Medcom Holding Company, Cross-Appellee v. Baxter Travenol Laboratories, Inc. And Medtrain, Inc.

Plaintiff-Appellant, Cross-Appellee Med-com Holding Company (“MHC”) filed a five-count complaint against Defendants-Appel-lees, Cross-Appellants Baxter Travenol Laboratories, Inc. and Medtrain, Inc. (“Baxter” collectively) in November 1987. MHC alleged that Baxter engaged in a scheme to defraud MHC in the September 1986, sale of the stock of Medcom, Inc. (“Medcom”). This complaint has already resulted in three jury trials in the district court over the course of eight years and only one issue has come before this Court previously, on interlocutory appeal. See Medcom Holding Co. v. Baxter Travenol, 984 F.2d 223 (7th Cir.1993). We assumé familiarity with that decision. These cross-appeals, however, raise a number of new issues.

I. The Stock Purchase Agreement and Sale of Medcom

Baxter acquired Medcom in a stock purchase for more than $50 million in May of 1982. Medcom’s primary business was the production and distribution of audiovisual and written training material for health-care providers and consumers, both in the United States and abroad. Medcom’s subsidiary, Entertainment Partners, Ine. (“EPI”), also produced general entertainment films for television. Baxter owned Medcom for four years. During that time, Medcom suffered significant operating losses.

In 1986, Baxter sold to MHC all of the outstanding capital stock of Medcom for $3.77 million pursuant to a Stock Purchase Agreement (the “SPA”). In the SPA, Baxter made several representations and warranties as of the date of the SPA and as of the date of closing. The representations and warranties include the following: that no material fact was undisclosed that was necessary to prevent previous statements from being misleading; that all representations, statements, and information provided to MHC (including the schedules and financial statements contained in the SPA) were true in all material respects; and that Baxter would pay the amount of any overstatement in the September 30, 1986, balance sheet, which it represented had been prepared in accordance with *1393 generally accepted accounting principles (“GAAP”).

Subsequent to MHC’s purchase of Med-eom, MHC discovered various facts that it claims were part of a scheme by Baxter to defraud MHC. In particular, MHC alleged that Baxter falsely represented and warranted that Medcom had a balance sheet with $10 million in assets at book value when Baxter knew that Medcom had a pertinent asset value of only $1 million. Among other evidence of this alleged scheme to defraud, MHC pointed to evidence that Baxter had written down Medcom’s assets to a total of $1 million in precisely the same manner as the two earlier write downs, but this time the write-down was reflected only on the Medcom accounting records held at Baxter’s corporate offices. It was not reflected on Medeom’s September 30, 1986, balance sheet given to MHC. MHC also pointed to evidence that Medcom’s Chairman and CEO, Robert Funari, had prepared an analysis of the realizable value of Medcom’s assets that was several million dollars less than the value represented to MHC and that A.D. Little, a valuation firm, had conducted a preliminary appraisal that indicated that Medcom’s assets were worth only $2.5 million.

Baxter presented testimony that Medcom’s balance sheet was accurate, fairly presented, and in accordance with GAAP. Baxter also presented evidence that A.D. Little’s valuation was a preliminary, unissued draft and did not include substantial fixed assets that were included in the sale to MHC. Baxter also produced testimony that Funari’s personal valuation was based on market value, whereas the balance sheet concerned book value.

MHC alleged that Baxter had falsely represented the status of Medcom’s marketable domestic training programs. The June 1986 offering memorandum for the stock, the “Blue Book,” stated that Medcom had a “current library” of over 1600 audiovisual training programs that it marketed in the United States for nurse, physician and consumer health education. The Blue Book also stated that the Famous Teachings in Modem Medicine (“FTMM”) and the Video Journal of Medicine Series for Physician Education “currently contain[] over 500 active pro-grams_” MHC alleged that two-thirds of the programs were neither “current” nor “active” and could not be sold for current medical instruction. Baxter argued that the Blue Book simply contained an accounting of the number of programs, not a representation as to the contents or marketability of the programs. Baxter also countered MHC’s claim with evidence that the vast bulk of programs in Medeom’s library were “ethically saleable” in 1986.

