EMILIO M. GARZA, Circuit Judge:
Mobil Exploration and Producing U.S., Inc. ("Mobil"), sued Cajun Construction Services, Inc. ("Cajun"), to recover money paid to Cajun for deliveries of limestone, alleging that Cajun had short-loaded those deliveries. After a bench trial, the district court found in favor of Cajun and dismissed Mobil's suit with prejudice. Mobil appeals the judgment, and we reverse and remand.
I
For seven years, Cajun supplied Mobil with limestone for its operations in southern Louisiana. Mobil ordered the limestone in fourteen-cubic-yard or twenty-four-cubic-yard loads.
At trial, Mobil introduced evidence that it ordered limestone from Cajun in either fourteen-yard or twenty-four-yard quantities.
Rather than relying solely on its proffered evidence of Cajun's routine practice of loading its trucks short, Mobil further attempted to prove by correlation that Cajun had directly delivered to Mobil from the third-party suppliers.
After the bench trial, the district court concluded that Mobil had not proven that Cajun had short-loaded deliveries of limestone to Mobil sites. Consequently, the district court dismissed Mobil's suit with prejudice. Mobil appeals, arguing that the district court erred by 1) refusing to consider its proffered evidence of the manner in which Cajun routinely loaded its trucks, and 2) holding Mobil to an improperly high standard
II
Mobil argues that the district court erred in its analysis of the law applicable to its suit. First, Mobil contends that the district court failed to consider evidence, as required by Federal Rule of Evidence 406, of Cajun's routine practice of loading its trucks in a particular manner. Next, Mobil asserts that the district court imposed an improperly high standard for Mobil's proof of damages.
Mobil argues that the district court's finding that Cajun had not short-loaded its deliveries of limestone to Mobil is legally erroneous. Although we ordinarily review the trial court's findings of fact for clear error, Anderson v. City of Bessemer City, 470 U.S. 564, 573-75, 105 S.Ct. 1504, 1511-12, 84 L.Ed.2d 518 (1985), a judgment based on a factual finding derived from an incorrect understanding of substantive law must be reversed. Fuji Photo Film Co. v. Shinohara Shoji Kabushiki Kaisha, 754 F.2d 591, 597 (1985).
Mobil first asserts that the trial court erred in refusing to consider its proof of Cajun's routine practice of loading its trucks in a particular manner. Habit evidence is relevant to prove that a business acted in a certain way. Fed.R.Evid. 406.
Id.; see also McCormick on Evidence § 195, at 351 (John W. Strong ed., 4th ed. 1992) (explaining that habit or routine practice "denotes one's regular response to a repeated situation"). "Rule 406 allows the introduction of evidence of the habit of a person for the purpose of proving that the person acted in conformity with his habit on a particular occasion." Reyes v. Missouri Pac. R. Co., 589 F.2d 791, 794 (5th Cir.1979) (footnote omitted). Moreover, evidence of a routine practice is highly probative,
To obtain a Rule 406 inference of the routine practice of a business, a plaintiff must show a sufficient number of specific instances of conduct to support that inference. Reyes, 589 F.2d at 795 ("Although a precise formula cannot be proposed for determining when the behavior may become so consistent as to rise to the level of habit, `adequacy of sampling and uniformity of response' are controlling considerations." (quoting Fed.R.Evid. 406 adv. comm. notes)).
In this case, Mobil provided invoices for over 3400 of Cajun's loads of limestone obtained from third-party suppliers. Mobil introduced evidence to show that Cajun invariably loaded its trucks in the same manner and to the same level when Cajun obtained limestone from a third-party supplier. Mobil provided weight scale tickets showing that Cajun typically loaded either approximately fourteen-ton or twenty-five-ton loads at third-party suppliers.
Other statements by the district court similarly indicate that the district court would not accept evidence of routine practice as support for Mobil's allegations.
Mobil further contends that the district court erred in deciding that, because Mobil could not prove by direct evidence that loads to Mobil had been short-loaded, Mobil could not sufficiently prove any damages. The district court stated in its decision that "[t]he documentation simply is not there for Mobil to rebut the testimony of Mr. Angelle, Cajun's truckdrivers, and Mr. Lamy" who testified that, because Cajun used a front-end loader with a "3-yard bucket" and routinely delivered from its own yards to its customers, it must have used the "3-yard bucket" method and delivered to Mobil from its own yards. The district court held that even if Mobil demonstrated how Cajun routinely loaded limestone irrespective of who the final customer was, Mobil must "further show that they did the same thing when they delivered to Mobil." Under Louisiana law, the plaintiff must prove damages with reasonable certainty,
Id. 112 So.2d at 94. Thus, the court in Martin ruled that the defendant had not proven entitlement to damages because it failed to take into account that other suppliers could have caused the alleged shortages.
