Opinion ID: 1043281
Heading Depth: 3
Heading Rank: 2

Heading: Reasonable Forecast

Text: Ejaz has produced no record evidence suggesting that $50,000 per sale was grossly disproportionate to or an unreasonable forecast of the actual damages Bose would have expected. Instead, he claims that the structure of the clause itself, providing $50,000 in damages for every breach, without limit, shows that the forecast is unreasonable. But a hypothetical larger range, separated from the actual facts and the amount sought, does not make a clause unreasonable. Rather, courts examine for reasonableness the amount of liquidated damages actually sought. See Space Master Int'l, Inc. v. City of Worcester, 940 F.2d 16, 1617, 20 (1st Cir. 1991) (denying summary judgment motion of defendant seeking to avoid liquidated damages clause even though clause provided for per-day late fees without limit); Perfect Solutions, Inc. v. Jereod, Inc., 974 F. Supp. 77, 85 (D. Mass. 1997) (denying summary judgment motion of defendant seeking to -15- avoid liquidated damages clause even though clause provided for per-violation damages without limit).6 The Restatement also adopts this position, analyzing liquidated damages as they are actually imposed rather than in hypotheticals. See Restatement (2d) of Contracts § 356 cmt. b, illus. 3 (contemplating valid enforcement of liquidated damages clause providing for per-day late fees even though fees were unlimited, where ten days of fees are sought). Bose articulated a series of harms showing that the liquidated damages clause is reasonable in this case. 6 Courts in other jurisdictions have followed the same approach. See, e.g., ProTherapy Assocs., LLC v. AFS of Bastian, Inc., 782 F. Supp. 2d 206, 218-19 (W.D. Va. 2011) (allowing enforcement of liquidated damages provision granting uncapped damages of $10,000 per breach across fifty-seven breaches); Elexco Land Servs., Inc. v. Hennig, No. 11-CV-00214, 2011 WL 9368970, at  (W.D.N.Y. Dec. 28, 2011) (reserving decision of whether liquidated damages clause providing $25,000 per breach is enforceable until plaintiff actually sought damages under the clause); Mattingly Bridge Co. v. Holloway & Son Constr. Co., 694 S.W.2d 702, 704 (Ky. 1985) (allowing enforcement of liquidated damages provision granting $750 damages per day late without limit but reducing recovery from unreasonable 193-day penalty to reasonable 32 and 2/3-day damages); Bd. of Cnty. Comm'rs of Adams Cnty. v. City & Cnty. of Denver, 40 P.3d 25, 32 (Colo. App. 2001) (If a contract stipulates a single liquidated damage amount for several possible breaches, the damage provision is invalid as a penalty if it is unreasonably disproportionate to the expected loss on the very breach that did occur and was sued upon.); Anonymous v. Anonymous, 649 N.Y.S.2d 665, 666-67 (N.Y. App. Div. 1996) (liquidated damages provision allowing $500,000 per breach of confidentiality agreement not, in and of itself, unenforceable as against public policy); cf. Rex Trailer Co. v. United States, 350 U.S. 148, 151-152 (1956) (uncapped statutory penalty of $2000 per violation enforceable as liquidated damages rather than criminal sanction for case of five violations). -16- Specifically, Bose identified as its potential harms: loss of revenue from each sale (Bose's retail price for each unit was approximately $6500 (Australian)); harm to Bose's brand name; downstream effects of harm to the brand name, such as interrupting Bose's distribution chain and discouraging purchases by third parties; enforcement costs due to the possibility that Ejaz could, perhaps successfully, evade legal process, thereby increasing Bose's costs (Ejaz had explicitly told Bose's lawyers that he will run away from the country if they come after me for any money); and the possibility that Bose would not be able to prove all of Ejaz's sales in court (in this very case, Bose relies on proof of seven violations but asserts that there may have been many more). The absence of affirmative proof of unreasonableness is fatal to Ejaz's argument because he bears the burden of proof. See NPS, 886 N.E.2d at 673. Since Ejaz has not introduced any evidence to rebut Bose and show that $50,000 for each of seven violations was an unreasonable forecast, he remains bound by the liquidated damages clause. See Reed v. Zipcar, Inc., No. 12-2048, 2013 WL 3744090, at  (1st Cir. July 17, 2013) (Reed's complaint contains no allegations as to what a reasonable estimate of damages would be. This is sufficient to defeat [Reed's] claim . . . .).