## Facts

- RSB Laboratory Services, Inc. was formed by two registered nurses who operated a specimen-collection “bleeding station” serving an established base of patients and referring physicians.
- RSB decided to expand into a full-service clinical laboratory using the same location, staff, referral sources, and patient population, but with in-house testing.
- RSB contracted with BSI Corp. to purchase refurbished laboratory equipment; BSI also agreed to install the equipment and provide training.
- RSB alleged the equipment did not function properly and that BSI failed to provide adequate installation and training, preventing RSB from commencing full laboratory operations.
- RSB sued for breach of contract and sought, among other damages, lost profits from the planned expansion.
- At trial, RSB presented expert testimony from a CPA who calculated lost profits using standard accounting methods and data tied to RSB’s existing operations; BSI offered no competing damages expert.
- A jury returned a verdict for RSB and awarded $254,763 in damages including lost profits.

## Issues

1. Whether the “new business rule” bars an expanding or newly established business from recovering lost profits in a breach-of-contract action.
2. Whether RSB proved lost profits with reasonable certainty rather than speculation.

## Decision

- The Appellate Division affirmed the judgment for RSB, including the lost-profits component of the $254,763 award.
- The court held New Jersey does not apply the new business rule as a rigid, categorical bar to lost profits.
- The court concluded RSB presented sufficient, reasonably certain proof to support the jury’s lost-profit award.

## Legal Principles

- Contract plaintiffs may recover lost profits when the loss is proven with reasonable certainty, is not based on conjecture, and was within the parties’ contemplation at contracting.
- Mathematical precision is not required; uncertainty in amount does not defeat recovery if there is a reasonable basis to estimate damages.
- A business’s “new” status does not automatically preclude lost-profit recovery; the controlling inquiry is the quality and reliability of the evidence.
- Continuity between an existing operation and an expansion (shared facilities, personnel, clientele, and historical performance data) can reduce speculation and support lost-profit projections.
- Expert testimony grounded in objective data and accepted accounting methods may provide an adequate evidentiary foundation for a lost-profits award.

## Conclusion

The court upheld a jury award of lost profits to a business expanding into full-service operations, rejecting a per se prohibition on lost-profit damages for “new” businesses and requiring instead proof of damages with reasonable certainty based on credible evidence.


RSB Lab. Servs., Inc. v. BSI Corp., 847 A.2d 599 (N.J. Super. Ct. App. Div. 2004)