VCA Cenvet, Inc. v. Chadwell Animal Hospital, LLC, 1:11-cv-01763

VCA Cenvet, Inc. sues Chadwell Animal Hospital, LLC for breach of Lab Services Agreement (LSA) and unjust enrichment.
LSA (Dec. 2009) required exclusive Antech lab services and minimums; loyalty rebate of 17% of monthly purchases.
Minimum Average Annual Fee set at $78,000 or $6,500 monthly; rebates contingent on meeting volume and exclusivity.
In Oct. 2010, VCA breached by switching to another lab; in Jun. 2011, VCA filed suit seeking lost profits and rebates/discounts totaling $273,000.
Defendant conceded breach but urged damages be limited to rebates already paid ($16,096.66).
Court later directed further briefing on damages and mitigation of damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Damages for breach of contract under California law	VCA seeks lost profits of $198,644.	Damages should be limited to rebates received; no recoverable lost profits.	No lost profits awarded; restitution/rebates awarded.
Whether plaintiff proved lost profits with reasonable certainty	Evidence supports projected profits using variable cost methodology.	No reliable cost data; company-wide 29% variable cost rate not evidence of LSA costs.	Lost profits not established with reasonable certainty.
Whether restitution rather than expectation damages is proper	Entitled to recovery of benefits conferred by contract.	Damages unjust enrichment not available with express contract; rebates only.	Restitution of rebates; discounts not recoverable; unjust enrichment dismissed.
Whether rebates are recoverable and discounts are not	Rebate amounts should be returned as benefit conferred.	Rebates were not a benefit conferred in exchange for the four-year term; discounts not recoverable.	Recover rebates ($16,096.66); not the discounts.

Shade Foods, Inc. v. Innovative Prods. Sales & Marketing, Inc., 93 Cal. Rptr. 2d 364 (Cal. Ct. App. 2000) (historical income/expense data supported lost profits award)
Sanchez-Correa v. Bank of America, 38 Cal. 3d 892 (Cal. 1985) (projections supported by historical growth data)
Grupe v. Glick, 160 P.2d 832 (Cal. 1945) (lost profits require reliable data; certainty of proof)
Resort Video, Ltd. v. Laser Video, Inc., 42 Cal. Rptr. 2d 136 (Cal. Ct. App. 1995) (lost profits must be proven with reasonable certainty)
Gerwin v. Southeast Cal. Ass’n of Seventh Day Adventists, 92 Cal. Rptr. 111 (Cal. Ct. App. 1971) (disallows recovery of profits when unjust enrichment; reliance on express contract)
Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682 (Cal. Ct. App. 2010) (unjust enrichment barred where contract governs)
Janusz v. Gilliam, 947 A.2d 560 (Md. 2008) (Md. law on unjust enrichment; contract governs)