MIAMI BUSINESS LITIGATION: CALCULATING LOST PROFIT DAMAGES

A common type of damage in business litigation is lost profits. Lost profits can be used in breach of contract cases and other business torts like tortious interference. See, e.g., Marbella Park Homeowners Ass’n, Inc. v. My Lawn Service, Inc.,12 So. 3d 807 (Fla. 3d DC 2009) (stating the measure of damages for breach of services contract is lost profits); Ins. Field Servs., Inc. v. White & White Inspection & Audit Serv., Inc., 384 So. 2d 303 (Fla. 5th DCA 1980) (“Here, there is no question but that the tortious interference of appellants was the direct cause of appellee’s lost profits . . . .”). Some courts even allow a plaintiff to recover lost profits damages under the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”). See Glob. Tech Led, LLC v. Hilumz Int’l Corp., 2017 WL 588669 (M.D. Fla. Feb. 14, 2017) (holding past lost profit damages recoverable in FDUTPA claim between two competing businesses). Proving up and calculating lost profits damages can be difficult in litigation. Generally, there are two methods for calculating lost profits: the before and after method and the yardstick method. Devon Medical, Inc. v. Ryvmed Medical, Inc., 60 So. 3d 1125 (Fla. 4th DCA 2011). A recent magistrate judge report from U.S. District Court for the Middle District of Florida, in Nuvasive v. Absolute Medical, LLC, Case No. 6:17-cv-02206 (M.D. Fla., Jan. 17, 2025), relied on the before and after method to award more than $19 million in lost profit damages to a plaintiff. The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

In Nuvasive, a spine hardware and biologics company entered a contract with a sales company. The sales company was a single member LLC, meaning that it was wholly owned and operated by one person. The sales company agreed to sell the plaintiff’s products to surgeons and hospitals in twelve counties. The contract prohibited the sales company from competing against the plaintiff during the period the contract was in effect and for one year thereafter. However, the owner of the sales company helped a family member start a competing company that sold products to the same surgeons as the plaintiff. Those surgeons stopped purchasing products from the plaintiff and the plaintiff lost revenues as a result.   

The plaintiff sued the sales company for breach of contract, tortious interference and violation of FDUTPA and sought lost profit damages. The court conducted an evidentiary hearing on the lost profit damages matter and the plaintiff presented expert testimony using the before and after method for calculating lost profits. The plaintiff’s expert first calculated the amount of profit that the plaintiff historically earned from each of the surgeons before the defendants’ breached and tortious conduct. The expert then used the historical information to calculate how much the plaintiff would have generated from the surgeons but for the sales company’s wrongful conduct by applying certain financial and accounting methodologies. This calculation enabled the export to conclude that the plaintiff’s lost profit damages were $13 million. The magistrate adopted the expert’s conclusion and granted the plaintiff a corresponding lost profit damage award.

Lost profit damages calculations are not easy to prove because they cannot be too speculative. Nebula Glass Intern., Inc. v. Reichhold, Inc., 454 F.3d 1203 (11th Cir. 2006) (“It is settled under Florida law that lost profit damages, like all damages, cannot be speculative and must be proved with reasonable certainty.”). Establishing such damages requires careful attention to specific case facts and often requires a damages expert working in conjunction with the lawyers to determine the calculations.

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.