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Commercial Damages Expert Report: Alaska Rent-A-Car vs. Avis Budget Group, Federal District Court

A trial in federal court featured testimony by Anderson Economic Group experts, which was strongly contested by an opposing expert. At the conclusion of the trial the jury agreed completely with the damages estimated by the AEG expert. The trial illustrates the importance of a well-prepared expert report that contains data and methodology to support a conclusion.

The expert report was prepared by Patrick L. Anderson, Principal and CEO, East Lansing and Ilhan K. Geckil, Senior Consultant, Chicago.

The case involved the breach of a franchise agreement by a national rent-a-car franchisor. The agreement prevented the use of the Avis “sales, marketing, & reservation operations and personnel” to aid a competing franchise. The Court had previously ruled that Cendant (now Avis-Budget Group) had breached this agreement after purchasing the bankrupt Budget franchisor in 2002 and integrating it with the Avis sales and reservation system. The primary issue for the jury was the amount of damages.

Plaintiffs presented evidence from the franchisee (including the founder of the firm), which had operated in Alaska since before statehood, that the franchisee had lost sales to Budget after the breach occurred.

The plaintiffs also presented Patrick L. Anderson as the expert on damages. The Anderson Economic Group report estimated the franchisee had lost $15.787 million due to the breach, and cited extensive industry data to support his estimate.  Anderson further stated that it was impossible to prove with mathematical precision what would have occurred if the contract had not been breached.

Anderson also testified at length on the data and methodology used to estimate damages, and cited professional standards as well as published authorities.

Defendants presented multiple executives, including Avis-Budget Group’s CEO, who testified the breach caused no harm. They also presented an opposing expert (a Ph.D. economist) who testified that the actual damages were zero.

The jury, presented with both competing explanations of what had occurred, and competing damage estimates of $15.787 million and $0, were instructed to return a verdict of damages. After closing arguments, the jury deliberated for 2½ hours, and returned a verdict of $16 million.