Gibson’s Bakery v. Oberlin College – Trial Day 7 — Damages Expert says Show Gibson’s The Money!
“when you have people thinking you’re racist, and you live in a small town, the accusation can last a lifetime”
Today was Day 7 of witness testimony in Gibson Bros. v. Oberlin College. The events giving rise to the lawsuit have been said to represent “the worst of identity politics.” You can read about some of the background on this case here.
The court addressed damage issues from a legal perspective earlier in the case, as described in our post Gibson’s Bakery v. Oberlin College trial motions – What’s a reputation worth, and how do you prove it?
In a half day of testimony that was full of numbers, the jury deciding whether Oberlin College defamed and libeled a small business heard that the bakery/market had already lost and will lose about $5.8 million from the school’s alleged racist accusations. That number was arrived at by an independent accountant who based that figure on losses over a 30 year period.
“When you look at how the revenues have declined, it is clear that those numbers represent that something major happened,” said Frank Monaco, a certified public accountant who is managing partner for a 60-member accounting and financial consulting firm based in Canton, Ohio. Monaco has been a CPA for almost 40 years.
He said he based his 30-year estimates on the fact that Gibson’s Bakery & Market, has been around for more than 130 years and that “when you have people thinking you’re racist, and you live in a small town, the accusation can last a lifetime.” He said 30 years was a “generational” estimate, being that Gibson’s family has been in the business for five generations.
Things got testy during cross-examination of Monaco by Oberlin College’s attorney Matthew Nakon. “Do you hold that Oberlin College is responsible for every human being that doesn’t shop there anymore,” Nakon asked. Monaco paused, and Nakon asked him, “Do you understand my question?”
“Yes, do you understand my report?” Monaco answered.
The differences in the approach taken in this fight between the plaintiffs and the defendants were quite clear. Gibson’s Bakery presented that their revenues began dropping significantly after the protest by students in November of 2016, a protest that claimed in no uncertain terms that the business was racist for pursuing the prosecution for three African-American students who were arrested for shoplifting bottles of wine at the store.
Monaco laid out figures that showed how much of that loss came from the stores school cafeteria food deal, in-store shopping by both students and the general public, and the lost income from two apartment buildings they owned (and a future planned building of another one scrapped).
The Oberlin College’s attorney, however, repeatedly harped on the fact that Gibson’s had seen a decline in revenue in the five years prior to the protest, and that the protests in 2016 had little to do with any income loss. In addition to that, as reported exclusively in Legal Insurrection last week, the defendants focused on the fact that an expert report they would bring into evidence this week or next would say the business isn’t worth any more than $35,000.
Monaco said the tax filings he looked at indicated that the three main employees of the business – 90-year-old Allyn W. Gibson, his son, David Gibson, and grandson, Allyn D. Gibson – made $140, 000 in salaries in 2016. “You would never sell a business like this for $35,000 that has been around for 130 years and has $140,000 in annual salaries for its principal owners,” he told the jury.
Monaco laid out his numbers very clearly: the business would lose $2,819,000 over 30 years in the store and from school food losses; $985,350 in higher rental property vacancies; and $2,031,000 in a long-planned apartment building they planned to build in the next few years. The last loss came from not having the projected revenue to do the housing project.
His report also took a stab at measuring how bad the student loss of shopping would be. Oberlin has a student debit card system called Obie Dollars; money is deposited in the school-run account, and the students can then use that card at on-campus, school-run stores or selected off-campus stores like Gibson’s
In 2015, Gibson’s took in about $48,000 in Obie Dollar shopping from students, and then $44,000 in 2016 (the protests happened Nov.10-11 that year). But in the next two years, the Obie Dollars spending dropped off the campus cliff: Oberlin College student spent only $9,000 in Obie Dollars at the store in 2017, and about $5,000 in 2018.
Overall store revenues have dropped from $828,000 in 2016 to $690,000 in 2017 to $525,000 in 2017. Based on what has been brought in so far this year, the 2019 revenues are predicted to be $433,000. Monaco said that is a loss of 47.74% in income four years. “These are textbook before and after numbers,” he told the jury.
