* NO. 2022-CA-0777 HUNTSMAN INTERNATIONAL, L.L.C. AND * COURT OF APPEAL RUBICON, L.L.C. * FOURTH CIRCUIT VERSUS * STATE OF LOUISIANA PRAXAIR, INC. *
* *******
DLD DYSART, J., CONCURS IN PART AND DISSENTS IN PART
I concur with the majority’s decision insofar as it affirms the trial court’s
findings that Praxair breached its contracts with Huntsman and caused damages to
Huntsman. I respectfully dissent from the majority’s decision to affirm the amount
awarded to Huntsman for lost profits. I would amend the judgment to reduce the
award for lost profits to $37,522,291, which, in my opinion, is the highest amount
supported by the evidence presented at trial.
The only award at issue in this appeal is one for lost profits. Lost profits are
a type of special damages that must be proved with reasonable certainty and cannot
be based on speculation or conjecture. Cox, Cox, Filo, Camel & Wilson, LLC v.
Louisiana Workers’ Comp. Corp., 2021-00566, p. 11 (La. 3/25/22), 338 So.3d
1148, 1157. “While recognizing that lost profits may not always be susceptible of
proof to a mathematical certainty, [our courts] have held that lost profits must
nonetheless be proven with reasonable certainty, that is, by a preponderance of the
evidence.” Cargill, Inc. v. Syngenta Seeds, Inc., 2021-681, p. 11 (La. App. 5 Cir.
12/7/22), 355 So. 3d 103, 111.
Huntsman’s expert on economic damages, Rebecca Szelc, was the only
expert witness who testified at trial as to calculations of damages Huntsman
allegedly sustained in lost profits. In pre-trial discovery, no other Huntsman witness attempted to quantify the damages sustained by it due to Praxair’s
breaches. Instead, several of those witnesses, in depositions, specifically deferred
to Huntsman’s expert to provide those calculations.
Ms. Szelc prepared a report with data provided by Huntsman and calculated
the damages sustained by Huntsman in lost profits and cover damages. At trial,
she testified that she determined the amount of Huntsman’s lost pounds of MDI
and aniline production that she found attributable solely to Praxair’s breaches, and
the contribution margins Huntsman would have earned for the months of lost
production. Ms. Szelc explained that a contribution margin was an amount
Huntsman would have received for every pound of production it made after
subtracting expenses. She multiplied lost pounds of production by the contribution
margins she determined to arrive at a total amount of lost profits.
Ms. Szelc testified that in a month where there was lost production due
solely to Praxair’s shortages, she used contribution margins that were weighted
averages of all of the products sold during that month at the profit that Huntsman
sold them. She explained that she adjusted the contribution margins for each
month because it could not be determined which products Huntsman did not
produce or sell during that period of time. There are many different types of MDI
produced and sold by Huntsman so she used a weighted average contribution
margin of all of the MDI products Huntsman sold in a given month. She used the
average of what she referred to as the “product mix,” or, as she described, the mix
of MDI flavors sold in that month at the volumes sold. She then calculated the
weighted average contribution margin for that product mix for that month.
Ms. Szelc stated that when Huntsman had a supply interruption, the lost
pounds of production were taken away from what would have been the typically
more lucrative spot sales. She acknowledged that by using weighted average
contribution margins of all types of sales in her calculations, this was a conservative approach that could result in an underrepresentation of Huntsman’s
losses given the fact that Huntsman did not lose contract sales due to Praxair’s
breaches. However, Ms. Szelc maintained that the way she determined what
contribution margins would have been for lost sales was “the best or the fairest
representation” given the fact that the product mix changes every month and the
prices products sell for changes because of market conditions and cost inputs
among other factors.
Ms. Szelc found that the weighted average contribution margins for the total
loss to Huntsman was 36 cents for MDI production and 8 cents for aniline
production. Multiplying the amount of pounds of lost production that she
determined were caused by Praxair’s shortfalls by the above-stated average
contribution margins, Ms. Szelc calculated that Huntsman sustained $35,142,940
in lost MDI sales and $2,379,351 in lost aniline sales for a total loss of profits of
$37,522,291.
Several of Huntsman’s fact witnesses testified at trial that their own expert’s
calculations were overly conservative, but none of those witnesses presented
testimony supporting a different method of calculating contribution margins that
rose to the level of reasonable certainty required for this item of special damages.
Huntsman’s fact witnesses used general terms such as “conservative,” “floor,” and
“rock bottom,” to describe Ms. Szelc’s calculations. Although Huntsman now
disparages its own expert’s calculations as overly conservative, there is no
evidence that Huntsman asked Ms. Szelc, prior to trial, to provide a supplemental
report with a range of calculations.
In closing arguments, counsel for Huntsman argued that Ms. Szelc should
not have included Huntsman’s contract sales in her calculation of contribution
margins because those sales were never lost due to Praxair’s shortages. After
stating “I think there are a couple of other ways to calculate this,” counsel urged the jury to examine the spreadsheets used by Ms. Szelc, and apply much higher
contribution margins than those calculated by Ms. Szelc. Counsel suggested two
alternative methods of calculating contribution margins that he argued were more
reflective of Huntsman’s losses.
