Case In Point: The Danger Of Dissimilar Comparables

Daryl K. Washington et al., v. Kellwood Company

The Washington v. Kellwood case is a good example of a plaintiff failing to apply the appropriate amount of review when selecting a proxy or yardstick. When using this approach to damages, particular care should be taken when selecting a proxy for a nascent business without a baseline history of revenues. Damages experts have leeway when selecting comparable firms to use as comparables in a yardstick approach. However, in this case the Court found that, selecting an established business with revenues exceeding the plaintiff's revenues by a factor of 1,000 stretched the "reasonableness" requirements too far. Damages in litigation are not likely to get simpler anytime soon, and the Washington v. Kellwood case highlights the importance of carefully selecting a similar proxy firm(s) when using the yardstick approach to damages calculations.