## Facts

- Dr. Gordon Rausser, an economist, worked with three other economists in a litigation-consulting practice.
- In connection with moving the practice to Charles River Associates (CRA), Rausser received several thousand shares of CRA stock.
- Rausser and the other economists reached an agreement that Rausser would share the proceeds from selling those shares with them.
- Each economist’s portion of the proceeds was to be determined based on how much work each performed during a measurement period that ended on November 29, 2003.
- On November 29, 2003, Rausser refused to sell the stock and distribute proceeds as the other economists said the agreement required.
- Over the next several years, Rausser sold shares at different times and at different market prices.
- The economists sued for breach of contract.
- A jury found in the economists’ favor and awarded more than $5 million in damages, but the verdict did not specify the precise date of breach.
- Rausser moved for a new trial, arguing that the jury should have been instructed to determine the breach date to calculate damages tied to fluctuating stock values; the district court denied the motion.
- Rausser appealed.

## Issues

1. Did the district court commit reversible error by failing to instruct the jury that it had to determine the date of breach in order to calculate contract damages based on stock values that changed over time?

## Decision

- The Tenth Circuit affirmed the judgment for the economists.
- The court held that the absence of a separate jury finding on the precise breach date did not require a new trial.
- Reviewing the instructions as a whole, the court concluded the jury had an adequate legal framework to award expectation damages and that any claimed instructional defect did not warrant reversal.

## Legal Principles

- Contract damages generally aim to place the nonbreaching party in the position it would have occupied had the contract been performed (expectation damages).
- Jury instructions are evaluated in their entirety; reversal is appropriate only when an instructional error misstates the law or is likely to have affected the verdict.
- A party seeking a new trial based on instructional error must show more than an imperfection in phrasing; it must show prejudicial error in the context of the full trial record.
- In a dispute involving fluctuating stock prices, a jury may still render a valid damages award without a special interrogatory fixing an exact breach date, so long as the instructions and evidence allow a reasoned damages calculation consistent with the contract’s performance time frame.

## Conclusion

Kearl v. Rausser affirmed a jury’s breach-of-contract verdict and more-than-$5-million damages award arising from an agreement to share proceeds from CRA stock. Although the verdict did not identify the breach date, the Tenth Circuit held that the district court’s failure to require that specific finding in the jury instructions did not amount to reversible error because the instructions, taken as a whole, permitted a lawful and supported measure of damages and did not justify a new trial.


Kearl v. Rausser, 293 F. App'x 592 (2008)