Federal Jury Finds For Employer in ADA Case

Intuitively, contracting parties in commercial transactions understand that legal consequences follow a breach of contract: If a party fails to deliver a product as promised, the breaching party can be liable for the cost to correct the breach; but what is that cost?

Say, for example, a business cancels an order to provide parts to a long-time customer because the relationship has gone sour. Legally, the liability for that breach of contract may extend beyond the cost of the order. A breaching party is liable for damages that are a direct consequence of the failure to perform and that were foreseeable at the time the contract was made, which may include lost profit. If the breach was intentional or malicious, the party's liability may extend even to direct damages that were not foreseeable.

The business that cancelled the order now faces a jury’s decision to identify the direct and foreseeable losses, a decision that, by its nature, is vague. However, the law imposes a limit on the jury’s prerogative to decide the damages. Even for a bad faith breach of contract, liability arises only for the direct, immediate consequences of the breach and there should be no liability for damages determined to be remote, indirect, or that have no necessary relation to the breach.

In a recent case, a jury found that a defendant boat engine manufacturer breached its contract with plaintiff boat manufacturer by cancelling a purchase order for engines, and further, that the engine manufacturer was in bad faith. The jury awarded $1.8 million in foreseeable lost revenues and $1.3 million in unforeseeable lost profits. The trial court threw out the “unforeseen” portion of the award because it was not a direct damage, and emphasized that a breaching party does not “become the insurer for all misfortunes that may arise from the breach.”

The boat manufacturer had argued that the cash flow expected from the sale of the boats rendered engine-less by the breach would have been invested in more personnel and capital to grow its northwest division. But, because of depleted cash flow from lost sales, that opportunity was lost. The court found, as a matter of law, that this loss was not a direct consequence of the breach, and thus, regardless of the bad faith, was not a recoverable contract damage. Simply, loss of cash flow in one part of the business that had a ripple effect in a separate division was too indirect to be a recoverable damage. See Marine Power Holding, LLC v. Malibu Boats, LLC, 2016 WL 7241560 (E.D. La. 12/15/2016).

By contrast, courts have found that loss of cash flow is recoverable where directly related to the damages suffered, such as where breach of a contract to deliver chickens to a chicken farmer caused the forced sale of the chicken farm. See Volentine v. Raeford Farms of La., 50-698 (La.App. 2 Cir. 8/15/16), 201 So.3d 325.

Failure to perform on a contract exposes a business to more than it may realize. Understanding this risk allows for smarter decisions before the breach.

The use of biomechanical expert testimony in Louisiana courts has evolved over the last few years. A recent decision from the Louisiana Fifth Circuit Court of Appeal provides an example of the changing standards for the admissibility of biomechanical expert testimony and its relation to medical causation.

In Pollard v. 21st Century Centennial Ins. Co., 21-65 (La. App. 5 Cir. 12/23/21), 334 So. 3d 1013, writ denied, 2022-00163 (La. 4/20/22), the defendants argued that the underlying accident involved a minor rear-end impact not likely to cause injury. The defendants hired a biomechanical expert who was also a medical doctor. The expert performed an “impact severity analysis” to determine the force of impact in the collision.

The expert concluded that the accident involved a minimum damage collision; he relied upon the “force reflection method” and test data at his crash test facility to determine how fast the rear-ending vehicle would have traveled to cause the damage present on the plaintiff’s vehicle. Based upon his findings, the expert opined that the plaintiff was not seriously injured in the collision. He went further to testify that specific injuries could not have been caused by the forces involved.

The Fifth Circuit noted the same expert was previously excluded in a case that went to the Louisiana Supreme Court in Blair v. Coney, 2019-00795 (La. 4/3/20), reh'g denied, 2019-00795 (La. 7/9/20), 298 So. 3d 168, where the Court found the expert’s testimony to be based upon insufficient facts or data. In Blair, the Supreme Court found the expert’s testimony should be excluded because he did not (1) inspect either vehicle involved in the collision; (2) speak with the damage appraisers; (3) know the plaintiff’s body position at the time of the accident; (4) inspect plaintiff’s vehicle for variance from the test-vehicle or (5) interview the plaintiff. Thus, his testimony failed to meet the requirements of C.E. art. 702(A)(2).

Citing the Blair decision, the Louisiana Fifth Circuit in Pollard concluded that the expert “relied on the same [improper] methodology in reaching his conclusions.” Therefore, the appellate court found the trial court erred in denying a motion in limine to exclude the expert’s testimony. Although the expert cited to peer-reviewed literature to support his conclusions, the evidence revealed that “most of the research and articles” he cited were either written by him or one of his employees.

Effective January 1, 2021, Louisiana amended La. R.S. 32.295.1, which now allows the admission of a plaintiff’s failure to wear a seat belt as a factor to be considered in comparative fault. Defendants will seek to use biomechanical experts to prove that the failure to use a seatbelt substantially caused or contributed to the damages.

Biomechanical testimony may be allowed. However, as shown in Pollard, biomechanical opinions which lack sufficient inquiry to match the analysis to the real-world impact will be treated with skepticism. Taking Blair and Pollard together, the courts appear to resist expert biomechanical opinions which seek to definitively resolve medical causation which often involves subjective elements and credibility determinations reserved for the trier of fact.

It is certain that defendants will continue to advance the “low impact” argument because force-of-impact testimony is a relevant factor in determining causation or extent of injuries. See, e.g., Merrells v. State Farm Mutual Auto, Ins. Co., 33-404 (La. App. 2 Cir. 6/21/00), 764 So. 2d 1182. What is less than certain is the role of the biomechanical expert. Following the Fifth Circuit’s decision in Pollard, the Louisiana Supreme court denied the defendant’s writ application 4 to 3, with all three dissenters advising they would have granted the writ. Issues surrounding the use and scope of testimony from biomechanical experts appear far from settled.

You tell a contractor you want him to repair a problem. Before leaving your house, the contractor says he will “look into it” and “get back to you.” Have you just made an oral contract for the repair? The answer to this question is no, according to Hodson v. Daron Cavaness Builder, Inc., 2017-1235 (La. App. 1 Cir. 2/27/18), a recent First Circuit Decision.

In Louisiana, an oral contract for over $500 must be proved by at least one witness and other corroborating circumstances. See La. C.C. art. 1846. The person trying to enforce the oral contract may serve as her own witness to meet this standard, but evidence of the corroborating circumstances must come from some other source. In Hodson, the plaintiff observed cracks in her floor and called a contractor to examine the problem. The plaintiff made it clear she wanted the contractor to repair the floor. While the contractor denied promising to fix the floor, he admitted that he promised to “look into it and get back with her in a week or two.” Despite his promise, he never called the homeowner back.

The plaintiff filed suit and claimed she was entitled to recover damages for the cost of repairing her floor. The Trial Court found the contractor’s admissions to be enough “corroborating evidence” to establish an oral contract for the repair. However, the First Circuit found the parties did not make an oral contract to repair the floor. Instead, the contractor only agreed to “look into it.” According to the Hodson Court, a “broken promise to look into a situation does not equate to an oral agreement to repair.”

The Hodson decision shows that while Louisiana law allows parties to create oral contracts, it can be difficult to prove that a contract was actually formed or to define the details of the agreement. If you put the agreement in writing, you won’t be left wondering whether you just created a contract.

Reynolds LeBlanc is a partner at Keogh Cox. His practice areas include commercial litigation, personal injury claims, appeals, and other matters. Reynolds is a former teacher, who in his free time plays music and perpetually talks himself into training for his next marathon.