---
title: "Economics Experts Not Allowed to Opine on Pecuniary Damages"
meta:
  "og:description": "The economics experts were not allowed to testify because they failed to reliably apply their methodology to the agreement the parties actually made"
  "og:title": "Economics Experts Not Allowed to Opine on Pecuniary Damages"
  author: "Shuva Guha Thakurta"
  description: "The economics experts were not allowed to testify because they failed to reliably apply their methodology to the agreement the parties actually made"
---

# Economics Experts Not Allowed to Opine on Pecuniary Damages

Posted on August 12, 2026 by Shuva Guha Thakurta

Plaintiff Calltrol Corporation initiated this action on October 6, 2018, against LoxySoft AB and LoxySoft Inc. (together, "Defendants"), alleging breach of contract, tortious interference with prospective economic benefit, unfair competition, false and deceptive practices.

Plaintiff sold call center software, hardware products, and related support services. LoxySoft Inc. is a wholly owned subsidiary of LoxySoft AB. In March of 2002, Plaintiff entered into an agreement (the "Reseller Agreement") with LoxySoft AB that granted LoxySoft AB a license to market and resell certain call center products for which Plaintiff was a licensed distributor. LoxySoft AB agreed to purchase call center software products, software developer kits, and related support services from Plaintiff.

The Reseller Agreement ("RA") stated that "during the term of this Agreement" LoxySoft AB "will not directly or knowingly indirectly participate in the development or commercialization of software products competitive to the [Plaintiff's] Products." The RA also provides "an initial term of two (2) years" and "thereafter automatically renewed for successive one (1) year periods (each a "Renewal Period") unless earlier terminated in accordance with the terms" therein, which included "written notice" to Plaintiff.

Plaintiff alleged that Defendants began marketing and selling their own call center products and services ("Competing Products") to Plaintiff's customers, directly competing with the products and services they previously purchased and resold from Plaintiff.

Plaintiff further asserted that Defendants failed to provide written notice of their intent to terminate the RA. To quantify the lost profits allegedly caused by that breach, Plaintiff retained the experts, [Kristin K. Kucsma](https://expertwitnessprofiler.com/expert-witness/Kristin-Kucsma/1518515), M.A., and [A.E. Rodriguez](https://expertwitnessprofiler.com/expert-witness/Armando-Rodriguez/1578326), Ph.D. Defendants filed a motion to exclude the testimony of Plaintiff's damages experts.

![Economics Experts Not Allowed to Opine on Pecuniary Damages](https://media.jurimatic.com/images/blog_pic_640X480_2026_08_12T150127_262.webp)

## Economics Expert Witnesses

[Kristin K. Kucsma](https://expertwitnessprofiler.com/expert-witness/Kristin-Kucsma/1518515) is an experienced economic and financial analyst and a former professor at Drew University and Seton Hall University.

[Want to know more about the challenges Kristin Kucsma has faced? Get the full details with our Challenge Study report](https://expertwitnessprofiler.com/order/add?eId=1518515&pId=3).

Dr. [Armando E. Rodriguez](https://expertwitnessprofiler.com/expert-witness/Armando-Rodriguez/1578326) is a Professor in the Department of Economics & Business Analytics, Pompea College Business, University of New Haven.

He created the University of New Haven’s bachelor’s degree program in business analytics and the behavioral economics concentration as part of the University’s B.A. in economics.

[Gain a comprehensive understanding of A.E. Rodriguez’s qualifications and casework history with his Expert Witness Profile report](https://expertwitnessprofiler.com/order/add?eId=1578326&pId=3).

## **Discussion by the Court**

The experts stated that they were asked "to calculate pecuniary damages owed to Calltrol as a result of Defendant's actions," and that they limited their analysis "to profits lost by Calltrol as a result of Defendant's actions," expressly excluding any analysis of Calltrol's patents or exit strategy. The experts assumed liability and did not independently audit the figures or data provided to them. They opined that Calltrol's damages ranges from $3,710,311 to $4,256,846.