Counsel first showed a slide to the jury, which set forth a formula for
calculating lost profits using contribution margins of 82 cents for MDI and 25
cents for aniline. He argued that those higher contribution margins were consistent
with what Huntsman’s spot sales, the top third of Huntsman’s business, typically
generate. He stated that those contribution margins would result in a lost profits
award of $88,117,405. Counsel also presented another alternative method of
calculating even higher contribution margins that he argued were more typical of
what sales to Huntsman’s top 100 customers would generate. Those contribution
margins, multiplied by the amount of lost production, would result in an award for
lost profits of approximately $186 million. The jury awarded Huntsman
$88,117,405 for lost profits - an increase of $50,595,114 over the amount
calculated by Huntsman’s own economic damages expert.
While a jury is not bound by an expert’s opinion, in this case, the only
evidence presented at trial that established an amount of lost profits with
reasonable certainty was Ms. Szelc’s report and testimony. She was the only
witness who testified regarding calculations as to contribution margins to be used
in determining lost profits. The record does not include any other evidence that
established with reasonable certainty any other amount of lost profits than those
calculated by Ms. Szelc. “Argument of counsel, no matter how artful, is not
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* NO. 2022-CA-0777 HUNTSMAN INTERNATIONAL, L.L.C. AND * COURT OF APPEAL RUBICON, L.L.C. * FOURTH CIRCUIT VERSUS * STATE OF LOUISIANA PRAXAIR, INC. *
* *******
DLD DYSART, J., CONCURS IN PART AND DISSENTS IN PART
I concur with the majority’s decision insofar as it affirms the trial court’s
findings that Praxair breached its contracts with Huntsman and caused damages to
Huntsman. I respectfully dissent from the majority’s decision to affirm the amount
awarded to Huntsman for lost profits. I would amend the judgment to reduce the
award for lost profits to $37,522,291, which, in my opinion, is the highest amount
supported by the evidence presented at trial.
The only award at issue in this appeal is one for lost profits. Lost profits are
a type of special damages that must be proved with reasonable certainty and cannot
be based on speculation or conjecture. Cox, Cox, Filo, Camel & Wilson, LLC v.
Louisiana Workers’ Comp. Corp., 2021-00566, p. 11 (La. 3/25/22), 338 So.3d
1148, 1157. “While recognizing that lost profits may not always be susceptible of
proof to a mathematical certainty, [our courts] have held that lost profits must
nonetheless be proven with reasonable certainty, that is, by a preponderance of the
evidence.” Cargill, Inc. v. Syngenta Seeds, Inc., 2021-681, p. 11 (La. App. 5 Cir.
12/7/22), 355 So. 3d 103, 111.
Huntsman’s expert on economic damages, Rebecca Szelc, was the only
expert witness who testified at trial as to calculations of damages Huntsman
allegedly sustained in lost profits. In pre-trial discovery, no other Huntsman witness attempted to quantify the damages sustained by it due to Praxair’s
breaches. Instead, several of those witnesses, in depositions, specifically deferred
to Huntsman’s expert to provide those calculations.
Ms. Szelc prepared a report with data provided by Huntsman and calculated
the damages sustained by Huntsman in lost profits and cover damages. At trial,
she testified that she determined the amount of Huntsman’s lost pounds of MDI
and aniline production that she found attributable solely to Praxair’s breaches, and
the contribution margins Huntsman would have earned for the months of lost
production. Ms. Szelc explained that a contribution margin was an amount
Huntsman would have received for every pound of production it made after
subtracting expenses. She multiplied lost pounds of production by the contribution
margins she determined to arrive at a total amount of lost profits.
Ms. Szelc testified that in a month where there was lost production due
solely to Praxair’s shortages, she used contribution margins that were weighted
averages of all of the products sold during that month at the profit that Huntsman
sold them. She explained that she adjusted the contribution margins for each
month because it could not be determined which products Huntsman did not
produce or sell during that period of time. There are many different types of MDI
produced and sold by Huntsman so she used a weighted average contribution
margin of all of the MDI products Huntsman sold in a given month. She used the
average of what she referred to as the “product mix,” or, as she described, the mix
of MDI flavors sold in that month at the volumes sold. She then calculated the
weighted average contribution margin for that product mix for that month.
Ms. Szelc stated that when Huntsman had a supply interruption, the lost
pounds of production were taken away from what would have been the typically
more lucrative spot sales. She acknowledged that by using weighted average
contribution margins of all types of sales in her calculations, this was a conservative approach that could result in an underrepresentation of Huntsman’s
losses given the fact that Huntsman did not lose contract sales due to Praxair’s
breaches. However, Ms. Szelc maintained that the way she determined what
contribution margins would have been for lost sales was “the best or the fairest
representation” given the fact that the product mix changes every month and the
prices products sell for changes because of market conditions and cost inputs
among other factors.
