01 Jul 2016 Cases

Jury Awards HP $3 Billion, Precise Damage Estimate of Compass Lexecon Expert

2 minute read


After a five-week trial in which Compass Lexecon expert Jon Orszag testified twice, a California jury provided Hewlett Packard (HP) what the Wall Street Journal called a "resounding victory," deciding that Oracle must pay HP $3 billion for breach of contract. The damage award was the precise amount calculated by Mr. Orszag, a Senior Managing Director at Compass Lexecon and a member of the firm's Executive Committee, and is the largest verdict in the United States so far this year, according to Bloomberg.

The dispute between Oracle and HP began in March 2011 when Oracle announced that it had discontinued database software development for HP's mission-critical, Itanium servers. HP's counsel – Jeff Thomas and Sam Liversidge of Gibson, Dunn & Crutcher LLP – retained Mr. Orszag and Compass Lexecon to calculate damages associated with Oracle's breach of contract, as well as potential damages associated with Oracle's counter-claim that HP had made false and misleading statements.

Mr. Orszag testified at the jury trial in the Superior Court of California County of Santa Clara in San Jose, California. He showed that Oracle's conduct caused a substantial decline in HP's Itanium business and that over a ten-year period, HP had lost, and was expected to lose, a total of $3 billion in profits. Mr. Orszag presented alternative estimates of damages based on both HP business plans and econometric analyses that produced damage amounts in the range of his preferred approach. Mr. Orszag also testified at trial about the flaws in the arguments put forward by the economic and technical experts for Oracle, as well as the fundamental problems with the damage estimate put forward by Oracle's expert in its counter-claim relating to HP's alleged false and misleading statements.

In the end, the jury completely accepted Mr. Orszag's $3 billion damage estimate in its award to HP.

The Los Angeles-based Compass Lexecon team was led by Kevin Green, Mike Smith, and Steve Stanis, and included Aren Megerdichian and Shuting Zhang. They both supported Mr. Orszag and assisted HP's trial team, who were led by Gibson Dunn and included Robert Frank of Choate Hall & Stewart LLP; Mark Ferguson and Mike Valaik of Bartlit Beck Herman Palenchar & Scott LLP; and Camille Olson of Seyfarth Shaw LLP.

A new version of Compass Lexecon is available.