Gibson’s Bakery v. Oberlin College: The $13 million damage claim the jury wasn’t permitted to consider
Had the reputation repair damage theory gone to the jury, the final judgment — even after adjusting for the tort reform caps — could have been double the $25 million entered in the case.
Things seem bad for Oberlin College, after the $11 million compensatory and $33 million punitive damage verdicts (later reduced collectively to $25 million under Ohio tort reform caps) in favor of Gibson’s Bakery and its owners.
But it could have been worse. Much worse.
Oberlin College’s erroneous crisis management public relations campaign seeks to portray itself as the victim of a process in which the judge and jury made numerous mistakes, and the media misrepresented the case.
But in reality, Judge John Miraldi had several rulings that helped Oberlin College tremendously. In his pre-trial summary judgment ruling, Judge Miraldi found a number of the statements the plaintiffs wanted to present to the jury on the libel claim to be constitutionally protected opinion. Only two of the documents which contained defamatory statements and were spread by the college (the flyer and student senate resolution) were permitted to be shown to the jury. The judge also denied the plaintiffs’ request to show videos of the demonstrations because student speech was not at issue (contrary to what Oberlin College President Ambar keeps saying).
More important than all those rulings was the Judge’s refusal to let the plaintiffs call an expert witness on the cost of repairing the reputational damage.
Daniel McGraw wrote about expert
James Dick Maggiore on May 2, 2019:
Today, the Oberlin College lawyers filed a motion to prevent media/advertising expert, Dick Maggiore, to testify at the trial. Maggiore is president and CEO of Innis Maggiore, a Canton OH based ad agency/crisis management firm that has big clients: Goodyear Tire and Rubber, Purell Hand Sanitizing, some Ohio hospitals in Northeast Ohio, and Republic Steel.
The reason the college’s attorneys don’t want Maggiore’s 14-page report to be admitted is that they don’t think he bases his estimates of “damaged brand” repair on enough methodology. Maggiore answered this claim that his report was too much guesswork and not enough expertise by giving out his background: 40 years as head of his award-winning ad agency, regular gigs as college professor at University of Akron and Walsh University, and occasional lectures at Kent State University.
The judge seems to be leaning toward allowing the report to be admitted and Maggiore to testify, and allow Oberlin College to knock down credibility with cross-examination. But Judge Miraldi will not rule on this until next week.
Maggiore’s report says it will take six months of to “defend” the Gibson’s name, two years to “repair,” and another four years of “recovery.” The Oberlin College attorney expressed skepticism that it would take more than six years and $13.5 million of “brand mending” to fix a business that had had about $1 million of annual sales prior to the November 2106 protest.
Judge Miraldi ultimately did not allow Maggiore to testify or his damage theory to go to the jury, but we didn’t have the Judge’s written order until recently.
Though dated May 10, the Order (pdf.)(full embed at bottom of post) was docketed in the Clerk’s office on June 27, 2019. What seems to be happening is that the fast flow and volume of papers during the trial was such that it is taking time for loose ends to be tied up and docketed.
The Judge described the damage claim that could have added $13 million to the compensatory damage claim:
Defendants have filed a motion to exclude the testimony of Plaintiffs’ expert witness, Richard Maggiore. Mr. Maggiore is affiliated with Innis-Maggiore, an advertising agency in the Akron-Canton Area. Mr. Maggiore is not an accountant or an economist. A review of Mr. Maggiore’s testimony at the motion hearing, his discovery deposition, and his report shows Mr. Maggiore has recommended that the Plaintiffs utilize an extensive, multi-phase marketing and advertising campaign in the future to mitigate, repair, and restore the reputation or brand of Plaintiffs’ business as well as the Plaintiffs’ personal reputations. Mr. Maggiore has quantified the dollar amount necessary to complete this campaign at approximately $13 million dollars….
The Ohio Supreme Court has held that damage to reputation is a tort injury, subjecting any recovery to the damage caps· set forth in Ohio Revised Code § 2315.18. Those damage caps apply only to non-economic damages. Plaintiffs argue that Mr. Maggiore’s thirteen million dollar brand restoration plan is an economic loss that is not subject to the damage cap or limit.
The Judge didn’t let it go to the jury because he could not find case law allowing such reputation repair damages, and in any event, the Judge viewed the theory as insufficiently reliable in light of the plaintiffs’ accounting expert’s analysis of the lost future revenue to the business:
This Court has been unable to find a case specifically on point regarding the issue of whether the future projected cost to repair, restore, or mitigate the damage. to a business’s reputation is a proper element of economic damages in a business defamation case….
Courts have generally identified three areas of measurable loss: 1) decreased income; 2) the diminished value of the business; and 3) known reduction of the business’s good will (generally deemed by Courts to be synonymous with “reputation”). All of these measures are reflected in the business’s balance sheet.
Plaintiffs will utilize expert testimony from Frank Monaco, CPA. · Mr. Monaco is the managing partner of an accounting firm and the director of the litigation support and business valuation division of the accounting firm. Mr. Monaco has prepared a report wherein he opines that the quantifiable and measurable economic loss caused to the Plaintiffs’ business is $5.3 million dollars. Mr. Monaco employed many routinely accepted methods and principles of accounting, including a present value analysis, in reaching his opinions. These are damages that may be recoverable by the business for the harm caused to its reputation by the alleged defamation.
Mr. Maggiore’s report is more akin to an advertising or marketing proposal. Mr. Maggiore is proposing that the Plaintiffs spend in excess of $13 million dollars in the future to repair or restore their business reputation….
The Court notes that as to the element of future damages, expert testimony is necessary to establish that the damages are “reasonable and necessary” and reasonably certain to occur.
Mr. Maggiore will not offer any opinion regarding the value of the Plaintiffs’ business before versus after the alleged damage to reputation. Without that information, his opinion that $13.5 million dollars is reasonable and necessary to restore the business reputation of the Plaintiffs is inherently unreliable….
Mr. Monaco has opined using accounting principles that the measurable amount of damage, past and future, caused by the harm to the business reputation is $5.3 million dollars. That is the market value. Mr. Maggiore has recommended $13.5 million dollars to repair that same loss in the future. This is not permitted under common principles of damage law. To permit Mr. Maggiore to testify regarding a future amount of money recommended to repair that loss will confuse the jury and could result in duplicative or excessive damages.
Based on the foregoing reasons, Defendants’ motion to exdude testimony of Richard Maggiore is granted.
Understand what that it could have meant if Maggiore were permitted to testify.
If the $13 million reputation repair damages were allowed to go to the jury, it’s almost certain in light of the jury’s other verdicts that the full $13 million damages would have been granted as economic damages, subject to doubling for punitive damages ($26 million), for a total of $39 million.
While there’s no guarantee how the jury would have allocated such damages relative to the other damages, I think it’s fair to say that had the reputation repair damage theory been permitted to go to the jury, we could have been looking at final judgment, even after adjusting for the tort reform caps, close to double the $25 million entered in the case.
Because the Judge was so cautious, contrary to the way Oberlin College portrays it in their public relations campaign, Oberlin College may have gotten away easy.
[Featured Image: Judge John Miraldi reads punitive damages verdict][Photo credit Bob Perkoski for Legal Insurrection Foundation]
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