Oberlin College attorney Nakon cross-examined with several points he put out over and over again. He tried to lessen the estimated loss by calling Gibson’s a “small time general store and not a national conglomerate.” He also pointed out to Monaco that the store had had a mixed bag of revenue results between 2010 and 2018: five years when the business posted small losses, and four years when they operated at a profit.
Monako said the previous losses were from the business being late to the game in having debit cards accepted. “Hardly anyone, and especially among students, carry any cash anymore,” he said. “They were very slow to modernize.”
It is quite apparent that the Oberlin College attorneys are defending the damages with as much effort as they are defending liability.
What the general feeling among courtroom observers is that a win for Oberlin College (from their viewpoint) would be to be found guilty of the defamation and libeling of Gibson’s, but having the decide upon a small payout of money. That way, they can still be seen by the social justice warrior activist students in Oberlin as fighting racism by the establishment, but not have to pay much money to be held in such high esteem.
At this point, when one does the math, it is very clear that a high monetary award is quite possible. The expert today laid the compensatory damage at $5.8 million for store revenue losses, and if the jury does find the college guilty of the defamation and uses that number as compensatory damage, the punitive monetary damage can be double from that number. That would add $11.6 million to the $5.8, making it $17.4 million to start with. And, of course, that high figure would mean the best of all possible worlds would take place in a pro-Gibson’s bakery world.
Monaco gets back in the witness chair tomorrow to finish his testimony. Expect Gibson’s principal owner, David Gibson, to follow. Oberlin College will likely begin calling their witness and presenting evidence on Wednesday.
Daniel McGraw is a freelance writer and author in Lakewood, Ohio. Follow him on Twitter @danmcgraw1
WAJ adds: Based on Dan’s reporting, the college’s attack on the expert appears to continue the tone-deaf nature of the defense since the start of the case, and arguably before the case. It’s one thing to attack future damages as speculative, it’s something else to denigrate the business, a business in existence since 1885 and which feeds multiple generations of the Gibson family and numerous local employees. By insulting and demeaning the Gibson’s business, the defense is insulting the community and the jury. The defense might as well have just called them “deplorables.”
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Comments
Thank you for this trial coverage. If not for Legal Insurrection, I wouldn’t know anything about this.
Keep up the excellent work, DM.
Things got testy during cross-examination of Monaco by Oberlin College’s attorney Matthew Nakon. “Do you hold that Oberlin College is responsible for every human being that doesn’t shop there anymore,” Nakon asked. Monaco paused, and Nakon asked him, “Do you understand my question?”
“Yes, do you understand my report?” Monaco answered.
Woot!
yes it’s great fun, buit snarkiness like that can also alienate a jury. .
Depends on which one they think was being snarky.
Its also something that depends heavily on tone, which doesn’t really come through in text.
It also depends on how the community views Oberlin College, in this case I do not think there is any love loss. Especially telling is their blackmailing local businesses to not involve the police when someone is stealing. That is really BS, and I bet they resent it.
Keep in mind that the trial is being held in Lorain County, not Oberlin. Oberlin is about 3% of Lorain County. This is not just the College vs the Oberlin townspeople. Lorain County is pretty evenly split politically, vs Oberlin city which voted 90+% for Hillarity. Most of Lorain County is oblivious to the existence of Oberlin College. The college didn’t want a change of venue because the townspeople hated them, but rather, because they needed a highly slanted urban jury to even stand a chance. They were screwed from the start in a fair trial. As an aside, back in my freshman year mid 70’s a friend and I were hitchhiking south on rte 58 and were picked up by a local woman (different places, different time). She thought that we were high school students who had missed the bus. When she learned we were Oberlin freshman, she actually asked “do you people still make bombs?” This was only 5 years after Kent State et al. Still funny today. I’m just glad that my friend, who was snarkier than me, didn’t reply “we haven’t gotten that far in chemistry yet.”
So the jury isn’t composed of people who hate the college, just a group of people with a lower BS tolerance. If you want a fun trial, hold it in Kipton. 😉
Gibson’s chose a solid expert: LOCAL, an Ohioan, but from a good-sized firm with a history of competency. For big-dollar auto accidents where we needed surgical medical experts, we always used either (a) the operating physician with “hands on” experience on our client, who was his patient or (b) a nationally recognized “super star”.
