Court Examines Basis and Methodology of Telecommunications Expert’s Damages Calculation

Zach Barreto

Written by
— Updated on May 25, 2021

Court Examines Basis and Methodology of Telecommunications Expert’s Damages Calculation

Court: United States District Court for the Southern District of New York
Jurisdiction: Federal
Case Name: National Communs. Ass’n v. AT&T
Citation: 1998 U.S. Dist. LEXIS 3198

In this case, a telecom reseller alleges the defendant carrier unlawfully withheld services. The plaintiff’s telecommunications expert witness is retained to present damages calculations. The defendant claims the calculations lack sufficient evidence and acceptable methodology.

The court partially agrees. For portions of the report, the expert is able to explain the figures and modeling they used to form their conclusions. However, other parts of the report are unacceptably conclusory. On one point, the expert even admits their lack of knowledge in an area. For this reason, the court must throw out certain sections of the expert’s report.

Facts

The plaintiff was a reseller who purchased telecommunication services from the defendant in bulk. The plaintiff later sold the services to the public for a profit. They offered telecom bundles distinct from the defendant’s. Thus, the plaintiff was both the defendant’s customer and competitor. The plaintiff filed this lawsuit against the defendant after being denied certain services. Further, the defendant allegedly failed to provide other services in a timely and efficient fashion. The plaintiff claimed the defendant violated multiple provisions of the Communications Act of 1934. Also, the plaintiff alleged the defendant was trying to drive resellers from the telecommunications market through illegal means. Among the motions filed in the suit, the defendant challenged the plaintiff’s telecommunications expert’s admissibility

The Plaintiff’s Telecommunications Expert Witness

The plaintiff’s telecommunications expert’s report sought to provide testimony on the calculation of damages. The expert forecasted outbound sales growth that could’ve been achieved had the defendant not interfered with service. The plaintiff’s expert report concluded that the plaintiff would have earned one dollar in inbound revenue for every two dollars in outbound sales. Further, the expert explained that most consumers want to buy multiple items from the same supplier. Thus, the plaintiff’s offerings would have been more desirable.

The defendant argued these figures lacked sufficient basis. The plaintiff argued their expert’s calculations used actual sales figures in forming this growth rate model. The expert also relied on sales numbers from other resellers. Thus, the plaintiff argued their expert’s methodology was reasonable.

Discussion

The court reviewed the growth modeling from the expert’s report. It determined the calculations may not be entirely accurate, however, it does not make it inadmissible per Rule 702. The court found the report to be helpful the trier of fact, citing Tyler v. Bethlehem Steel Corp.

The court also reviewed the argument that customers would’ve been motivated to buy multiple items given the option. The court noted that the cited new customer growth could not be guaranteed. Here, the court deemed this assumption to be unreasonable and lacking evidence.

The plaintiff’s expert also called out that the defendant failed to issue over 10,000 phone numbers to the plaintiff. Here, the court questioned whether the expert was qualified to determine whether the defendant was at fault for these missing phone number issuances. The court pointed out that the expert admitted in testimony that he was not an expert in establishing long-distance telephone networks. Thus, the court concluded he was not qualified to opine on this point.

Ruling

The court granted in part and denied in part the defendant’s motion to exclude the plaintiff’s telecommunications expert witness.

Key Takeaways for Experts

This case demonstrates the importance of proper methodology and sound reasoning. These are the only reasons the court accepts the expert’s growth modeling figures. Experts must remember to have careful methodology and evidence behind every conclusion. Otherwise, this could be grounds for exclusion.

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