New Jersey’s Appellate Division recently affi rmed the trial court’s rulings on the plaintiff’s expert damages testimony in a case involving breach of an international distribution agreement. In Andes Trading De Mexico, S.A. de C.V. v. Church & Dwight Co. (March 12, 2007), the appeals court had to review the testimony of plaintiff’s experts in support of its calculation of lost profi ts damages from the defendant’s breach of a fi ve-year exclusive distribution agreement covering defendant’s consumer products in Mexico. Defendant terminated that agreement only six months after it was entered when defendant acquired another consumer products company that had a pre-existing Mexican distributor. A jury found defendant liable for breach of the agreement and awarded $15,000,000 in damages.

Defendant moved to set aside the damage award, claiming that the jury had been improperly tainted by the plaintiff’s expert testimony and by plaintiff’s lawyer’s argument during summation. Two experts had testifi ed for the plaintiff. Andrew Safi r testifi ed to relevant market conditions in Mexico, opining that the average seller of “branded” consumer products could reasonably expect to capture 5% of the Mexican retail market. Under this assumption, Safi r testifi ed that defendant’s potential retail sales during the contract period would have been approximately $500,000,000. Despite defendant’s objections that Safi r’s testimony was irrelevant, speculative and prejudicial, the court allowed the testimony as background to help the jury assess the credibility of plaintiff’s other damages expert, Walter Bratic.

Bratic had testifi ed to a much smaller retail market share of defendant’s products (0.36%), and had calculated that plaintiff’s total retail sales during the contract period would have been $37,000,000. Bratic’s opinion translated into lost profi ts of $9,800,000. In summation, plaintiff’s lawyer introduced a chart that extrapolated Bratic’s lost profi ts damage fi gure, assuming the greater market share that Safi r had estimated, and invited the jury to “do the arithmetic” in calculating an appropriate damage award. The trial court denied defendant’s motions to set aside the judgment for a new trial but it reduced the verdict to $9,800,000.

On appeal, the Appellate Division rejected most of defendant’s challenges to the plaintiff’s expert testimony. The appeals court noted that the trial judge had wide latitude in allowing expert testimony and that her decisions could not be disturbed absent a clear abuse of discretion. The Appellate Division stated that given the short pre-termination history of plaintiff’s operations under the fi ve-year distribution agreement, the trial court properly allowed Safi r’s testimony to assist the jury in evaluating Bratic’s later projection about defendant’s market penetration. The appeals court also rejected the arguments that Safi r’s testimony had improperly bolstered Bratic’s opinion, had misled the jury, was too speculative and was unduly prejudicial. Rebuffi ng defendant’s challenges to Bratic’s testimony as well, the appellate court noted that defendant’s own expert had accepted the same premises that defendant now claimed were unsupported.

The Appellate Division, however, did fi nd error in the trial court’s refusal to issue a curative instruction to the jury about counsel’s damages chart and his argument in summation. The court noted that Bratic did not support any damages that would have resulted from a higher market share, and that there was no support in the record for counsel’s assertion that lost profi ts would increase in direct proportion to greater market share. Even though it found that the trial court’s error could have produced an unjust result, the Appellate Division concluded that the trial court had rectifi ed the problem by remitting the verdict to $9,800,000, the maximum amount of damages supported by Bratic’s testimony