But for this kind of case, you want a “home grown”, “meat and potatoes” guy–“one of us”, with experience in valuation and able to defend himself in court. I think Gibson’s damages claim is credible, and defensible, both for a jury’s verdict and for any appeal. Thank you for the reporting.
I think most important aspect is the valuation by Oberlin. It’s so low that it is unbelievable.
When you hear something like taht you start wondering about a lot of the lawyers arguements. “falsus in uno, falsus in omnibus”
Again, for those who don’t know: one year at a diploma mill like oberlin costs upwards of 57,000 dollars.
Oberlin is valuing Gibson’s 130 year-old bakery at 35,000 dollars.
If Gibson’s gets even half the damages they’re claiming, that $57,000 / year is going to go way, way up.
One good question we cannot answer: Does the college have LIABILITY INSURANCE? That’s very likely, but the jury will not be allowed to know this.
Oberlin’s expenses are worse than that. They require students to live on-campus for part of their degree so the total cost is more than $71,000 per year!
While I agree that $57K is far too much for an Oberlin “education”, and that $35K is unlikely to be a fair valuation of Gibson’s business, I don’t understand why you think there’s a relationship between those two figures. Why is it implausible for a business to be worth less than the cost of a year’s education?
I’d be really tempted to suggest to the jury that the 35K estimate is due to the damage Oberlin has caused the business.
The Gibson expert doesnt come across as being nearly as rock solid as is being portrayed. Quite frankly, I am surprised the defense didnt rip him a new A in the cross.
As a CPA, I have been involved in numerous valuations (estate & gift valuations, buy/sell transactions, divorce litigations).
On the plus side, the ridiculus $35k makes the Gibson expert look reasonable.
A few obvious errors in the Gibson expert’s report
1) The earnings from the non existant future real estate development should even be admissible, much less a factor.
2) the correct measure for the lost revenue should included the costs associated with the lost revenue, not the gross revenue,
3) The gross annual revenue before the protest was only $828k, Assuming a 10% net profit margin, that is only 80k per year. The typical business of this size will sell for 5-10x the annual cash flow which at best puts upper limit on the value in the 800k range. However, the article notes that the store lost money in several years. That puts the lower limit in the range of 200k-300k.
In summary, both the $5m valuation/lost revenue and the $35k valuation are on the extreme ends of being ridiculus. Not sure how either one got past the daubert standard.
I agree with your other objections, but not this one. If Gibson’s can establish that but for the defamation they would have proceeded with this project and it would have been successful, I don’t see why they shouldn’t recover for it.
It should be disregarded because 1) it doesnt exist
Even at that, it remains speculative at best. ,
It´s that re.tarted progressive logic that justifies killing unborn human beings.
“They don´t exist”, right?
Call up the defense and offer your services. Show everyone how to “do it right”.
With respect, Gibson’s damages are not the value of the business but its pecuniary loss – loss of profits – and general damages for loss of reputation, plus punitive damages.
Here is an article that points out that because of Tort Reform there is an upper limit of $350K for non-economic loss.
https://www.ohionews.org/aws/ONA/pt/sd/news_article/206756/_PARENT/layout_details/false
If it wasn’t for this suit by Gibson’s, sales would have returned to their “normal” by now.
30 years of decreased revenues my foot! “The dogs bark, but the caravan moves on” . . . time for the SJW’s to move on to their next target.
Oberlin College is responsible for the lawsuit. People who are defamed have every right to fight back in Court and reclaim their reputation.
It is hard to tell what would happen in an alternate universe where this lawsuit didn’t happen, but I strongly doubt that you are correct. The Oberlin students and faculty have clearly been trying to keep this alive, even going so far as to tell prospective students to avoid the store. The student government kept its condemnation of the store up on its message board and apparently some faculty did similar things. Before the lawsuit was filed, an article appeared in a student newspaper saying “The social implications of being seen at Gibson’s are much worse than any freshman faux pas I can imagine.” So, no, I think there is a lot of evidence that this would continued if no lawsuit was filed.
Great Picture. Those porkers all look just like the most famous OC grad. Lena the pig Dunham LOL
They’ve already had more than enough donuts and such.
They probably stole those donuts.
They look like utter idiots.
Their photos should be kep by every potential employer who might get a resume from a loser graduating from Oberlin.
