e s i gni fi cant par s i ng outr egar di ng w hats houl d and s houl d notbe gr os s ed up. T he pr i nci pl es se t fo rth in Med- C om and Hom e Savi ngs of A m er i ca s houl d gui de the di s tr i ct court ’ s det erm i nat i ons r egar di ng s ame.

IV CO NC L US I ON T he judgm ent of the d i stri ctcou rti s AFF I RM ED in p a rt , REVERSED in part , and REM AND ED fo rf u r th e rp r o c e e d i n g s c o n s i s t e n twi th t h i s d e c i s i o n . On 3 r emand, the di s tr i ctcourts houl d m ake s peci fi c and de t ai l ed fi ndi ngs r egar di ng the mat t er s l eftopen byouropi ni on.