Most persons, if they ever gave it any thought at all, would assume that to determine the damages of a business injured by a supplier's violation of the RPA would multiply the number of units bought over the 4-year limiting period times the amount of the discrimination.

The courts have held that this is not the way to determine damages. Thus, if a retailer bought 1,000,000 items over the 4-year period prior to filing suit and on the average paid $1.00 more per item than his competitor, he would think that his claim would be $1,000,000 (or $3,000,000 after trebling), but this is entirely wrong. The law says that the plaintiff has to prove his actual damages, not just the amount of the discrimination.

But this principle of law leads us into a more profitable area for recovery, in many instances. Take for instance the difference in outcome in the following hypothetical situation: Assume a building maintenance company was overpaying for supplies by $1.00 per item on the average, and bought 500,000 units during the 4-year period prior to filing suit. (We should temporarily disregard his damages during the period of the suit itself, which are additional damages, and even future damages beyond the date of the judgment, which can be recovered in some instances).

We can agree that the amount of the discrimination was $500,000. Now, we learn that this higher cost of supplies cost the building maintenance company a $10,000,000 maintenance contract, when his bid (based on the higher cost of supplies) was rejected, and was one instead by his competitor (due to the $1.00 difference in price, let us assume).

The disfavored company's claim would be the amount of profit lost on the $10,000,000 contract which was lost, which could be $3,000,000 or so, or $9,000,000 after trebling.

Accordingly, it is often better to be able to show the consequences of the discrimination, rather than the amount of the discrimination, as proof of damages. The effort is greater to prove the actual loss, the difference in amount often makes the extra work highly justified.

To calculate your damages, you generally should look estimate the business you lost (i.e., were not able to keep or get) due to the price discrimination, then calculate your gross profit margin on such lost business, then deduct from that your direct costs. Your total recoverable losses (before trebling and before adding the amount for attorneys' fees payable to the winning plaintiff) would be the net amount of your lost (pre-tax) profits over the 4-year period prior to the filing of the action, plus the year or more of litigation through the first day of trial, plus future damages beyond the first date of trial (perhaps several years or more of lost business which you could not get back right away even if you win the suit and get injunctive relief). The amount can be considerable, even for a small business.

You should look at the next item on the menu for a rough rule of thumb to calculate your damages.

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Copyright © 1997 by Carl E. Person