To be honest, every non-SJW with hiring authority [and I realize that HR Departments are usually run by PC Commandos who functionally hate company and the country] should have a list of schools, whose names on a resume mean the reject pile.
Subotai Bahadur
Outstanding coverage!
I can hardly wait to open the next installment!
Oberlin’s valuation claim is not credible. The math presented by the accountant who testified today is easy to understand, straightforward, and therefore, more believable and credible. It will be interesting when Oberlin presents. I wonder if they will simply rest. If what is being reporting here is accurate, continuance by Oberlin may be counterproductive to their cause.
The college hired attorneys who share their SJW mind set. We have repeatedly seen statements and actions by defense counsel which an impartial observer would deem imprudent–even counter productive.
MAJOR ERROR–Oberlin acts like this is one of today’s too numerous “trials in the court of public opinion”. It’s not. Gibson’s has a laser focus on the men and women on the jury, with due deference to the judge as the “referee”. The 2016 election was a metaphor for this trial: Hillary Clinton “played for the media” and won the popular vote. Trump played to the ELECTORAL COLLEGE, and won the election!
Oberlin’s faulty “mind set” and progressive bias distorts their very capacity to reason intelligently and it will compel them to put on a “vigorous” defense. Watch for repeated IMPEACHMENTS during the defense phase. Gibson’s can score as many points on defense as they did on offense.
I’m torn.
On the one side, anybody actually testifying with a straight face that this only cost the $35k is such an obvious ridiculous liar that they will harm the college’s entire case.
The thing with the student cards was GOLD, because that is unambiguous proof that their sales went WAY down as a direct result of the college’s lies. And incidentally, JUST that goes past the $35k bullshit estimate.
Me personally seeing something like that would insult my intelligence and say that the college is just guilty and deserves to feel the pain.
But on the other hand, including in the Gibson’s estimate things like lost earnings on a proposed project that has nothing to do with the actual bakery itself is a questionable move, and may bias people against THAT estimate as well. They should have stuck with actual damages to the bakery itself.
My observation has been when juries think they’re both liars they’ll start going way off course and you’ll see some weird number between the 2 based completely on the jury’s feelings.
No, the $35,000 is what the college asserts is the total value of the business, not the total value of its losses.
The alleged value of the business is totally irrelevant to the losses suffered as a result of the College’s defamation of the bakery.
I agree. This is an attack on the Gibson’s, the bakery incident is simply a proxy. Oberlin College and it’s supporters would be overjoyed to have all the family’s business endeavors fail as a consequence of this incident. They will be smeared forever. It would be trumpeted loudly everywhere as a victory for anti-racism, little Oberlin having struck a blow for Justice. I confess not knowing how much coverage the trial and incident are attracting nationally, but if Oberlin wins they will make certain it gets national attention and claim it as evidence that entrenched, small town racists will not be tolerated…as opposed to the notion that shoplifting is a crime. It’s Michael Brown and Ferguson without riots. If Oberlin loses they’ll move on, if they win everyone, everywhere will know. Thank you Professor Jacobson for your coverage.
The value of the business is a cap on the possible damage. If the whole business is only worth $35K, then even if Oberlin destroyed it completely it would only be liable for that about, so how can it be liable for more when it only damaged the business rather than destroying it?
That’s clearly the Oberlin strategy. However, it is so ridiculous it has no credibility and will likely be disregarded. The Gibson’s valuation is also very high. Both sides are, of course, presenting the case most advantageous to themselves. My only point is the Gibson’s PRESENTATION was more credible and likely to set more firmly in the jury’s mind. Just my take on the reporting present on this blog.
No, little one, the Gibsons haven´t been in business for 130 years just to be worth $35k.
BSR, there’s nothing ridiculous about it. On the contrary, it’s the obvious truth. Damage done to a business can’t be greater than its total value. The absolute worst one can do to a business is to destroy it completely, thus reducing its value to zero.
Cucha, you’re an idiot. How long a business has survived has no impact on its value. It is entirely possible for a 200-year-old business to be worth nothing at all, just as it’s possible for a six-month-old business to be worth billions.
If the project has a well documented plan that was already underway then it’s reasonable to include the estimated loses for future earnings.