The report's damages calculation is based on what the experts call the "Computer Telephony Integration Software Index," or "CTIS Index." The experts created the CTIS Index from the publicly traded stock prices of four companies: eGain Corp., 8x8 Inc., Five9 Inc., and Enghouse Systems. The report describes the CTIS Index as a "market performance metric based on publicly traded shares of the constituent firms" and that it "reflects what would have been Calltrol's performance but-for the events set forth in this matter." The experts then applied that index to Calltrol's historical income to "forecast Calltrol's lost income" and applied a smoothing filter the report describes as a seven-year moving average. The experts did not deduct projected costs because, in their view, Calltrol's cost of goods sold was negligible and the income at issue entailed intellectual property payments requiring no ongoing resources or activity. As corroboration that the Index is representative, the report reports a 0.97 correlation coefficient between LoxySoft's reported revenues for 2016 through 2023 and the but-for income the Index generates for Calltrol.

### **I. The CTIS Index Is Not the Product of Reliable Principles and Methods**

The mechanics of the experts' methodology are not in dispute. The experts multiplied Calltrol's reported income in 2012 by the ratio of the CTIS Index value in each subsequent year to its index value in 2012 and treated the result as a forecast of Calltrol's lost income.

The resulting projections rise and fall based on the stock prices of four public companies. They did not reflect Calltrol's license sales, customers, pricing, or profits. That approach satisfies none of the [_Daubert_](https://www.law.cornell.edu/wex/daubert_standard) benchmarks. Nothing in the record indicates that it can be or has been tested or that it carries a known rate of error, and Plaintiff has identified no peer-reviewed literature, treatise, or judicial authority approving the use of public-company stock prices to forecast the income of a small, privately held company.

Rodriguez testified that share value generally rises with sales, but that observation about public issuers does not establish that the same relationship holds for a two-employee private licensor like Calltrol. Moreover, the authorities Plaintiff cites — the Gaughan treatise and a law review article on yardstick damages — address comparisons based on the sales or profits of comparable firms, not their stock prices.

### _Methodology_

The methodology also failed on its own terms. Three of the four companies in the CTIS Index reported negative or stagnant net income over the same 2013-2023 period in which the Index projects Calltrol's income would grow severalfold. Plaintiff offered no response to that evidence. An index that does not track the profitability of its own constituent companies cannot serve as a reliable proxy for the profitability of Calltrol.

The report also did not analyze whether the four companies selected for the Index are actually comparable to Calltrol. The treatise on which Plaintiff relies states that an expert who uses the performance of other firms to estimate how the Plaintiff would have performed must analyze those firms to determine whether they are truly comparable.

Kucsma testified that she did not select the companies because she considered them "comparable to Calltrol," and that, apart from a shared NAICS classification, she could not identify what they had in common with Calltrol. She performed no analysis of the companies' profits or revenues and could not recall considering alternatives. The differences between the companies are substantial. Each constituent is a diversified, multinational company with subscription revenue; Calltrol had two employees and earned income only from discrete per-license sales. An expert who does not merely choose imperfect comparators but "utterly fails to perform any substantive analysis of those factors most relevant to comparability" has not employed a reliable method.

The additional analyses in the report did not remedy these defects. The moving average reduces year-to-year volatility in the stock-price data, but the smoothed values are still stock prices. Kucsma identified no Calltrol-specific factor that the filter measured or controlled for, only unspecified "market" and "industry" factors.

As for the correlation, the experts computed the 0.97 coefficient using LoxySoft's total revenues. Rodriguez testified that he did not know what portion of LoxySoft's market performance "was attributed to the call center," and, when shown a breakdown of LoxySoft's revenues by product line and asked whether he took the breakdown into consideration in developing his opinion, answered that he did not.

A correlation computed without regard to which of LoxySoft's products competed with Calltrol's does not establish that the Index reflects the market for Calltrol's products. Plaintiff's contention that the correlation shows LoxySoft "captured the entire market updraft" presupposes that LoxySoft's aggregate growth consisted of sales that would otherwise have flowed to Calltrol. The coefficient shows only that LoxySoft's total revenues moved with the constituent companies' stock prices, not that the growth came from products that displaced Calltrol's. Neither analysis, therefore, establishes that the Index reliably measures Calltrol's but-for performance.

