The U.S. District Court for the Middle District of Louisiana in North Atlantic
North Atlantic Security Co. v. Blache, 2025 U.S. Dist. LEXIS 15651 (M.D. La. January 29, 2025).
The plaintiff, a licensed provider of security services in Louisiana, was awarded a contract to provide security services to several state agencies. Less than a year later, the defendant, the executive secretary of the state’s Board of Private Security Examiners, accused the plaintiff of violating certain state regulations. The defendant subsequently revoked the plaintiff’s license without a board hearing or vote. Then he notified the state, which terminated the plaintiff’s contract.
The plaintiff sued the defendant on several grounds. One significant lost profits claim was against the defendant in his individual capacity for violating the plaintiff’s due process rights. The issue before the court was the admissibility of certain documents and testimony. This included an “itemization of losses” and the testimony of the plaintiff’s current and former presidents regarding lost profits.
The plaintiff submitted into evidence a spreadsheet that itemized various financial metrics, including the company’s revenue and expenses, net income, and projected revenues from 2018 to 2024. The defendant sought to exclude the itemization as unreliable and speculative, arguing that the numbers didn’t add up. He also challenged it as an improper summary exhibit.
The court determined that the plaintiff failed to provide the defendant with data underlying the spreadsheet, as required by Federal Rules of Evidence 1006. So, it excluded the itemization as an improper summary exhibit.
The court allowed the testimony of the plaintiff’s current and former presidents because they had personal knowledge of the information in the itemization spreadsheet. However, the court expressed skepticism about its sufficiency to prove damages. For one thing, an injured party’s testimony alone, unsubstantiated by other evidence, is insufficient to establish lost profits with reasonable certainty.
In addition to lost profits stemming from the contract itself, the plaintiff sought profits it allegedly would have derived from “collateral undertakings.” In essence, the plaintiff claimed, if not for the defendant’s wrongdoing, the Louisiana contract would have served as a “springboard” for additional work.
However, to recover such damages, plaintiffs must prove that:
In North Atlantic Security, the court observed, “This is a high hill and the Court is skeptical of [the plaintiff’s] ability to climb it.” Nevertheless, the court allowed the presidents to testify, explaining that, at that stage, it could not conclude that their testimony would be “inadmissible for any purpose.”
This case illustrates that establishing lost profits with reasonable certainty is challenging, particularly when calculations are based on consequential damages. Although it’s possible for lay witnesses to testify on this subject, it’s critical to back up testimony with solid evidence. Estimating lost profits isn’t a do-it-yourself project. To bolster claims, consider hiring a qualified financial expert to independently calculate lost profits and evaluate the underlying financial data.