It depends. If the Gibsons have evidence to document a plan in action that was derailed by the lost bakery revenue, then I could see it being relevant. Purchased land, architectural drawings, permits, etc are evidence of something tangible and not just a pipe dream, and also represent both a loss in money spent and future income lost.
You are missing the fact that this is a defamation lawsuit. The school didn´t simply call for the boycott of the bakery, they were defaming the Gibson family. By having their names thrown in the mud, they sustained losses beyond diminished sales at the bakery.
The defamation affected any and all potential business deals they had going on or were planning to make.
“an expert report they would bring into evidence this week or next would say the business isn’t worth any more than $35,000.”
That is one hell of an overreach.
The $35k was the target to destroy them down to….pick up the store for pennies and run it themselves. The college will forever be negative to the store. Watch Oberlin try to start an off campus competitor to Gibsons……and fail. Since the damage is done…. Gibson’s must recoup their forever loss. The three college “crooks” got off light.
The original suit contained a lot of information regarding actions by the college to obtain the Gibson’s properties. In some ways, colleges are just like cities, but don’t have the power of eminent domain. It is easy for me to see a backroom effort to get the price down lower via mob action by the students.
Typically, a business (“going concern”) is priced at a multiple of the cash flow. Even at a valuation of 1x cash flow, Gibson’s is worth far, far more than $35k.
Note my comment above.
You are correct that the a business is price as a multiple of cash flow ( or some variation based on cash flow)
The value of any business is the present value of future cash flows (with an appropriate adjustment for risk, both positive and negative adjustment).
The article notes that Gibson’s had postive taxable income in some years and negative taxable income in other years, though the article doesnt provide sufficient detail. Based on my experience with similar businesses, the annual cash flow (for the years before the protest) averaged less than $100k (note the 2016 gross revenue was only $828k). A reasonable estimate would put the value somewhere in the $200k to $600k range.
Business evaluation may be irrelevant here. Gibson’s is not claiming the defamation resulted in the loss of a sales opportunity and current valuation, but a loss in current and future income and so need that income replaced. I am not at all sure if this allowed under Ohio law. But since Gibson’s presented this an the judge allowed it, I am assuming it is a permissible basis for calculating loss.
The value of a business represents the excess of expected income from it over what a potential buyer could earn by starting up his own business, which is the same as what the current owner could earn by starting over with a new business. If the value has been reduced to zero there’s no point in continuing it.
But one thing Oberlin seems to be trying to ignore is that the damage is not just to the bakery but to the Gibson family’s entire business, including the real estate side.
Oberlin hired attorneys that share their SJW outlook. Perhaps their expert does as well. I certainly hope that the Gibson’s attorneys can provoke the Oberlin expert to spit out something along the lines of, “No business owned by a bunch of hateful racists can be worth more than $35.000!”
Oberlin should be forced to televise to the world a course called:
“How to open and operate a first-class retail operation for $35,000.”
This, they should be forced to do.
This is probably one of the reasons why the college is valuing Gibson’s at only $35k. It’s a link to the Lorain County tax assessor’s office for the store.
http://loraincountyauditor.com/gis/report/Report.aspx?pin=0900085112007
I don’t see what the land value has to do with the damage to the business. Even if the business were to close down entirely, the land would still be there and would still be worth the same.
This is a key question. Obviously Oberlin is not responsible for people deciding on their own to boycott Gibson’s — unless their reason for doing so is that they heard lies originally told by Oberlin.
And that is why Oberlin is so insistent that the factual lies told were not told by it, or at least were also told, with far greater volume, by others whom it does not control. If the current students are boycotting Gibson’s because they heard the lies from older students, who heard them from the students who made them up in the first place, then Oberlin is not responsible, even if it also repeated those lies. But if the current students are boycotting because of lies they heard from someone who heard them from the college, then it is responsible, even if it didn’t make the lies up in the first place.
But all this must be about factual lies, not mere opinions. “Gibson’s is racist” is an opinion. “Gibson’s falsely accuses black people of shoplifting”, or “Gibson’s beats accused shoplifters”, are lies, and actionable.
“…then Oberlin is not responsible, even if it also repeated those lies. But if the current students are boycotting because of lies they heard from someone who heard them from the college, then it is responsible, even if it didn’t make the lies up in the first place.”