Plaintiff's remaining arguments are unpersuasive. In its opposition, Plaintiff described the CTIS Index as a "Yardstick Analysis" and as a proxy for "lost enterprise value" derived through a Price-to-Sales multiple. Those terms appear nowhere in the report, the experts' depositions, or Plaintiff's [Rule 26(a)](https://www.law.cornell.edu/rules/frcp/rule_26) disclosures.

The CTIS Index, as the experts applied it, is not the product of reliable principles and methods. Because the damages calculations are generated entirely from the Index, the Court excluded the report and the experts' testimony.

### **II. The Experts' Methodology Was Not Reliably Applied to the Facts of This Case**

The experts' model did not measure the position Calltrol would have occupied under the parties' actual contract. Plaintiff acknowledged that the model assumes "that the parties to the agreement acting in good faith would renegotiate the agreement." Kucsma testified to the same effect that, absent the alleged breach, Calltrol might have "entered into some sort of alternative arrangement, perhaps some sort of rental agreement."

But nothing in the Reseller Agreement requires the parties to renegotiate or imposes a minimum purchase obligation. Instead, either party could terminate the agreement at the end of the initial term or any renewal term by providing ninety days' written notice. A damages model built on a hypothetical renegotiated agreement, rather than the agreement the parties actually made, rests on the type of "unrealistic and contradictory" assumption that warrants exclusion.

The projected duration of the parties' relationship presents the same problem. The experts projected that the relationship, or a renegotiated version of it, would continue for ten to thirteen years after the alleged breach. Yet the report itself acknowledges that the parties last communicated in 2013 and that Calltrol has performed no maintenance services for LoxySoft since that year. Over the course of the parties' relationship, LoxySoft purchased approximately 12,500 licenses, a volume consistent with a stable and finite customer base. The report never analyzes how many additional licenses LoxySoft would have needed to purchase to generate those projections, and Rodriguez confirmed that the damages estimate does not contemplate any particular number of licenses. The model assumes tens of thousands of additional license sales without considering whether there was any market for those licenses. That assumption is difficult to reconcile with either the agreement or the record.

Plaintiff responded that LoxySoft never exercised its termination right and that the agreement therefore remains in force. But whether the contract was terminated is not the dispositive question. The relevant question is whether the experts applied their methodology to the agreement the parties actually made, and they did not. Because the methodology was not reliably applied to the facts of this case, exclusion is independently warranted under [Rule 702](https://www.law.cornell.edu/rules/fre/rule_702#:~:text=Rule%20702%20sets%20forth%20the,is%20a%20relatively%20narrow%20inquiry.).

### **III. The Experts' Opinions Are Not Based on Sufficient Facts or Data**

An expert may rely on unaudited, client-provided data if experts in the same field would reasonably rely on such materials. But the expert must be able to explain and account for the data used.

Here, the income figures that anchor the damages model come from a one-page summary of Calltrol's reported foreign income. At her deposition, Kucsma could not reconcile the summary's figures with those in the report. The summary reported a 2010 loss of $42,836, while the experts used a $160,917 income figure for that year, and she confirmed that she never reviewed the underlying shareholder tax returns. Plaintiff's explanation, that the negative figure reflected a one-time bank failure, comes from counsel's opposition brief, not from the report or the experts' testimony.

The experts' inability to account for the income figures anchoring the damages model reinforces the conclusion that their opinions must be excluded.

## **Held**

The Court granted****Defendants' motion to exclude the testimony of Kristin K. Kucsma, M.A., and A.E. Rodriguez, Ph.D.

## **Key Takeaway**

In evaluating a methodology, courts consider whether it can be and has been tested, whether it has been subjected to peer review and publication, its known or potential rate of error, and whether it is generally accepted in the relevant field.

A court may also exclude an opinion where "there is simply too great an analytical gap between the data and the opinion proffered."

Please refer to the blog previously published about this case:

[Telecommunications Expert's Testimony on Business Matters Excluded](https://expertwitnessprofiler.com/telecommunications-experts-testimony-on-business-matters-excluded)

## **Case Details:**

| Case Caption: | Calltrol Corporation V. Loxysoft AB |
| --- | --- |
| Docket Number: | 7:18cv9026 |
| Court Name: | United States District Court for the Southern District of New York |
| Order Date: | August 04, 2026 |

---

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