Calculating Liquidated Damages- an example

We were recently asked to evaluate a case involving a breach of contract. In this case, we were asked to provide expert witness testimony on the appropriate value of liquidated damages at a temporary injunction hearing. The plaintiffs, which was a large state agency on the west coast, were suing an ex-employee for utilizing a proprietary database in breach of the written contract that the defendant had entered into several months prior with the state agency.

The state agency was in charge of revoking state issued professional licenses. The defendant was using the state agency's database to solicit and organize people, who had had their professional licenses removed, to sue the agency based on some relatively obscure open records and meetings law.

We were asked by the plaintiffs, the state agency, in the case to provide them with a value for the liquidated damages that they would seek in the event of a breach of contract and the defendant continued to use the database in violation of the restraining order.

The liquidated damages themselves were based on the potential harm that the defendant's use of the database could have caused the state agency. To perform our analysis, we looked at a number of cases that involved the calculation of liquidated damages, such as HONEY DEW ASSOCIATES, INC., AND BOWEN INVESTMENT, INC v. M & K FOOD CORP., IRWIN KAY AND ADELE KAY, APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF RHODE ISLAND.

The key thing is that we had to make sure that our damage calculation has a basis.

More to come in the days to come...