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Analyzing Lost Profits in Defamation Cases: Memorial Hermann Health Sys. v. Gomez

Updated: Aug 2, 2023

In the case of Mem'l Hermann Health Sys. v. Gomez, 649 S.W.3d 415 (Tex. 2022), a Texas appeals court recently upheld the jury's liability findings and damages awards in a defamation and business disparagement case involving a cardiovascular surgeon and his solo practice. The primary focus of this article is on the lost profits analysis presented by the plaintiff expert.

The plaintiff expert's lost profits analysis centered on the number of surgeries the plaintiff performed and the nature of his practice before and after the wrongful conduct took place. The expert effectively ruled out alternative reasons for a decline in business by considering multiple factors and presenting a range of damages based on various scenarios supported by evidence.

In contrast to the Dieckman v. Regency case, where the plaintiffs' expert failed to provide a valid rationale for valuing the merger consideration based on a DDM-to-market comparison, the expert in Mem'l Hermann Health Sys. was successful in providing a convincing lost profits analysis. The court found the expert's approach to be thorough and reliable, considering and convincingly ruling out alternative explanations for the decline in business.

The success of the plaintiff expert's damages analysis in Mem'l Hermann Health Sys. highlights the importance of utilizing accurate and well-established valuation methodologies when quantifying damages in defamation and business disparagement cases. Furthermore, it underscores the necessity of presenting these methodologies in a transparent and consistent manner throughout the litigation process.

Mem'l Hermann Health Sys. serves as a critical reminder for lawyers, finance and valuation professionals to carefully scrutinize and select the most appropriate methods for evaluating damages in complex disputes. It emphasizes the importance of conducting a thorough analysis, ruling out alternative explanations, and providing a range of damages based on various scenarios supported by evidence.

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