On January 16, 2019, a sales representative for NuVasive, Inc. emailed a colleague his projections for the year. For one Boston surgeon, his best case was $3,577,084 in hardware sales. His worst case was $3,141,668. On April 1, 2019, he joined a competitor.
When the case reached a damages hearing in October 2021, Plaintiff's forensic accountant began her lost profits calculation with those two figures. The Court credited her opinion and entered judgment for $1,602,123.
Forensic accountants in commercial cases measure what a business would have earned if the wrong had not occurred. They project revenue and subtract the costs the business avoided. Where the loss runs into the future, they discount it to present value.
This article reviews five rulings from federal courts in Massachusetts, Delaware, West Virginia, and Louisiana. In each, a lost profits opinion was admitted over a challenge or credited by the Court. In one, part of the resulting award was later cut.
Where Forensic Accounting Appears in Litigation
The five cases began with a sales representative's move to a competitor, the sale of a fitness company, a plan for an inland port, the purchase of MRI equipment, and a patented blender. Three were contract disputes. One was a patent infringement suit. The fifth order, from West Virginia, applied that state's rule on lost profits in contract actions.
The experts were not all described the same way. Three rulings involved forensic accountants or certified public accountants. The West Virginia Court dealt with an expert in business valuation. The Delaware Court in the patent case referred to Plaintiffs' witness as a damages expert. All of them did the same work, which was to put a number on lost profits.
Liability was left to others. In two cases, the accountant said expressly that she had assumed it.
The methods had names. The Massachusetts Court listed four that forensic accountants use to calculate lost profits: the sales projection method, the yardstick method, the before-and-after method, and the market model. The West Virginia expert used an income based approach. The patent expert built a model of the market as it would have looked without the infringing product.
Challenges went mostly to inputs. Opponents argued that the expert had relied on figures from the client's own managers, on business plans for a venture that never opened, or on an email that listed competitors. They attacked a discount rate, the choice of comparable contracts, and the costs deducted from revenue. One side argued that an accountant with no healthcare experience could not assess a medical facility's losses.
After a jury verdict in the patent case, the challenge became one of proof. Defendants argued that the evidence did not support the prices the expert had assumed.
NuVasive, Inc. v. Day
U.S. District Court for the District of Massachusetts. Civil Action No. 19-cv-10800. Decided March 28, 2022.
NuVasive makes products used to treat spinal disease. Timothy Day sold those products to surgeons in New England from August 2011 until April 2019, when he joined Alphatec Spine, Inc., a competitor. His agreement with NuVasive contained non-competition and non-solicitation clauses. On summary judgment, the Court found that he had breached both. A three-day evidentiary hearing on damages began on October 19, 2021. Before it started, the Court denied Day's motion to exclude expert testimony.
Plaintiff engaged a forensic accountant to calculate damages from the move of three surgeons' business from NuVasive to Alphatec. She assumed liability, which the Court had already found. Her measure was lost profits from April 1, 2019 through March 3, 2020, the last day of a preliminary injunction against Day.
For the largest account, she used the sales projection method. She started with Day's own best-case and worst-case projections for 2019. She then subtracted the sales NuVasive actually made, the cost of goods sold, and distributor commissions. As a check, she compared the projections with the surgeon's historical sales for 2016 through 2018 and the first quarter of 2019. The average fell within Day's range. Her result for hardware was $1,339,005 at the low end and $1,697,946 at the high end.
For that surgeon's biologics purchases and for two other surgeons, she used the yardstick method, with Alphatec's actual sales as the proxy. She limited the biologics figure to the period from January 1, 2020 to March 3, 2020. The Court described that choice as conservative.
Defendant's expert, also a forensic accountant, called it unreasonable to use projected sales when actual sales were available. The Court answered that her calculations deducted actual sales and that the projections were Day's own. He also faulted her for deducting only two categories of variable costs. She had considered other costs, such as selling, general, and administrative expenses, and found no basis to tie them to the lost sales. The Court found his criticism "not persuasive."
