Opinion ID: 396160
Heading Depth: 2
Heading Rank: 2

Heading: Lost Profits on Future Sales.

Text: 38 We note at the outset that Upjohn was clearly entitled to seek damages for lost profits from future sales of nitrofurantoin. The question in this case is whether the evidence was sufficient to submit the claim for anticipated lost profits to the jury. 39 Upjohn's proof of lost profits was illustrated by the following chart. 8 40 Most of the information contained in the exhibit was derived from a New Product Proposal prepared by Upjohn in 1971 in anticipation of entering the nitrofurantoin market. The proposal was prepared by Paul Riggs, Manager of the Mass Marketing Department within Upjohn's Domestic Pharmaceutical Marketing Division. The District Court gave the following description of the proposal, based on Riggs' testimony at trial: 41 This was a study analyzing with some depth the state of the overall market for the particular drug under consideration, the economic environment in which the drug had to be marketed, production and/or product costs, promotional expenses, profitability potential, and other factors deemed significant in assessing the prospects for successful marketing of the proposed product. The statistics contained in the new product proposal were derived from various surveys and projections prepared by trained personnel at Upjohn. These projections covered a five-year period, and were periodically revised to reflect unanticipated changes in the market picture. New product proposals were the basis for Upjohn's decisions to market new drugs, and millions of dollars were invested in accordance with the projections. 42 Rachelle contends on appeal that Riggs was unable to cite sufficient factual data at trial to support the sales forecasts contained in the New Product Proposal. It further asserts that there is no factual basis for the profit projections based on those forecasts. Finally, it claims that Upjohn failed to prove that it deducted all of its expenses from lost sales or that the expenses not deducted were not saved. 43 The trial court found that Upjohn's proof was clearly sufficient under Fera v. Village Plaza, Inc., 396 Mich. 639, 242 N.W.2d 372 (1976), to warrant the submission of the lost profits claim to the jury. We agree. 44 The plaintiffs in Fera were lessees of space in the defendant's proposed shopping center. By the time the space was ready for occupancy, the defendant had lost the lease and rented the space to other tenants. Plaintiffs brought an action seeking anticipated lost profits from their planned business venture and obtained a jury verdict for $200,000. The Michigan Court of Appeals reversed, holding that the trial court erroneously permitted the recovery of lost profits. The Michigan Supreme Court again reversed and reinstated the original judgment. It adopted the theory that a new business could recover damages for lost profits from the breach of a lease. Addressing the argument that the proof of lost profits was entirely speculative, the court quoted approvingly from the opinion of the trial court. The trial judge noted that there were days and days of testimony from experts on each side on the issue of lost profits, and that the jury's award was well within the range of proofs. The Michigan Supreme Court concluded the proof was sufficient to warrant submission of the issue to the jury. In describing the scope of appellate review in examining jury awards for lost profits under Michigan law, the court stated: 45 As (the trial court) observed, the jury was instructed on the law concerning speculative damages. The case was thoroughly tried by all the parties. Apparently, the jury believed the plaintiffs. That is its prerogative. 46 The testimony presented during the trial was conflicting. The weaknesses of plaintiffs' specially prepared budget were thoroughly explored on cross-examination. Defendants' witnesses testified concerning the likelihood that plaintiffs would not have made profits if the contract had been performed. There was conflicting testimony concerning the availability of a liquor license. All this was spread before the jury. 47 The trial judge, who also listened to all of the conflicting testimony, denied defendants' motion for a new trial, finding that the verdict was justified by the evidence. We find no abuse of discretion in that decision. Sloan v. Kramer-Orloff Co., 371 Mich. 403, 124 N.W.2d 255 (1963). 'The trial court has a large amount of discretion in determining whether to submit the question of profits to the jury; and when it is so submitted, the jury will also have a large amount of discretion in determining the amount of its verdict.' 5 Corbin on Contracts, § 1022, pp. 145-146. 48 While we might have found plaintiffs' proofs lacking had we been members of the jury, that is not the standard of review we employ. 'As a reviewing court we will not invade the fact-finding of the jury or remand for entry of judgment unless the factual record is so clear that reasonable minds may not disagree.' Hall v. Detroit, 383 Mich. 571, 574; 177 N.W.2d 161 (1970). This is not the situation here. 49 396 Mich. at 647-48, 242 N.W.2d 375-76. See also The Vogue v. Shopping Centers, Inc., 402 Mich. 546, 266 N.W.2d 148 (1978), on remand, 86 Mich.App. 110, 272 N.W.2d 205 (1978). 50 The amount of Upjohn's lost profits could not have been established with absolute certainty. There is inevitably an element of uncertainty in determining the future profitability of an enterprise which only existed briefly. Our role is to determine whether reasonable minds could disagree as to the adequacy of the proof of Upjohn's lost profits. The Vogue v. Shopping Centers, Inc., supra, 266 N.W.2d at 151. 51 We agree with the District Court's assessment of the lost profits evidence. Upjohn's proof was based on marketing forecasts prepared well before litigation was anticipated, by employees specializing in economic forecasting. Riggs had clearly qualified as an expert by reason of his marketing and strategic planning experience. The accuracy of the projections was extensively litigated, and Rachelle presented its own proof concerning the proper calculation of lost profits. The trial court instructed the jury that the law does not permit pure guesswork or speculation as to damages. As for the expenses saved by the breach, the jury was instructed that Upjohn had the burden of proving that it has deducted its costs from the sales forecasts to arrive at projected profit or to prove that it could not have saved any of the costs. Finally, the jury's award was well within the range established by the evidence. This indicates, as the trial court pointed out, that the jury made its own assessment of the weight of the evidence. 52 The Fera and The Vogue decisions of the Michigan courts require us to give considerable weight to the opinion of a trial judge who finds that a verdict for lost profits was justified by the evidence. We find the District Court's decision in this matter to be amply supported by the facts in the record. 53