Ms. Szelc found that the weighted average contribution margins for the total
loss to Huntsman was 36 cents for MDI production and 8 cents for aniline
production. Multiplying the amount of pounds of lost production that she
determined were caused by Praxair’s shortfalls by the above-stated average
contribution margins, Ms. Szelc calculated that Huntsman sustained $35,142,940
in lost MDI sales and $2,379,351 in lost aniline sales for a total loss of profits of
$37,522,291.
Several of Huntsman’s fact witnesses testified at trial that their own expert’s
calculations were overly conservative, but none of those witnesses presented
testimony supporting a different method of calculating contribution margins that
rose to the level of reasonable certainty required for this item of special damages.
Huntsman’s fact witnesses used general terms such as “conservative,” “floor,” and
“rock bottom,” to describe Ms. Szelc’s calculations. Although Huntsman now
disparages its own expert’s calculations as overly conservative, there is no
evidence that Huntsman asked Ms. Szelc, prior to trial, to provide a supplemental
report with a range of calculations.
In closing arguments, counsel for Huntsman argued that Ms. Szelc should
not have included Huntsman’s contract sales in her calculation of contribution
margins because those sales were never lost due to Praxair’s shortages. After
stating “I think there are a couple of other ways to calculate this,” counsel urged the jury to examine the spreadsheets used by Ms. Szelc, and apply much higher
contribution margins than those calculated by Ms. Szelc. Counsel suggested two
alternative methods of calculating contribution margins that he argued were more
reflective of Huntsman’s losses.
Counsel first showed a slide to the jury, which set forth a formula for
calculating lost profits using contribution margins of 82 cents for MDI and 25
cents for aniline. He argued that those higher contribution margins were consistent
with what Huntsman’s spot sales, the top third of Huntsman’s business, typically
generate. He stated that those contribution margins would result in a lost profits
award of $88,117,405. Counsel also presented another alternative method of
calculating even higher contribution margins that he argued were more typical of
what sales to Huntsman’s top 100 customers would generate. Those contribution
margins, multiplied by the amount of lost production, would result in an award for
lost profits of approximately $186 million. The jury awarded Huntsman
$88,117,405 for lost profits - an increase of $50,595,114 over the amount
calculated by Huntsman’s own economic damages expert.
While a jury is not bound by an expert’s opinion, in this case, the only
evidence presented at trial that established an amount of lost profits with
reasonable certainty was Ms. Szelc’s report and testimony. She was the only
witness who testified regarding calculations as to contribution margins to be used
in determining lost profits. The record does not include any other evidence that
established with reasonable certainty any other amount of lost profits than those
calculated by Ms. Szelc. “Argument of counsel, no matter how artful, is not
evidence." Hous. Auth. of New Orleans v. King, 2012-1372, p. 4 (La. App. 4 Cir.
6/12/13), 119 So. 3d 839, 842, citing Houston v. Chargois, 98-1979 (La.App. 4
Cir. 2/24/99), 732 So.2d 71, 73. As stated above, “while recognizing that lost profits may not always be
susceptible of proof to a mathematical certainty, [our courts] have held that lost
profits must nonetheless be proven with reasonable certainty, that is, by a
preponderance of the evidence.” Cargill, Inc. v. Syngenta Seeds, Inc., 2021-681, p.
11 (La. App. 5 Cir. 12/7/22), 355 So. 3d 103, 111. The record shows that although
the amount of lost profits in this case could not be determined to a mathematical
certainty, the only economic damages expert who testified in this case presented
her well-reasoned opinion as to the amounts she determined that Huntsman
sustained in damages for lost profits that were caused by Praxair’s breaches. She
gave a detailed explanation as to how she arrived at her conclusions and the factors
she considered in doing so. In my opinion, the calculations reached by Ms. Szelc
were proven with reasonable certainty and were as “precise as circumstances in a
particular situation allow.” Citadel Broad. Corp. v. Axis U.S. Ins. Co., 2014-0326,
p. 4 (La. App. 4 Cir. 2/11/15), 162 So. 3d 470, 475.
As noted in First Alarm Fire Equip., Inc. v. Southland Int’l of Louisiana,
Inc., 47,823, p. 8 (La. App. 2 Cir. 5/8/13), 114 So.3d 1168, 1172, “a party's own
detailed testimony as to his loss may be sufficient to support an award for loss of
profits.” (citing Rosbottom v. Office Lounge, Inc., 94-894 (La. App. 3 Cir. 4/5/95),
654 So.2d 377). “But generally a claim for lost profits cannot rest solely on the
testimony of the injured party without being substantiated by other evidence.” Id.
(citing Simpson v. Restructure Petroleum Marketing Services, Inc., 36,508 (La.
App. 2 Cir. 10/23/02), 830 So.2d 480). In this case, no testimony or evidence
presented at trial established with reasonable certainty any amount of lost profits
higher than that determined by the economic damages expert.
Accordingly, I would find that the jury erred in awarding $88,117,405 to
Huntsman for lost profits, and I would amend the judgment to reduce the award for
lost profits to $37,522.291.