With prejudgment interest, her range ran from $1,602,123 to $2,005,253. NuVasive asked for the high figure, and for $157,049 more for each 30-day period after the injunction ended. The Court awarded the low figure. It declined any later damages, citing the effect of the pandemic on sales projections and surgical needs.
The Court held that NuVasive had shown its lost profits "by a reasonable degree of certainty through witness testimony, exhibits and expert opinion that the Court credits."
Morton v. BCAP GDI 1, Inc.
U.S. District Court for the District of Delaware. C.A. No. 24-1432-JLH-EGT. Decided July 16, 2026.
Sherry Morton founded Millennium Health & Fitness, Inc. more than three decades ago. On November 1, 2023, she agreed to sell it to BCAP GDI 1, Inc. On December 31, 2024, she and a non-profit association she owned sued BCAP. They alleged that it had wrongly withheld part of the purchase price and had improperly terminated a separate training agreement.
BCAP counterclaimed. It alleged that Ms. Morton had confidential Millennium files downloaded to an external hard drive and deleted from the company's system. According to BCAP, the loss left Millennium without information it needed to bid successfully on three government contracts.
To quantify those damages, Defendant retained a certified public accountant with more than fifteen years of forensic accounting experience. She assumed liability and gave no opinion on whether Millennium would have won the contracts. For lost profits, she identified three ongoing contracts from 2024 and 2025 of similar size or scope and applied a gross profit margin to the lost revenue. She discounted future lost profits at 9%. That figure combined the Federal Reserve discount rate of 4% with 5% for risk.
Plaintiffs moved to exclude all of her testimony. They argued that she had taken the 9% rate from a Delaware statute on interest and had analyzed no risk specific to Millennium. They also argued that she chose the comparable contracts solely from conversations with a BCAP vice president.
The Court denied the motion. On the discount rate, it noted that other district courts had left such disputes for cross-examination and competing experts. It found that Defendant's expert had considered Millennium's weighted average cost of capital and weighted average cost of debt. The Court added that it was not deciding whether her reliance on the statute was correct. It held only that her method was reliable enough to be admitted.
On gross margin, the Court found that she had reviewed Millennium's general ledger and its profit and loss reports by customer. Her partial reliance on a company officer did not make the opinion unreliable. Rule 703, the Court wrote, "expressly permits this." She had not read the underlying contracts, and that did not change the result.
Two parts of her report drew criticism. The Court said statements in her factual narrative would risk confusing a jury, and that her calculation on a second counterclaim was "mere arithmetic." The case was set for a bench trial. The Court therefore declined to exclude the narrative and admitted the calculation conditionally, subject to a later Rule 702 determination by the trial judge.
American Heartland Port, Inc. v. American Port Holdings, Inc.
U.S. District Court for the Northern District of West Virginia. Civil Action No. 5:11CV50. Decided June 30, 2014.
The dispute concerned a proposed inland port. Plaintiffs, American Heartland Port, Inc. and three individuals, had prepared a business prospectus for it. The original Defendants, American Port Holdings, Inc. and five individuals, had prepared business plans of their own. The port had not come into existence.
Plaintiffs retained an expert on the valuation of the project. He explained the techniques generally used to value prospective businesses. He chose the income based approach, citing the unique business of inland ports and the lack of similar operations with published financial data. He then ran the valuation twice. With Plaintiffs' numbers, the enterprise was worth $290,922,000. With the original Defendants' numbers, it was worth $676,689,000.
The original Defendants moved in limine to exclude him. Their first ground was Daubert. They argued that his testimony rested on speculative business plans and that he had tested none of the estimates given to him. Their second ground was West Virginia law, under which a new business may recover lost profits only if it establishes them with reasonable certainty. They pointed out that no historical data, market studies, or records of similar projects supported the estimate.
The Court denied the motion on both grounds. On Daubert, it found that his reports were grounded in a method commonly used to value prospective businesses. The objection, the Court said, was to his data and not to his method, and that went to weight. The data came from both sides. The Court also said it would give the jury detailed instructions on how to consider expert testimony.
