Haslund v. Simon Prop. Grp., Inc. - 378 F.3d 653 (7th Cir. 2004)

Rule:

It is true that when a defendant by violating plaintiff's rights makes it difficult for her to prove her damages, all reasonable doubts about the amount of damages are resolved in her favor. But this rule does not apply to the threshold issue of injury. Once the plaintiff proves injury, broad latitude is allowed in quantifying damages, especially when the defendant's own conduct impedes quantification. But the injury itself must be proved in the usual way, without speculation or burden shifting.

Facts:

Plaintiff Shannon Haslund agreed to work for a newly formed dot-com subsidiary of the defendant Simon Property Group. In a letter from the defendant’s director of human resources, it was agreed that plaintiff would receive an annual salary of $175,000 plus 1% equity in the subsidiary, with the structure to be determined. No stock was issued and the plaintiff, and she was fired 10 months later. The subsidiary never made a profit and was eventually dissolved. Plaintiff filed an action for breach of contract. After a bench trial, the district judge awarded plaintiff $537,634.41 in damages, plus prejudgment interest. The district court placed a value on the company based on two transactions. In the first, a company purchased shares in the subsidiary in return for the defendant’s purchase of an equal value of shares of the company. In the second, a consulting company was given shares at a stated value in lieu of cash for its services. Defendant argued that the provision of the contract that it was found to have violated was too indefinite to be enforceable, that no injury was proved, and that in any event no prejudgment interest should have been awarded.

Issue:

Under the circumstances, was the plaintiff entitled to the amount of damages awarded? 

Answer:

No.

Conclusion:

In reversing the district court's decision, the court held that there was an enforceable contract but that the value of the equity was nominal. The court held that there was no evidence that there would have been a market for the employee's shares, and the two transactions referenced by the district court constituted poor evidence of the subsidiary's value. According to the court, assessing damages was often and permissibly speculative, but only within limits. A plaintiff has the burden of proving damages to a reasonable degree of certainty.