MHC alleged that Baxter falsely represented in the Blue Book the existence of a pending $3 million sale of programs to the Daharan Medical Center in Saudi Arabia. Baxter did not disclose that it had information that this sale would not take place and that the sale of any additional programs in Saudi Arabia was unlikely. MHC further alleged that Baxter failed to disclose that millions of dollars worth of previous sales were the results of bribes, not the quality of the product. Baxter introduced evidence that prospective buyers were told “that they should put no value on the Saudi Arabian business when looking at Medcom.” (R. 658-4 at 384.)

MHC also alleged that Baxter did not disclose that the Saudi programs had been the subject of a law suit brought by Medeom’s founder, Richard Fuisz, (the “Fuisz litigation”) against Baxter and Medcom, alleging improper payments to Saudi officials and their family members. Nor did Baxter disclose that the settlement of the suit subjected the purchaser of Medcom to potential liability. Baxter produced evidence that the Fuisz litigation was settled before Baxter sold Medcom to MHC, Baxter was responsible for payment of the settlement, and Baxter was bound by the confidentiality provisions of the settlement agreement. Therefore, Baxter was not obligated to disclose the litigation.

MHC alleged that Baxter misrepresented in the June 1986 Blue Book the existence of a newsletter joint venture with the UCLA teaching hospital despite the fact that Baxter already had cancelled this venture by letter in April 1986. Baxter claimed that Medcom had simply given notice to UCLA that Med-com would terminate its contract with UCLA *1394 effective October 31, 1986. Baxter claimed that notice was given once Baxter decided to sell Medcom so that any future buyer would not be contractually obligated to keep publishing the unprofitable newsletter.

MHC also alleged that Baxter had breached the SPA as it related to Medcom’s stock in EPI. Under the SPA, Baxter was obligated to transfer certain stock in EPI to MHC. Baxter did not transfer this stock until the district court ordered it to do so. This Court affirmed that order of specific performance in Medcom Holding Co., 984 F.2d 223. The parties now dispute what amount of equitable compensation MHC should receive based on Baxter’s possession beyond the date the stock should have been transferred pursuant to the SPA.

Based on these and other similar claims, MHC alleged that Baxter had schemed to defraud MHC and was liable for damages on a number of theories. Baxter disputed all the claims and argued both that it was not liable and that it had caused MHC no damages.

II. Procedural History

The first trial, Medcom I, took place over the course of six weeks in 1990. Of the five counts in MHC’s original complaint, only three of the counts were tried: Count I alleged violations of Section 10-b of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5 (collectively “Rule 10b-5”); Count IV alleged fraud under Illinois common law; and Count V alleged breach of contract. The Medcom I jury found Baxter liable on all three counts and awarded to MHC compensatory damages in the amount of $5,725,000 and punitive damages in the amount of $10,000,000. The jury also specifically found that Baxter breached the SPA as it related to EPI. 1

On the special verdict form, the jury made specific findings on actual damages. The jury awarded $3,500,000 on MHC’s claims relating to Medcom’s domestic programs and $2,225,000 on MHC’s claims relating to Med-corn’s September 30, 1986 balance sheet. The jury awarded zero damages oh MHC’s claims regarding the UCLA Newsletter, the FTMM physician programs, and Medcom’s Saudi Arabian operations. The Medcom I jury further broke down these awards to $1 million on Count I, $3 million on Count IV and $1,725,000 on Count V.

Baxter brought a post-trial motion for judgment notwithstanding the verdict or for a new trial. The district court granted the motion in part and denied it in part. The district court sustained the liability verdict on all three counts, noting that there was sufficient evidence to support the jury’s verdict of common law fraud, Rule 10b-5 fraud and breach of contract with respect to both the domestic programs and the balance sheet. The district court, however, vacated the compensatory damages award, granting Baxter a new trial on damages (but not on liability) and reserved ruling on the award of punitive damages. The court later issued a specific performance decree requiring Baxter to transfer EPI to MHC.

The second trial, Medcom II, took place over the course of two weeks in 1991 and was limited to the two specific damages claims for which the Medcom I jury had awarded compensatory damages. MHC sought $9,000,000 for the balance sheet overstatement and $4,300,000 for the domestic programs’ lost profits. The jury returned an award of $9,000,000 for the 10b-5 fraud, an award of $4,300,000 for the breach of contract, and $0 for the common law fraud. The verdict form did not ask the jury to divvy the damages between the balance sheet overstatement and the domestic programs’ lost profits.