On state law, the Court worked through three decisions the original Defendants had cited. In one, an economist compared a planned grocery store to stores unlike it. In another, a lost profits claim for delayed coal mines rested on figures from another operation whose profits swung from year to year. In the third, an accountant projected a furniture store's future from three years of sales, without surveys or comparisons.
Plaintiffs' expert differed on each point. He compared no dissimilar ports. He gave detailed reports and explained how he used each set of data. He was offered as an expert in valuing businesses. The Court observed that both sets of figures concerned the same project, and that both parties had stood behind them "in an attempt to acquire funding for the project."
Reasonable certainty, the Court wrote, "does not require proof to absolute certainty." It held the testimony admissible to prove lost profits.
NAZ, LLC v. Philips Healthcare
U.S. District Court for the Eastern District of Louisiana. Civil Action No. 17-2882. Decided January 2, 2019.
NAZ, LLC and Advanced Neurodiagnostic Center, Inc. sued Philips Healthcare over MRI equipment bought for a medical facility. They alleged that the equipment was faulty, that Philips installed and serviced it badly, and that Philips failed to deliver the complete package of hardware and software.
Each side retained a certified public accountant, and each moved to exclude the other's.
Plaintiffs' expert held bachelor's and master's degrees in accounting and was the managing partner of a public accounting firm. He had more than thirty years of experience, was a certified forensic accountant, and had given testimony in more than 200 cases. According to Plaintiffs, he determined the number of MRI scans that would have occurred each day and the revenue from each, then built a lost profits model. Philips put his figure at $34,000,000.
Philips did not dispute his qualifications. It argued that he used no market data and no data from Plaintiffs' other facilities, gave no verifiable calculations, and did not account for future business trends. It also argued that his figures for an ambulatory surgery center were irrelevant, because the building's architect had sworn that no such center was in the plans.
The Court found him qualified in accounting and lost profits, and found his opinions relevant and reliable. Philips could explore his assumptions, research, and calculations on cross-examination. The motion was denied.
Defendant's expert was a certified public accountant and certified fraud examiner with two accounting degrees. He was a vice president in the forensic accounting practice of a risk consulting firm. Plaintiffs argued that he had never performed a lost profits analysis for a healthcare facility. They also argued that he offered only a critique of Plaintiffs' expert, with no independent analysis.
The Court acknowledged that he had not testified in the last four years and that his CV identified no experience with a healthcare facility's lost profits. It held that his education and general experience qualified him and "provide him with the tools needed to evaluate any business's lost profits." That motion was denied as well.
One issue stood ahead of both experts. Philips' standard terms disclaimed liability for lost revenues or profits. Whether those terms were part of any contract was disputed. The Court denied summary judgment on consequential damages without prejudice and left that question for the jury.
f'real Foods, LLC v. Hamilton Beach Brands, Inc.
U.S. District Court for the District of Delaware. Civil Action No. 16-41-CFC. Decided June 9, 2020 and August 14, 2020.
A jury heard this patent infringement case over four days. Plaintiffs were f'real Foods, LLC and Rich Products Corporation. Defendants were Hamilton Beach Brands, Inc. and Hershey Creamery Company. The jury awarded Plaintiffs $2,988,869 in lost profits.
The lost profits evidence concerned blenders used in a Hershey program for retailers. Plaintiffs' damages expert divided the infringement period in two. In one part, Hershey rented its machines to retailers. In the other, it let retailers use the machines for free and added an upcharge to the cups used in them. He modeled Plaintiffs' loss on whichever approach Hershey was using at the time. His totals were $3,015,367 for upcharges and $897,028 for rentals, or $3,912,395 in all.
After the verdict, Defendants moved for judgment as a matter of law, a new trial, or remittitur. They repeated their argument that his testimony should not have been admitted. The Court stood by its pretrial ruling, which had denied the relevant part of their motion to exclude.
