Selected Cases

Dr. Rosen has consulted or provided expert testimony in over 300 different litigation matters involving many areas of the law. His work involves the calculation or determination of lost profits, lost earnings, out-of-pocket damages, and punitive damages. Listed below are brief descriptions of selected matters in which Dr. Rosen has provided his expertise and assistance.

Antitrust

• A distributor of jewelry components located in the Los Angeles Jewelry District was sued by another distributor in a private action for violations of the antitrust statutes. The plaintiff claimed the defendant’s arrangements with several manufacturers constituted a group boycott and an attempt to monopolize the local market. Dr. Rosen was retained by counsel for the defendant as an expert economist to provide testimony on four key issues. He critiqued the statistical analysis of the market surveys conducted by the plaintiff’s expert, including definition of the relevant geographic market and substitutability. He conducted research on market share statistics to analyze the defendant’s market power and ability to control prices in the local market. He identified reasonable opportunities for the plaintiff to secure replacement components to mitigate losses. Finally, Dr. Rosen factored in seasonality of sales to revise the plaintiff’s calculation of lost profits. The case settled before trial on terms favorable to the defendant.

Bankruptcy

• The owner of a 100-unit apartment complex filed for bankruptcy protection. This action was contested by the mortgage holder. Counsel for the debtor-in-possession hired the firm to calculate the appropriate rate of interest that would fairly compensate the bank for providing 100% financing, and to determine whether the property would generate sufficient cash flow to cover mortgage payments, operating expenses, and an allowance for the debtor’s living expenses.

Business Valuation

• Two manufacturers of faucets formed a joint venture. One partner provided the capital and the other partner provided a business contact to a large national home improvement chain. The joint venture failed. One of the venture partners sued and claimed several million dollars of future lost profits. Dr. Rosen was retained by counsel for the defendants. He showed that the damages claimed by the plaintiffs double-counted future lost profits and future loss in value and relied upon interim financial statements without considering accrual-basis adjustments. The jury found liability, but, based on the testimony of Dr. Rosen, awarded damages at a much reduced amount compared to the claims made by the plaintiffs.

Divorce / Family Law

• A minority share of common stock in a privately-held company was assigned a nominal value in a divorce settlement. The company subsequently went public. The wife filed an action to retroactively revalue the shares of common stock. The firm was hired by the attorneys for the husband. Dr. Rosen reviewed interim financial statements and an independent consulting report to determine retroactively that the nominal value had been a good faith estimate of value at the time of the divorce settlement. Dr. Rosen also prepared a critique of the valuation placed on the stock by the expert retained by the wife’s attorney, emphasizing departures from Revenue Ruling 59-60 and the use of inaccurate and unreliable methodologies. The family law judge determined that the nominal value placed on the stock had been a good faith estimate of value, and awarded no damages.

Employment

• A hospital employee claimed she was terminated, and based her damage claims on the continuation of the extensive overtime she had worked in the year prior to the termination. The firm was hired by the attorneys for the defendants. Dr. Rosen prepared a critique of the plaintiff’s damaged claims, including why the hours of overtime would have been much more limited in the future, and why the plaintiff would not have been able to work overtime, even had it been available. The critique was based on a series of life events not affected by the issues of the litigation. The jury found liability on the part of the hospital, but awarded no economic damages.

Entertainment

• An independent film producer was hired to produce a promotional video for a major entertainment conglomerate and theme park operator. Revenues were to be shared based on a percentage of the gross profit per video. The company withheld payment of the revenue share and instead offered a lump-sum payment in exchange for full rights to the video. The company claimed the video was not popular and sales were declining. The firm was hired by the plaintiff to calculate lost profits. Dr. Rosen showed that a high level of demand for the video did exist, and that inventory levels had been mismanaged so that sales of the video were artificially low. The case settled after deposition on terms favorable to the producer.

Environmental

• The state of California and a group of corporate polluters were sued by the federal government for the cost of cleaning up a Superfund toxic waste site. The first-party defendants sued the third-party defendants for reimbursement of their share of the costs. The firm was retained by counsel for the first-party defendants to verify and document all costs incurred in the clean-up effort. Dr. Rosen compiled a database of all expenditures over a ten-year period. He then traced each item in the database back to supporting documents and contracts to determine reimbursable costs. After expert deposition, the third-party defendants withdrew their challenges on the issue of the total costs incurred.

Fraud Investigation

• A lessee agreed to a series of lease contracts based on the oral promises that the lease interest rates would range from 10% to 12%. Based on a subsequent review, the actual lease interest rates charged averaged 25% and ranged as high as 100%. The firm was hired by the attorneys for the lessee. Dr. Rosen prepared a database of the lease transactions, determined the methodology to calculate the actual lease interest rates in accordance with FASB 13, and wrote three federal reports on liability and damage issues and to rebut testimony provided by experts for opposing counsel. The federal reports determined that the oral promise had been made, that the lessee had been fraudulently induced into signing leases with higher interest rates than promised, and that the credit rating of the lessee did not justify the high interest rates charged. Dr. Rosen also provided extensive assistance to the attorneys during settlement negotiations, and the case settled before trial.