The district court denied MHC’s motion to enter judgment of $13.3 million on the verdict by cumulating the awards. The court determined that the $4.3 million award was reasonable based on the evidence, but found that the jury’s $9 million damage award on the Rule 10b-5 claim was insupportable. The court held that there was no rational basis upon which the Medcom II jury could have found that the company’s value at the time of Medcom’s purchase was $9 million *1395 less than the $3.77 million purchase price. Ultimately, the court found the verdict irreconcilable, stating:

[MHC] offered the same evidence and the court instructed the jury that the same measure of damages applied to both the fraudulent misrepresentation and breach of contract claims. Yet the jury returned a verdict of “zero” on the fraudulent misrepresentation claim, and a verdict of $4.3 million on the breach of contract claim. Thus, it appears that the verdicts on Counts IV and V are irreconcilable on any rational basis. The court finds that, under all the circumstances, the jury’s verdicts on all three damages claims are tainted with error and result in a miscarriage of justice. Accordingly, a new trial is warranted.

(Memorandum Opinion And ORDER, 3/24/92, 1992 WL 67873 at *4.)

The district court subsequently reconsidered the presentation of evidence regarding liability. On March 3, 1993, the court vacated the Medcom I liability verdict because it determined that a damages-only trial was inappropriate. The district court ordered a retrial of both liability and damages, but limited the retrial to the two specific claims for which MHC had initially received compensatory damages from the Medcom I jury: MHC’s claims relating to Medcom’s domestic programs and Medcom’s September 30, 1986 balance sheet. The court also granted Baxter judgment as to punitive damages, vacating the Medcom I jury’s award of $10 million.

MHC then filed a motion seeking to present evidence beyond the two specific claims (ie., evidence of the Fuisz litigation, the Saudi Arabian operations, etc.) as evidence of Baxter’s alleged scheme to defraud both for purposes of liability and damages. The district court denied MHC’s motion in its entirety, but indicated that MHC could attempt to introduce this evidence under Rule 404(b) of the Federal Rules of Evidence. In response, MHC filed an offer of proof, which the court denied in its entirety.

The third trial, Medcom III, took place between September 15, 1994, and October 4, 1994. The district court excluded all evidence except the evidence related to Med-com’s domestic programs and Medcom’s September 30,1986 balance sheet. The Medcom III jury returned a verdict in favor of Baxter on all counts. The district court denied MHC’s post-trial motions seeking reconsideration of the district court’s prior orders and reinstatement of the prior verdicts or a new trial.

Between Medcom I and Medcom III, one issue reached this Court on interlocutory appeal. On January 26, 1993, this Court affirmed the district court’s specific performance decree regarding EPI. See Medcom Holding Co., 984 F.2d 223. Baxter transferred the EPI stock to MHC on March 3, 1993. The district court then referred the matter to a magistrate judge for recommendation regarding an accounting of the benefits received by Baxter from its wrongful possession of EPI from September 30, 1986, to March 3,1993. The magistrate judge held a hearing and issued a report. Both parties raised objections to the magistrate judge’s recommendations. The district court sustained both parties’ objections in part, and entered judgment for MHC in the amount of $1,117,645.

III. The Parties’ Positions on Appeal

MHC raises a host of issues, seriatim. First, MHC requests that we reinstate judgment on the Medcom I verdict in its entirety. MHC argues that the district court improperly invaded the jury’s province when it vacated the Medcom I jury’s $5,725 million compensatory damage award because the court concluded that the jury could not have made a rational downward adjustment of MHC’s damages computations. MHC also argues that the court improperly substituted its judgment for the jury’s when it vacated the award of punitive damages.

Second, and alternatively, MHC urges this Court to enter judgment on the Medcom II verdict. MHC contends that the district court erred in vacating the Medcom II jury’s award of $13.3 million and in vacating the Medcom I jury’s liability verdict, which the court had originally determined was fully supported by the evidence. Third, MHC seeks a new trial. MHC asserts that the *1396 district court improperly limited MHC’s proof of liability and damages in Medcom III. In addition, MHC believes that it was entitled to try its punitive damages claim at Medcom III. Fourth, MHC seeks prejudgment interest if this Court chooses to reinstate any of the compensatory damage awards. Finally, MHC maintains that the judgment entered against Baxter relating to the EPI accounting must be increased.