III
For the foregoing reasons, we REVERSE the judgment of the district court and REMAND for further consideration consistent with this opinion.
FootNotes
Mr. Miller, representing all of Cajun's truckdrivers, testified:
Later, when Mobil attempted to again explain the purpose of evidence of routine practice:
Hall, 368 So.2d at 991; Graham v. Edwards, 614 So.2d 811, 819 (La.Ct.App.1993) ("`[L]oss of profits or income must be proved with reasonable certainty, i.e., by the more probable than not standard ....'") (quoting Clark v. Ark-La-Tex Auction, Inc., 593 So.2d 870, 878-79 (La.Ct.App. 1992)), writ denied, 619 So.2d 547 (La.1993).
Accordingly, we reject Cajun's argument that Mobil must "prove its case by direct proof, and to legal certainty, both the fact and amount of its losses." The cases cited by Cajun do not support its argument, and the applicable law clearly allows for circumstantial evidence.
It is unclear whether the district court was refusing to allow Mobil to prove Cajun's routine practice with average loads or whether the district court was refusing to assess damages based on an average shortfall calculated over all loads to Mobil. Our analysis of Rule 406 has addressed the first issue, and we note that, if Mobil proves by Rule 406 evidence that Cajun routinely short-loaded its trucks, the district court may use averages and formulas to assess damages. Although the burden is on the plaintiff to prove damages, Borden, Inc. v. Howard Trucking Co., 454 So.2d 1081, 1092 (La.1983), once the plaintiff establishes a legal right to recover, the court may not reject the claim for lack of an exact measure. See Austin v. Parker, 672 F.2d 508, 522 (5th Cir.1982) (approving old rule that "`[i]t is sufficient that there be proved a reasonable basis of computation, although the result may be only approximate.'" (quoting Rynveld v. Dupuis, 39 F.2d 399, 400 (5th Cir.1930) (emphasis omitted))); Nat Harrison Assocs., 491 F.2d at 588 ("We do not imply that in considering the measure of damages absolute accuracy is a precondition to ... recovery."); see also Guillory v. Terra Int'l, Inc., 613 So.2d 1084, 1090 (La.Ct.App. 1993) ("The law, however, is also well settled that when there is a legal right to recover damages, but the amount cannot be exactly estimated, the courts have reasonable discretion to assess damages based upon all of the facts and circumstances of the particular case. A plaintiff's demand should not be rejected merely because he cannot establish, with precision, the amount of damages suffered."), writ denied, 619 So.2d 1063 (La.1993). The court has discretion to assess damages, see La.Civ.Code Ann. art. 1999 (West 1987) ("When damages are insusceptible of precise measurement, much discretion shall be left to the court for the reasonable amount of the damages."); Jordan v. Travelers Ins. Co., 257 La. 995, 245 So.2d 151, 155 (1971) ("Where there is a legal right to recovery but the damages cannot be exactly estimated, the courts have reasonable discretion to assess same based upon all the facts and circumstances of the case."); and it should determine each case on its own facts and circumstances. Nat Harrison Assocs., 491 F.2d at 587; see also Hall, 368 So.2d at 991 ("The sufficiency of proof of damages must be determined in relation to the particular contract at issue and the circumstances surrounding its breach. The question of the certainty of proof of damages becomes a matter for decision in each individual case."). Moreover, courts often use averages or formulas to estimate damages. See, e.g., Austin, 672 F.2d at 521 (using formula to assess damages); see also, e.g., Borden, 454 So.2d at 1093 (using formula and estimates to calculate quantum of damages once plaintiff had proven entitlement to damages); Guillory, 613 So.2d at 1090-91 (using formula and average crop yields to assess damages); Moore v. Thornwell Warehouse Ass'n, 524 So.2d 828, 831-32 (La.App.1988) (choosing one of several potential formulas and calculating damages from averages proven); LeBlanc v. Gibbens Pools, Inc., 447 So.2d 1195, 1197 (La.Ct.App. 1984) (using "two different but substantiated estimates" to assess damages), writ denied, 450 So.2d 958 (La.1984).
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