The U.S. Court of Appeals for the 11th Circuit in WL Alliance, LLC v. Precision Testing Group, Inc. upheld a jury award of $3.3 million, including $1.6 million in damages for lost future profits. The district court rejected the defendants’ argument that lost future profits weren’t recoverable because they were too speculative. The appellate court agreed, applying Florida state law.
Energetic dispute
The plaintiff (WL) partnered with the defendant (Precision) to provide specialized technicians to First Energy, an energy utility company. Under the arrangement, Precision formally contracted with First Energy while WL recruited the technicians and managed payroll. The partners agreed to split profits 50-50.
A disagreement arose about the amounts being remitted to WL, and the partnership was terminated. Precision’s owner (another defendant in the case) terminated the contract between Precision and First Energy. Then he entered into a similar contract with First Energy using another entity he owned, effectively cutting WL out of the arrangement.
WL sued for wrongful disassociation from the partnership and breach of the partnership agreement and requested an equitable accounting. The defendants didn’t counterclaim for a reciprocal accounting. At trial, the parties presented testimony on the value of the business and the prospect that the business with First Energy would continue for several more years.
The defendants made a pre-verdict motion for judgment as a matter of law. They argued that because the contract with First Energy was terminable at will, damages were too speculative, so there was insufficient evidence to support future damages. The district court denied this motion and the jury awarded WL $1.7 million in past damages and $1.6 million in future lost profits damages.
After the verdict, WL moved to moot its request for an equitable accounting, noting that it had discovered what it was owed through the discovery process. The defendants objected, arguing that an accounting was required under Florida law and moving to amend their answer to add a reciprocal accounting claim. The district court denied this motion, finding that Florida law didn’t require an accounting and that the amendment wasn’t timely. The defendants also renewed their motion for judgment as a matter of law, which the court also denied.
Appellate court decision
The 11th Circuit upheld the district court’s denial of the defendants’ motions. The court noted that judgment as a matter of law is warranted only when, “taking all evidence in favor of the non-movant, no reasonable jury could have reached a verdict for the non-movant.” It also rejected the defendants’ argument that there was insufficient evidence to support future damages. Although Florida law requires such damages to be proved with “reasonable certainty,” the court explained that this standard applies to causation. Once a plaintiff proves that a defendant caused lost profits, it needs to provide only a “reasonable yardstick” to determine damages.
The appellate court found that the defendants’ argument — that an at-will contract can’t support future damages because it’s not “an enforceable guarantee of future business” —overstates Florida law. It was sufficient that testimony from fact witnesses, including Precision’s owner, showed that First Energy’s need for technicians hadn’t changed and wasn’t likely to change in the future. The court explained that the jury could weigh this evidence and “rely on the ‘common sense notion’ that a sophisticated business would not radically change its business model suddenly and without cause.”
Finally, the court rejected the defendants’ argument that all damages were speculative without an equitable accounting. The defendants waived this argument by raising it for the first time in a post-verdict motion and, in any event, it was unsupported by Florida partnership law.
Looking to the future
A key takeaway from this federal appeals case is that damages that include future lost profits won’t necessarily be deemed too speculative. If reasonably supported by sound reasoning, the evidence and applicable laws, courts can, indeed, look to the future. Please contact us if you have any questions.
