CACI No. 3903N. Lost Profits (Economic Damage)

Judicial Council of California Civil Jury Instructions (2020 edition)

Download PDF
3903N.Lost Profits (Economic Damage)
[Insert number, e.g., “13.”] Lost profits.
To recover damages for lost profits, [name of plaintiff] must prove it is
reasonably certain [he/she/nonbinary pronoun/it] would have earned
profits but for [name of defendant]’s conduct.
To decide the amount of damages for lost profits, you must determine
the gross amount [name of plaintiff] would have received but for [name of
defendant]’s conduct and then subtract from that amount the expenses
[including the value of the [specify categories of evidence, such as labor/
materials/rents/all expenses/interest of the capital employed]] [name of
plaintiff] would have had if [name of defendant]’s conduct had not
occurred.
The amount of the lost profits need not be calculated with mathematical
precision, but there must be a reasonable basis for computing the loss.
New September 2003
Directions for Use
This instruction is not intended for personal injury cases. Instead, use CACI
No. 3903C, Past and Future Lost Earnings (Economic Damage). (See Pretzer v.
California Transit Co. (1930) 211 Cal. 202, 207-208 [294 P. 382].)
Insertion of specified types of costs to be deducted from gross earnings is optional,
depending on the facts of the case. Other types of costs may be inserted as
appropriate.
Sources and Authority
• “The measure of damages in this state for the commission of a tort, as provided
by statute, is that amount which will compensate the plaintiff for all detriment
sustained by him as the proximate result of the defendant’s wrong, regardless of
whether or not such detriment could have been anticipated by the defendant. It is
well established in California, moreover, that such damages may include loss of
anticipated profits where an established business has been injured.” (Fibreboard
Paper Products Corp. v. East Bay Union of Machinists, Local 1304, United
Steelworkers of America, AFL-CIO (1964) 227 Cal.App.2d 675, 702 [39
Cal.Rptr. 64], internal citations omitted.)
• “In business cases, damages are based on net profits, as opposed to gross
revenue.” (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 397 [178
Cal.Rptr.3d 604].)
• “ ‘Lost profits, if recoverable, are more commonly special rather than general
damages . . . , and subject to various limitations. Not only must such damages
803
Copyright Judicial Council of California
be pled with particularity [citation], but they must also be proven to be certain
both as to their occurrence and their extent, albeit not with “mathematical
precision.” ’ ” (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 754
[118 Cal.Rptr.3d 531].)
• “ ‘[T]he general principle [is] that damages for the loss of prospective profits are
recoverable where the evidence makes reasonably certain their occurrence and
extent.’ Such damages must ‘be proven to be certain both as to their occurrence
and their extent, albeit not with ‘mathematical precision.’ ” (Sargon Enterprises,
Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773-774 [149
Cal.Rptr.3d 614, 288 P.3d 1237]), internal citation omitted.)
• “It is for the jury to determine the probabilities as to whether damages are
reasonably certain to occur in any particular case.” (Asahi Kasei Pharma Corp.
v. Actelion Ltd. (2013) 222 Cal.App.4th 945, 972 [166 Cal.Rptr.3d 134].)
• “It is enough to demonstrate a reasonable probability that profits would have
been earned except for the defendant’s conduct. The plaintiff has the burden to
produce the best evidence available in the circumstances to attempt to establish a
claim for loss of profits.” (S. C. Anderson, Inc. v. Bank of America N.T. & S.A.
(1994) 24 Cal.App.4th 529, 536 [30 Cal.Rptr.2d 286], internal citations omitted.)
• “Historical data, such as past business volume, supply an acceptable basis for
ascertaining lost future profits. [Citations.] In some instances, lost profits may be
recovered where plaintiff introduces evidence of the profits lost by similar
businesses operating under similar conditions. [Citations.]” (Sargon Enterprises,
Inc.,supra, 55 Cal.4th at p. 773.)
• “Regarding lost business profits, the cases have generally distinguished between
established and unestablished businesses. ‘[W]here the operation of an
established business is prevented or interrupted, as by a . . . breach of
contract . . . , damages for the loss of prospective profits that otherwise might
have been made from its operation are generally recoverable for the reason that
their occurrence and extent may be ascertained with reasonable certainty from
the past volume of business and other provable data relevant to the probable
future sales.’ ” (Sargon Enterprises, Inc.,supra, 55 Cal.4th at p. 774.)
• “[T]he lost profit inquiry is always speculative to some degree. Inevitably, there
will always be an element of uncertainty. Courts must not be too quick to
exclude expert evidence as speculative merely because the expert cannot say
with absolute certainty what the profits would have been. Courts must not
eviscerate the possibility of recovering lost profits by too broadly defining what
is too speculative. A reasonable certainty only is required, not absolute
certainty.” (Orozco v. WPV San Jose, LLC (2019) 36 Cal.App.5th 375, 397-398
[248 Cal.Rptr.3d 623].)
• “ ‘On the other hand, where the operation of an unestablished business is
prevented or interrupted, damages for prospective profits that might otherwise
have been made from its operation are not recoverable for the reason that their
occurrence is uncertain, contingent and speculative. [Citations.] . . . But
CACI No. 3903N DAMAGES
804
Copyright Judicial Council of California
although generally objectionable for the reason that their estimation is
conjectural and speculative, anticipated profits dependent upon future events are
allowed where their nature and occurrence can be shown by evidence of
reasonable reliability.’ ” (Sargon Enterprises, Inc.,supra, 55 Cal.4th at p. 774.)
“[I]f the business is . . . new . . . or . . . speculative . . . , damages may be
established with reasonable certainty with the aid of expert testimony, economic
and financial data, market surveys and analyses, business records of similar
enterprises, and the like.” (Meister,supra, 230 Cal.App.4th at p. 397.)
• “In some instances, lost profits may be recovered where plaintiff introduces
evidence of the profits lost by similar businesses operating under similar
conditions. In either case, recovery is limited to net profits.” (Berge v.
International Harvester Co. (1983) 142 Cal.App.3d 152, 161-162 [190 Cal.Rptr.
815], internal citations omitted.)
• “Even in cases of unestablished businesses, while a plaintiff may base its lost
profits on the experience of comparable businesses, there is no requirement that
it must do so.” (Orozco, supra, 36 Cal.App.5th at p. 399.)
• “[T]he case law requires reasonable certainty, not absolute certainty, and once
the occurrence of lost profits is established a plaintiff has greater leeway in
establishing the extent of lost profits, particularly if the defendant was shown to
have prevented the relevant data from being collected through its wrongful
behavior.” (Asahi Kasei Pharma Corp., supra, 222 Cal.App.4th at p. 975.)
Secondary Sources
6 Witkin, Summary of California Law (10th ed. 2005) Torts, § 1729
Haning et al., California Practice Guide: Personal Injury, Ch. 3-C, Specific Items Of
Compensatory Damages, ¶¶ 3:66-3:233 (The Rutter Group)
4 Levy et al., California Torts, Ch. 52, Medical Expenses and Economic Loss,
§§ 52.12, 52.37 (Matthew Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.44
(Matthew Bender)
6 California Points and Authorities, Ch. 64, Damages: Tort, § 64.27 (Matthew
Bender)
DAMAGES CACI No. 3903N
805
Copyright Judicial Council of California

© Judicial Council of California.