ESPN, Inc. v. Office of the Commissioner of Baseball
76 F. Supp. 2d 416 (1999)
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Rule of Law:
Under New York law, a plaintiff seeking compensatory damages for breach of contract must prove the existence of damages with certainty and provide a stable foundation for a reasonable estimate of the amount. Claims for intangible harm like lost goodwill or reputation must be proven with reasonable certainty as to both the fact of loss and the amount, and may not be based on mere speculation or guesswork.
Facts:
- ESPN, Inc. ('ESPN') and the Office of the Commissioner of Baseball ('Baseball') were parties to a 1996 telecasting agreement.
- Under the agreement, ESPN was scheduled to broadcast 'Sunday Night Baseball' games.
- On six nights in September 1998 and September 1999, ESPN preempted the scheduled baseball games and instead broadcast NFL football games.
- ESPN did not obtain the prior written approval from Baseball required by the contract to make this substitution.
- Despite the preemptions, Baseball received the full payment contractually owed to it by ESPN.
- Baseball claimed extra-contractual damages, asserting that the preemptions caused a loss of national television exposure, promotional opportunities, ratings, prestige, potential sponsorships, and diminished the future value of its national telecast packages.
Procedural Posture:
- ESPN, Inc. and the Office of the Commissioner of Baseball litigated a dispute in the U.S. District Court for the Southern District of New York, a federal trial court.
- The court previously granted partial summary judgment, ruling that ESPN had breached its 1996 telecasting agreement with Baseball.
- Following this ruling and in advance of trial, ESPN filed a motion in limine to preclude Baseball from presenting any evidence of its alleged monetary damages to the jury.
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Issue:
Under New York law, may a plaintiff introduce evidence of monetary damages for breach of contract when its claim is based entirely on speculative assertions of intangible harm, such as loss of prestige and promotional opportunities, without providing any concrete evidence of financial loss or a method for calculation?
Opinions:
Majority - Scheindlin, District Judge
No. A plaintiff is precluded from introducing evidence of monetary damages where the claim is based on nothing more than subjective, speculative, and vague assertions of harm. Under New York law, damages for breach of contract must be susceptible to ascertainment and cannot be based on mere conjecture. While the existence of damage need only be certain for recovery, there must still be a 'stable foundation for a reasonable estimate' of the amount. For intangible harms like loss of reputation or future profits, the proof requirements are even more stringent, demanding that the amount of the loss be 'reasonably certain.' Here, Baseball failed to meet this burden, as its interrogatory answers, witness depositions, and expert testimony provided no specific examples of monetary loss, no quantification of damages, and no method for calculation. The claims were based solely on a subjective belief that Baseball was 'hurt.' Consequently, while Baseball may pursue nominal damages for the breach, it cannot present its speculative claim for compensatory damages to the jury.
Analysis:
This opinion reinforces the critical legal principle that damages in contract cases must be proven and cannot be speculative. It underscores the high evidentiary bar for recovering consequential damages for intangible harms like loss of goodwill or reputation, requiring plaintiffs to provide concrete proof and a reasonably certain calculation of the amount. The decision also clarifies an important distinction: a party's inability to prove monetary damages does not prevent it from arguing that the breach was material. This allows a non-breaching party to potentially terminate the contract or seek other remedies based on the severity of the breach, even if its financial recovery is limited to nominal damages.
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