Baxter argues that the district court’s actions were appropriate and urges this Court to affirm the judgment entered on the Medcom III jury’s verdicts. Baxter’s cross-appeal contends that the $1,117,645 EPI accounting judgment against Baxter was erroneous. Baxter asks this Court to reverse that judgment and eliminate the award entirely or, in the alternative, reduce the judgment to $115,598.

IV. Analysis

The primary relief sought by MHC is the reinstatement of the Medcom I jury’s verdicts of compensatory damages in the amount of $5,725,000 and punitive damages in the amount of $10,000,000. More specifically, MHC argues that the evidence supported the jury’s award of $3,500,000 on MHC’s claims relating to Medcom’s domestic programs and $2,225,000 on MHC’s claims relating to Medcom’s September 30, 1986 balance sheet. Before we reach this issue, we must address Baxter’s argument that MHC is precluded from seeking reinstatement of the Medcom I jury verdict on compensatory damages.

A. Waiver

Baxter claims that MHC is precluded from seeking reinstatement of the Medcom I compensatory damage award by virtue of MHC’s post-trial conduct following Medcom II. Baxter raises the doctrines of waiver and judicial estoppel. Baxter points out that MHC did not seek a reinstatement of the Medcom I verdict following the Medcom II trial. MHC asked the district court to enter judgment in the amount of $13.3 million on the Medcom II verdict or grant MHC a new damages trial. The court denied MHC’s request to enter a $13.3 million judgment, but it granted MHC’s alternative request and ordered a new damages trial. Baxter argues that MHC made a strategic decision not to seek reinstatement of the Medcom I verdict and that this strategic decision operates as a waiver. We disagree.

Baxter cites only one case in support of its “waiver” 2 argument: Heller Int’l Corp. v. Sharp, 974 F.2d 850, 862 (7th Cir.1992). Heller Int’l does not compel the conclusion that MHC has waived its right to seek reinstatement of the Medcom I jury’s verdict. First, Heller Int’l involved the factual question of whether an insurer waived a two-year limitations period for bringing suit that was a condition of the fidelity bond being sued on, thus it was entirely distinct from the “waiver” issue in this case. Second, this Court wrote in Heller Int’l that “[wjaiver is the intentional relinquishment of a known right,” id. at 860, and explained that the intent to waive “should be decisive and unequivocal.” Id. at 861. The record does not indicate that MHC gave up its right to seek reinstatement of the first verdict, much less that it did so unequivocally. MHC sought to have the verdict reinstated until the district court rejected that option. When the Medcom II jury returned a $13.3 million verdict in MHC’s favor, MHC sought entry of judgment based on that verdict. In the alternative, MHC suggested a retrial of damages as to the balance sheet and the domestic programs, as well as several other issues not tried in Med-com III, including the Saudi program, claims of lost market value, and an additional RICO claim. Nothing indicates that MHC abandoned its belief that the Medcom I verdict was appropriate.

Likewise, the doctrine of judicial estoppel does not apply to this case. Judicial estoppel is an equitable concept “intended to prevent the perversion of the judicial process. It is to be applied where ‘intentional self-contradiction is being used as a means of obtaining unfair advantage....’” In the *1397 Matter of Cassidy, 892 F.2d 637, 641 (7th Cir.), cert. denied, 498 U.S. 812, 111 S.Ct. 48, 112 L.Ed.2d 24 (1990) (internal citations omitted); see also Ezekiel v. Michel, 66 F.3d 894, 904 (7th Cir.1995) (requiring “clearly inconsistent” positions for judicial estoppel to apply). There is no self-contradiction in MHC’s positions. MHC never sought to vacate the Medcom I verdict and MHC never received its alternative request, a retrial on all of the issues raised in Medcom I. There is no injustice in reviewing MHC’s request that we reinstate the Medcom I jury’s verdict.

B. Reinstatement of the Medcom I Jury’s Verdict

MHC argues that the district court imper-missibly substituted its judgment for the Medcom I jury’s judgment. The district court found that the evidence was sufficient to support the jury’s determination of liability. Nevertheless, the court vacated the award of damages because it found that the evidence did not permit the jury “to adjust the amount of damages downward” from the amount of damages sought by MHC. (Memo-Rándum OPINION And Order, 6/29/90, 1990 WL 104039 at *13.) Essentially, the district court presumed that the jury was not capable of understanding the experts’ testimony relating to accounting and lost profits well enough to make a downward adjustment of the damages from the amount testified to by MHC’s expert.