Defendants then attacked the proof. His market share figure relied on an email from f'real's chief operating officer, who had testified that the email did not allow a reliable market share calculation. The Court read the testimony differently. The officer had said he would go to an expert for that, and Plaintiffs' expert had gone beyond the email's contents.
Defendants also objected that the model used prices no customer had accepted. The Court answered that a lost profits analysis must reconstruct the market without the infringing product, so a model was required. It found evidence for the 70-cent upcharge he assumed. f'real had built a model on that figure for a potential customer in a similar business context. Its cups, with the upcharge added, were priced competitively with Hershey's.
The rental period was different. Plaintiffs' expert had assumed that f'real would match Hershey's rental fee of roughly $150 a month. A f'real document showed a $500 down payment and $350 a month. The Court found no evidence that f'real ever rented, or would have rented, at $150. That portion of the award, it held, was "clearly not supported by the evidence."
The Court denied a new trial on the condition that Plaintiffs accept a remittitur to $2,091,841, the verdict less the rental figure. In the August order, it applied the same reasoning to supplemental damages. It entered judgment for damages and interest of $3,066,724 through July 31, 2020.
What the Rulings Have in Common
Every Court in this group denied a motion to exclude the lost profits testimony.
On qualifications, no Court required experience in the industry at issue. The Louisiana Court held that general training as an accountant supplies the tools to evaluate any business's lost profits. The West Virginia Court noted that Plaintiffs' expert was offered as a specialist in valuing businesses. It contrasted him with an accountant in an earlier case who was expert only in analyzing financial statements.
On method, the courts looked for a recognized approach with visible steps. The Massachusetts expert named her methods and checked one against another. The West Virginia expert explained why he chose an income approach over comparisons. The accountant in Morton could show the records behind her margin.
The most common objection was that the numbers came from a party. No Court treated that as disqualifying. In Massachusetts, the projections came from the Defendant himself. In West Virginia, both sides had supplied them. In Morton, the Court cited Rule 703, which lets an expert rely on facts she has been made aware of. Disputes over inputs went to cross-examination.
The same rulings show where the tolerance ended. In the patent case, an assumed rental price with no evidence behind it cost Plaintiffs $897,028. In Massachusetts, the Court awarded the low end of the range and refused damages for the months after the injunction. In Morton, two parts of the report stayed in because a judge, not a jury, would hear them.
These rulings were chosen because the testimony was admitted or credited. They do not measure how often that happens.
Practical Points for Attorneys
The accountant in NuVasive deducted the sales Plaintiff actually made before she arrived at lost profits. When Defendant's expert argued that she should have used actual sales, the Court had a short answer. She also limited one category to about two months, because hospital inventory and another supplier might explain the earlier decline. The Court awarded her low figure in full.
Party-supplied numbers held up when they had a life outside the lawsuit. Day wrote his projections while he was still selling for NuVasive. The port plans in American Heartland were used to seek funding. In f'real, the 70-cent upcharge came from a business document f'real generated around the time infringement began. The $150 rental fee had no such source, and it was the one input the Court rejected.
In Morton, the challenge to the comparable contracts failed because the accountant could point to the general ledger and customer profit reports. The discount rate survived as well, though the Court declined to say the rate was correct.
For the party opposing the testimony, two details stand out. Philips did not contest the qualifications of Plaintiffs' accountant, and the Court dealt with its remaining objections in a few sentences. In f'real, Defendants lost the admissibility argument twice. They still reduced the award by attacking a single unsupported assumption after trial.
The forum mattered in one ruling. The Morton Court said the concerns behind Rule 403, such as confusion and unfair prejudice, are minimal in a bench trial. These are observations from five records, not legal advice.
From Model to Judgment
Two of the five rulings end in a number. In NuVasive, the judgment was $1,602,123, the low end of the accountant's range with interest. In f'real, a $2,988,869 verdict became $2,091,841 after the Court removed the rental figure.
The other three orders came before trial. In Morton, American Heartland, and NAZ, the lost profits figures still had to face cross-examination. In NAZ, a jury first had to decide whether Philips' disclaimer of lost profits was part of the contract.
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