Your statement seems rather contradictory to me. Perhaps you were not clear, which is a common problem in blog posting I, too, also make.
“But all this must be about factual lies, not mere opinions. “Gibson’s is racist” is an opinion. “Gibson’s falsely accuses black people of shoplifting”, or “Gibson’s beats accused shoplifters”, are lies, and actionable.”
“Gibson’s is racist” can be construed as a statement of fact as surely as the other two examples you give. A statement of opinion would be more like “Based on what I have heard, Gibson’s appears to be racist.”
My statement is crystal clear. If it seems contradictory to you, the problem is with your reading comprehension. The college is responsible for all the consequences of its own lying (if indeed it lied) but it is not at all responsible for the consequences of other people’s lying.
And “Gibson’s is racist” is an opinion, just like “Gibson’s is evil”. It’s not actionable. “Racist” is a conclusion, not a fact.
It could well be my comprehension. But to my comprehension, the paragraph is contradictory.
I don’t see how it could be clearer. If the students who are boycotting Gibson’s, thereby damaging it, are doing so because the college told lies about it, then the college is responsible. If they are doing so because someone else told lies about it, then the college is not responsible. What difficulty do you have with this?
That someone’s actions were motivated by racism can be verified; whether someone is a racist cannot. That someone is a racist is a conclusion, which is an opinion. It’s the same as saying they are a bad person, as opposed to saying they have done bad things.
And “Gibson’s is racist” is an opinion, just like “Gibson’s is evil”. It’s not actionable. “Racist” is a conclusion, not a fact.
Not sure why you insist this. An important distinction between “opinion” and “fact” is that “opinion” is not verifiable. Certain racist activities are prohibited by law, such as discrimination based on race by a prospective employer. To try these cases there must be a “finding of fact,” which would show the offender was acting from racist motives and not some legal manner of discrimination (such as lack of attainment of credentials). Therefore, a legal finding may occur that an offender acted from a motive of racism, which would make those people racists. If a court can determine if a person acted due to racism, or not, then it must be a discernable and verifiable fact. Therefore, stating “Gibson’s is racist” would seem to be a statement subject to verification, and is therefore a statement of fact.
Milhouse
The law is not as black and white as you believe. Here is an excellent article on whether accusing someone of racism is actionable. In this case, the accusation of racism is not a mere opinion. Oberlin College alleged Gibson’s accused the 3 black thieves of theft because Gibson’s is racist and not because the 3 black students were thieves. There was obviously no factual basis for Oberlin’s accusation and it made no attempt to determine the truth. The claim of racism is clearly defamatory, unless you think being accused of racism in this day and age is no big deal. It is harder to think of a bigger deal.
https://harvardblackletter.org/wp-content/uploads/sites/8/2012/11/199-228.pdf
“That someone’s actions were motivated by racism can be verified; whether someone is a racist cannot.”
If someone’s actions are motivated by racism, they are racist. It’s pretty plain and simple.
If you have followed the complete trial to date, you would likely not have made your comment. You’re certainly entitled to your opinion. But it is refuted by previous testimony and documents already in evidence.
Gibson’s has now presented a complete “prima facie” case with admissible evidence supporting findings of liability and justifying an award of damages–of whatever amount the jury believes is just and proper.
BUT, I suspect Gibson’s has MORE. And, I believe it will be as delicious and satisfying as their finest chocolate eclair.
Their attorneys deserve great respect. As does the trial judge–who is honorably assuring an “honest contest on a level playing field”. As does our “reporter”
Oberlin’s next trial will be with the alumni. Unlike the students, and apparently the faculty/admins, the alumni are adults and will look at this very differently. If Oberlin tells the truth, they will look bad. If they double down with lies and blame, they will look worse. Anyone want to wager how they will handle it? My good buddy JR Ewing once said, “once you lose your integrity, the rest is simple.” I don’t think that Oberlin College will find this to be the case.
Awhile back I read a book titled “Stick and Rudder.” It claims to be about flying, but I saw it more as directions on how to navigate life. Someone needs to tell Oberlin that you can only pull back on the stick for so long before bad things happen. I won’t get into what cargo should have been tossed a long time ago.
I’m enjoying your articles, Daniel. You’re a good writer and LI is lucky to have you.