| Court: | United States Court of Appeals, 8th Circuit |
| Facts: | Lakota Girl Scout Council hired Havey Fundraising Management to run a campaign to raise money for its campsite. Havey won the work after conducting a survey which was used as the basis for estimating the expected value of the fund. Although there were no guarantees about what would be raised Havey (undisputedly) failed: swapped staff around, failed to collect pledges, etc. In the end, the drive brought in about 20% of what was expected. The council sued for the lost money. |
| Posture: | Plaintiff awarded damages at trial; defendant appealed. |
| Issue: | Should evidence of lost profits be considered in this case? |
| Holding: | Yes. The trial court was correct. Affirmed. |
| Rule: | This is a narrow exception to the "new business" rule, based on the nature of the business deal. Here, the deliverable from the contract was actual money, and failure on the part of the promisor equals less money (i.e., very direct causation). Cited authorities include Riley v. General Mills (salespersons can recover losses resulting from the termination of a promotional offer) and Autowest, Inc. v. Pugeot, Inc. (wrongdoers bear the risk of uncertainty arising from their own conduct). |
| Reasoning: | First, there were solid foundations for believing that the campaign could be a success. Scouting was not new to the area, and experts agreed that Havey's estimates were realistic. Also, this wasn't the anticipated first profits of a business not yet established, it was a one-time deal. |
| Dicta: | Dissent: this was pure speculation (even the expert testimony) and anyway the "new business rule" controls: no reason to assume Iowa courts would ditch it in this case. |