Health Care

• Three doctors had a joint agreement to share practice overhead expenses. One doctor withdrew his practice from the joint agreement. The two remaining doctors sued to recover a share of that doctor’s future collections of outstanding accounts receivable to cover practice expenses through the date of separation. Dr. Rosen was retained by counsel for the plaintiffs. Because the joint cost-sharing agreement was not written, Dr. Rosen provided testimony on the economic rationale for claiming a share of the outstanding accounts receivable as the measure of damages, and prepared an estimate of the future collections. The arbitrator found in favor of the plaintiffs and awarded damages based on the testimony of Dr. Rosen.

Insurance

• A high-tech industry trade show was in progress in Atlanta when the terrorist attacks occurred on 9/11. The show organizers claimed the events of 9/11 disrupted the show and negatively impacted the ability to re-sign exhibitors at the current show for the next year’s show. The organizers filed a claim with their event interruption insurance carrier. Coverage was denied and litigation ensued. The firm was retained by counsel for the carrier. Dr. Rosen reviewed general economic trends for the high-tech industry and analyzed the trends in re-signs for other trade shows. The data showed that the decline in re-signs for the next show scheduled for 2002 was already in effect before the events of 9/11. The matter settled on terms favorable for the insurance carrier.

Intellectual Property

• A media conglomerate launched a new cable television channel focused on music videos. The name chosen for the channel was the same name as an accounting software package marketed to the music recording industry. The software developer sued for trademark violations. The firm was retained by counsel for the plaintiff. Because revenue from the cable channel was bundled with revenue from other sources, there was no revenue stream that could be used as the basis for a reasonably royalty calculation and no operating profits that could be used for a disgorgement calculation. Dr. Rosen used industry data on cable channel merger and acquisition transactions to determine the relationship between the number of subscribers and market value, and then determined an imputed revenue stream using industry ratios for market value and revenue. A reasonable royalty calculation was then applied to the imputed revenue stream.

Personal Injury

• An officer in the Naval Reserves was injured in an off-duty accident and was forced to retire before accumulating enough service time for retirement benefits. The firm was hired by attorneys for the plaintiff and worked with Naval Reserve personnel to calculate lost reserve duty pay, lost retirement benefits, and lost medical benefits. Damages were based on the anticipated rank assuming that the officer would otherwise have remained in the Naval Reserves. The case settled after the experts’ depositions, on terms favorable to the plaintiff.

Punitive Damages

• The firm developed a punitive damage model that determines a threshold level of materiality as an objective basis for punitive damages. Using this methodology, Dr. Rosen testified at an arbitration hearing regarding punitive damages to be assessed against an insurance company. He determined the point at which the impact on the company’s financial statements would become so material that it would come to the attention of upper management. No attempt was made to account for the egregiousness of the defendant's conduct. The arbitrator awarded the plaintiff the amount of damages calculated by Dr. Rosen.

Real Estate

• A confidential operating memorandum (COM) was drafted to promote investment in a large apartment complex. The actual mortgage interest rate at the closing of the purchase was more than 2% higher than the anticipated interest rate in the COM. The investors sued the mortgage lender. Dr. Rosen researched commercial mortgage interest rates and showed the actual interest rate was a market rate of interest. He also identified other differences that existed between the actual loan documents and the loan terms outlined in the COM. Dr. Rosen then calculated the reduction in damages had the plaintiffs’ expert considered these issues. The matter settled on terms favorable to the mortgage lender.

Securities

• A startup company operating an Internet auction website retained the services of an investment banking firm. During the subsequent road show, no capital was raised from investors and the company and the website eventually ceased operations. The principals of the company sued the investment bankers for failure to adequately market the company. The firm was retained by counsel for the plaintiffs. Dr. Rosen prepared an analysis of the valuation of the startup company based on the revenues and income projected by the investment bankers and based on stock market valuations for comparable companies. Dr. Rosen also identified a potential offer to acquire the company that had been declined, and determined the subsequent cash value of the would-be acquirer’s shares had the transaction been completed. The matter settled at mediation.

Trusts and Estates

• A trustee commingled his personal assets and the assets of the trust created from the community property of his late wife. Funds of the trust were then spent on speculative stock and commodity investments, gambling debts, and the personal expenses of one of the two remainder beneficiaries. The firm was hired by the attorneys for the second remainder beneficiary. Dr. Rosen testified that the trust assets and personal assets of the trustee had been commingled, that trust funds in the amount of $1 million were missing, and that the missing funds had been spent on non-trust related expenditures. Dr. Rosen also testified on the allocation between income and principle of capital gains from the sale of trust assets. The judge’s decision fully accepted the economic damages testified to by Dr. Rosen.

Unfair Competition

• A proprietor of a successful retail cake business started a separate wholesale business selling sugar flowers for cake decorating. His former partner sued alleging that he was selling below cost. Dr. Rosen researched the proper definition of “cost” in state court. He then developed an allocation methodology to demonstrate conclusively that the defendant sold his product at a price above average total cost. This matter was settled after deposition of the experts.

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