Commercial Damages and Unjust Enrichment

Financial experts in commercial damages normally calculate damage remedies that focus on a plaintiff’s loss that is calculated either as lost profits or loss business value. While unjust enrichment is a damage remedy that focuses on the defendant’s benefit or gain.

Lost profits and lost business value remedies measure damages from the plaintiff’s perspective with the purpose of making the plaintiff whole. Lost profits is a measure of damages utilized when a business suffers a temporary decline as” a result of” or” but for” the alleged damaging act. Lost business value is a measure of damages that is utilized when a business suffers a permanent loss such as ceasing operations or permanent loss of a business segment.

The third remedy, unjust enrichment,   measures damages based on the defendant’s benefit not the plaintiff’s loss.  It is not a measurement of damages based on the plaintiff’s records and operating results but a measurement of damages based on the defendant’s  records and results of operations. This can have a significant effect on the discovery process.  When parties  distrust each other, meeting an opponent’s request for a production of documents in a litigation matter can be a significant issue in the outcome of the case.

As a damage remedy, unjust enrichment seeks to deprive the defendant  of the alleged ill-gotten benefit or gain. Unjust enrichment is generally used as a remedy for breach of fiduciary duty and intellectual property infringement. Unjust enrichment has historically been associated with claims on trade secrets, copyrights, or trademarks but its use as a damage remedy has grown  with the  increasing role  of intellectual property in the economy.

Another difference between lost profits and unjust enrichment is how the benefit is measured. While lost profits uses ex ante evidence at the time of the alleged tort or breach and the commercial damages expert will  rely on the plaintiff’s forecasts, projections, or budgets to estimate  what would have happened if not for the defendant’s actions, in unjust enrichment the expert  will use an ex post measurement of the actual benefit the defendant received based on evidenced through the trial date.

As the differences indicate, unjust enrichment is a remedy that yields damages based on the defendant’s benefit and seeks a measure of relief without unfairly treating the defendant but carries enough weight to act as a disincentive for future unfair actions by the defendant.