Points to remember from California law when recovering lost profits. The plaintiff must prove it is reasonably certain it would have earned profit but for the defendant’s conduct.
To decide the amount of damages for lost profits, one must determine the gross amount the plaintiff would have received but for the defendant’s conduct and then subtract from that amount the expenses [including the value of the [specify categories of evidence, such as labor/ materials/rents/all expenses/interest of the capital employed] the plaintiff would have had if the defendant’s conduct had not occurred.
In business cases, damages are based on net profits as opposed to gross revenue.
Damages for the loss of prospective profit are recoverable where the evidence makes reasonably certain their occurrence and extent. Such damages must ‘be proven to be certain both as to their occurrence and their extent, albeit not with ‘mathematical precision.
It is for the jury to determine the probabilities as to whether damages are reasonably certain to occur in any particular case.
It is enough to demonstrate a reasonable probability that profit would have been earned except for the defendant’s conduct. The plaintiff has the burden to produce the best evidence available in the circumstances to attempt to establish a claim for loss of profits.
Historical data, such as past business volume, supply an acceptable basis or ascertaining lost future profits [Citations.] In some instances, lost profit may be recovered where the plaintiff introduces evidence of the profit lost by similar businesses operating under similar conditions.
Where the operation of an established business is prevented or interrupted, as by a . . . breach of contract . . . , damages for the loss of prospective profit that otherwise might have been made from its operation are generally recoverable for the reason that their occurrence and extent may be ascertained with reasonable certainty from the past volume of business and other provable data relevant to the probable future sales.
On the other hand, where the operation of an unestablished business is prevented or interrupted, damages for prospective profit that might otherwise have been made from its operation are not recoverable for the reason that their occurrence is uncertain, contingent and speculative. Although generally objectionable for the reason that their estimation is conjectural and speculative, anticipated profit dependent upon future events are allowed where their nature and occurrence can be shown by evidence of reasonable reliability.
If the business is . . . new . . . or . . . speculative . . . , damages may be established with reasonable certainty with the aid of expert testimony, economic and financial data, market surveys and analyses, business records of similar enterprises, and the like.
In some instances, lost profit may be recovered where the plaintiff introduces evidence of the profit lost by similar businesses operating under similar conditions. In either case, recovery is limited to net profits.