Opinion ID: 729764
Heading Depth: 3
Heading Rank: 1

Heading: The Domestic Programs Library

Text: 42 On a common law fraud claim, Illinois law permits Medcom to be placed in the same financial position it would have been in had the misrepresentation been true. Brown v. Broadway Perryville Lumber Co., 508 N.E.2d 1170, 1176 (Ill. App. Ct. 1987). To prove damages for the domestic programs library, MHC had to establish the amount of lost profits from the obsolete programs that Baxter had represented as current programs. MHC relied on the testimony of its expert, litigation economist Dr. Steven Schwartz, to establish and to calculate damages. Dr. Schwartz testified that because MHC received fewer current programs than Baxter promised, MHC suffered approximately $6,305,000 in lost profits. At trial, Baxter disputed Dr. Schwartz's conclusion that Medcom possessed only 554 current domestic programs in 1986 and claimed that Dr. Schwartz's method of calculating damages was flawed. 43 The district court found that the jury was entitled to accept Dr. Schwartz's assumption that only 554 programs were current in 1986. The court found, however, that the evidence did not afford the jury an opportunity to adjust the damages downward. The district court's reasoning is perplexing. Dr. Schwartz based his calculation of lost profits on the assumption that all noncurrent programs could achieve the same sales average as the average current program. His analysis was based upon the company's actual 1989 sales. The district court found this problematic because a Medcom employee testified that in 1989, Medcom marketed only the 500 best selling programs. Thus, the district court stated that Schwartz's thesis that every noncurrent program could be a 'best seller' was unsupported by the evidence. (MEMORANDUM OPINION AND ORDER, 6/29/90, 1990 WL 104039 at  12.) Baxter's expert criticized Schwartz's opinion regarding the number of current programs and the potential sales of noncurrent programs without offering an alternative projection. The district court therefore concluded that the evidence afforded the jury no basis to adjust the amount of damages downward. Consequently, the $3,500,000 award for the domestic library must be set aside. Id. at  13. 44 First, we agree with MHC that the district court has mischaracterized Dr. Schwartz's testimony. The district court's characterization would be apt if Dr. Schwartz used the average sales figure for the top ten or 100 current programs out of the total number of approximately 500 current programs. But he did not. Dr. Schwartz based his calculations on the assumption that the noncurrent programs, had they actually been current as Baxter had represented, would have sold as well as the average current program that Medcom actually sold. Dr. Schwartz testified that there were approximately 500 current programs. The fact that these current programs sold better than the approximately 1000 noncurrent programs is not surprising. It does not, however, change the fact that Dr. Schwartz used the average sales figure for the current programs. This rationale is plainly reasonable and does not support the district court's conclusion that Dr. Schwartz assumed that every noncurrent program could be a best seller. 45 Apart from our concern with the district court's characterization of the testimony, we must conclude that the district court erred in vacating the jury's award. The court's decision was based on its assumption that the jury was not capable of adjusting the amount of damages downward: 46 Schwartz's calculations were based on the palpably errant notion that each noncurrent program could achieve exceptional sales. Schwartz's calculations do not lend themselves to easy adjustment. Medcom failed to offer any analysis based upon reasonable sales expectations, and the jury cannot be expected to appropriately revise Schwartz's model. 47 Id. (emphasis added). 48 We disagree. The court underestimated the jury's abilities. Dr. Schwartz was the subject of lengthy cross-examination. In addition, Baxter's responsive expert discussed Dr. Schwartz's analysis at length. The jury had the information it needed to decide whether Dr. Schwartz's analysis was flawed. Thus, the jury could reasonably adjust the analysis to reflect the percentage of programs that were proven to be noncurrent and to reflect the appropriate amount of lost profits from each noncurrent program. 49 The jury must bring in a verdict within the range of the valuation testimony presented. 50 . . . . Where experts differ on the amount of damages there is no rule of law requiring that a jury agree with one or the other or that its award be capable of precise determination. Furthermore, a jury may reduce an expert's damage calculations without invalidating the verdict. 51 F.L. Walz, Inc., 586 N.E.2d at 1319 (citations omitted). Moreover, under Illinois law, it is not necessary to prove lost profits with absolute certainty; it is permissible to establish criteria by which the probable profits can be estimated with reasonable certainty. Havoco of America, Ltd. v. Sumitomo Corp. of America, 971 F.2d 1332, 1345 (7th Cir. 1992) (quoting Midland Hotel Corp. v. Reuben H. Donnelley Corp., 515 N.E.2d 61, 66 (Ill. 1987)). 52 We emphasize that the calculation and assessment of damages are questions of fact reserved for the jury. F.L. Walz, Inc., 586 N.E.2d at 1319. Expert testimony may begin the inquiry into damages because it will assist the trier of fact to understand the evidence or to determine a fact in issue . . . . Fed. R. Evid. 702. Expert testimony, however, cannot end the inquiry. The jury must determine the facts in issue. The rules of evidence recognize that an expert on the stand may give a dissertation or exposition of scientific or other principles relevant to the case but it is the trier of fact who appl[ies] them to the facts. Fed. R. Evid. 702, advisory committee notes. 53 The district court did not apply Illinois law when it determined that the jury was not capable of reducing MHC's expert's damages calculations. When reviewed against the appropriate standard, the verdict is not against the weight of the evidence. The jury reduced the damages award, as it was free to do.