Black Hills Truck & Trailer, Inc. v. MAC Trailer Manufacturing, Inc., 4:13-cv-04113

Black Hills Truck & Trailer (plaintiff) had a distributor agreement with MAC Trailer (defendant) to sell MAC trailers in parts of SD and NE; dispute arose after MAC proposed contract changes and refused orders pending a new signed agreement in June 2013.
Black Hills alleges MAC wrongfully terminated or failed to renew the distributor agreement, causing Black Hills to lose sales and seek damages for lost profits; Black Hills sold MAC trailers for only about nine months.
Black Hills retained Wayne R. Brown, an Accredited Senior Appraiser, to quantify lost profits and produced a supplemental expert report; defendants MAC and Siouxland moved to exclude his testimony under Daubert/Rule 702.
Defendants argued Brown overstated lost profits, relied uncritically on Black Hills’ internal data, used improper methodology (omitted certain costs like excise tax and overhead), and made speculative projections (ten-year forecast).
The court evaluated Brown’s qualifications, methodology (variable-cost approach subtracting allocable costs from gross profits consistent with Buono/Groseth), reliance on company-supplied data, and whether his opinion would assist the jury.
Court denied the motion to exclude, finding Brown used an accepted methodology, relied reasonably on Black Hills’ firsthand information (supplemented where possible), and factual disputes over inputs are for cross-examination and the jury.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of Brown's expert testimony under Fed. R. Evid. 702/Daubert	Brown is qualified and uses accepted lost-profits methodology to assist the jury	Testimony is unreliable, speculative, and should be excluded	Admitted — court: methodology reliable; admissibility questions for jury when factual inputs disputed
Use of a ten-year projection period for lost profits	Ten years is appropriate and supported by precedent and industry practice	Projection is speculative given short (nine-month) dealership period	Admitted — court: ten-year projection permissible under facts and precedent (e.g., Diesel)
Reliance on plaintiff’s internal data and lack of independent verification	Business owners best positioned to provide earning potential and costs; Brown cross-referenced when possible	Brown blindly accepted plaintiff’s assertions without adequate verification	Admitted — court: reliance was reasonable; disputes over accuracy go to weight, not admissibility
Treatment of costs (exclusion of 12% federal excise tax, overhead, and certain salaries)	Brown deducted allocable variable costs (e.g., commissions); omitted fixed overhead that would remain regardless	Omission of excise tax and overhead renders opinion inaccurate and misleading	Admitted — court: methodology follows Buono/Groseth (subtract variable expenses); exclusion of fixed overhead and excise tax not fatal to admissibility; issues for cross-examination

Daubert v. Merrell Dow Pharm., 509 U.S. 579 (gatekeeper role for admissibility of expert testimony)
Tipton v. Mill Creek Gravel, 373 F.3d 913 (heightened scrutiny for lost-profits where business is newly established)
Diesel Machinery, Inc. v. B.R. Lee Indus., 418 F.3d 820 (upholding multi-year lost-profits projection after short dealership period)
Marmo v. Tyson Fresh Meats, 457 F.3d 748 (expert testimony inadmissible if speculative or unsupported)
Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (expert damages inadmissible when not grounded in economic reality)
Buono Sales, Inc. v. Chrysler Motors Corp., 449 F.2d 715 (proper lost-profits measure: subtract allocable variable expenses from gross profits)
Groseth Int’l, Inc. v. Tenneco Inc., 440 N.W.2d 276 (SD Supreme Court adopting Buono approach to lost-profits in dealer-manufacturer context)
Lauzon v. Senco Prods., 270 F.3d 681 (Rule 702 is admission-focused; jury weighs expert evidence)