Chapter 4 - § 4.5 • TESTIMONY OF AN EXPERT REGARDING LOST PROFITS

• Jurisdiction: Colorado

§ 4.5 • TESTIMONY OF AN EXPERT REGARDING LOST PROFITS

§ 4.5.1—Introduction

It is common in breach of contract or business tort cases to call an expert, such as an accountant, business advisor, banker, or broker, to testify about the lost profits that the plaintiff expected to make but for the actions of the defendant. Some cases are relatively noncontroversial in the area of damages — even if tried before a jury. This is particularly so in cases involving established businesses where there are well-established profit figures. In these cases, the plaintiff alone may introduce evidence of the expected profit fromn a transaction, or the plaintiff's representative, such as an office manager or internal accountant, may testify as to the usual and expected profit regarding a transaction. See, e.g., Carder, Inc. v. Cash, 97 P.3d 174, 185 (Colo. App. 2003), overruled on other grounds by Mason v. Farm Credit of S. Colo., 419 P.3d 975, 981-83 (Colo. 2018) ("When recovery of lost net earnings is sought, the plaintiff need only provide a reasonable basis for computation, using the best evidence obtainable under the circumstances that will enable the trier of fact to arrive at a fairly approximate estimate of the loss"); Pomeranz v. McDonald's Corp., 843 P.2d 1378, n. 7 (Colo. 1993) (best evidence obtainable under the circumstances does not necessarily require expert testimony, even to establish future lost profits); Lee v. Durango Music, 355 P.2d 1083, 1087 (Colo. 1960) (lost profits may be awarded so long as they are not speculative, remote, imaginary, or impossible of ascertainment). However, more controversial testimony arises in cases involving small businesses or start-ups, where the profits are more problematic to calculate or more conjectural than those based on a long history of actual profits.

Colorado follows the "reasonable certainty" rule. Experts opining on past loss of profits are treated as any other expert under CRE 702. Carder, Inc., 97 P.3d at 185 ("When recovery of lost net earnings is sought, the plaintiff need only provide a reasonable basis for computation, using the best evidence obtainable under the circumstances that will enable the trier of fact to arrive at a fairly approximate estimate of the loss"). However, future lost profits must be based on "sufficient admissible evidence to enable the fact finder to compute a fair approximation of the loss." Technics, LLC v. Acoustic Marketing Research, Inc., 179 P.3d 123 (Colo. App. 2007) (finding no reason to...