A closer look at the district court’s decision illuminates the issue. The Medcom I jury awarded total compensatory damages of $5,725,000. The total award broke down into damages of $2,225,000 for the September 30, 1986, balance sheet overstatement and $3,500,000 in lost profits relating to the domestic programs. After finding that the evidence was not sufficient to permit the jury to adjust the amount of damages downward from the amount sought by MHC, the district court granted a new trial on compensatory damages.

We review the district court’s grant of a motion for a new trial on damages for abuse of discretion. Gasperini v. Center for Humanities, Inc., — U.S. -, -, 116 S.Ct. 2211, 2223,135 L.Ed.2d 659 (1996). At one time, we applied this standard “somewhat more exactingPy]” when the district court granted a new trial because of Seventh Amendment considerations. Superbird Farms, Inc. v. Perdue Farms, Inc., 970 F.2d 238, 247 (7th Cir.1992). However, in light of the Supreme Court’s decision in Gasperini that an abuse of discretion standard of review does not violate the Seventh Amendment, — U.S. at -, 116 S.Ct. at 2223-24, we hereby abandon this practice as unnecessary. 3 Although we now review with somewhat more deference to the district court, utilizing an ordinary abuse of discretion standard, we find that the district court did abuse this discretion.

In this case, the court vacated the damages award on the ground that the damages bore no rational connection to the evidence. A trial judge in the federal system has discretion to grant a new trial if the verdict appears against the weight of the evidence. Gasperini, — U.S. at -, 116 S.Ct. at 2222. However, Illinois law governs the substantive assessment of whether the evidence supports the damages awarded when liability is based on Illinois law.

Illinois law governs the damages question in this case. Although the jury found Baxter liable for Rule 10b-5 fraud, a cause of action sounding in federal law, the district court expressly disallowed benefit of the bargain damages under Rule 10b-5 relating to the domestic programs claim. Thus, MHC relied upon its Illinois’ common law fraud claim to justify the jury award. Second, MHC relied entirely upon the warranty in the SPA providing that Baxter would pay MHC the amount of any overstatement in the balance sheet to establish damages for the balance sheet overstatement. The award must be *1398 justified by reference to MHC’s breach of contract claim. In sum, the trial court had to look to Illinois law for the substantive standard of what evidence would satisfy proof of damages. Id. at -, 116 S.Ct. at 2224-25.

The district court found that the evidence was not sufficient to permit the jury to adjust the amount of dámages downward from the amount sought by MHC. The court stated that the jury “cannot be expected to appropriately revise [MHC’s expert’s] model.” (MEMORANDUM OPINION AND ORDER, 6/29/90, 1990 WL 104039 at *13.) The district court’s finding denigrates the historic and practical abilities of the jury. More importantly, the district court’s finding directly contradicts Illinois law.

Pursuant to Illinois law, where the existence of damages is established, “the evidence need only tend to show a basis for the computation of damages with a fair degree of probability.” In re Busse, 124 Ill.App.3d 433, 79 Ill.Dec. 747. 751, 464 N.E.2d 651, 655 (1984). The jury awarded $3.5 million for Baxter’s misrepresentations regarding the content of the domestic library and $2.225 million for Baxter’s misrepresentations regarding the September 30, 1986 balance sheet. These figures were less than MHC sought and less than the calculations provided by MHC’s experts. They were, however, within the reasonable range of valuations testified to by MHC’s experts and Baxter’s experts. As the Appellate Court of Illinois has noted, the law does not require

that a jury verdict must match either of two experts’ figures, or a combination of the assumptions. Rather, all the law requires is that the evidence tend to establish, with a fair degree of probability, a basis for the assessment of damages.... The ascertainment and assessment of damages is a question of fact for the jury; although the amount may not be speculative, it need not be proved with mathematical certainty. The jury must bring in a verdict within the range of the valuation testimony presented.

.... Where experts differ on the amount of damages there is no rule of law requiring that a jury agree with one or the other or that its award be capable of precise determination. Furthermore, a jury may reduce an expert’s damage calculations without invalidating the verdict.

F.L. Walz, Inc. v. Hobart Corp., 224 Ill.App.3d 727, 167 Ill.Dec. 42, 47, 586 N.E.2d 1314, 1319 (1992) (citations omitted). Are-view of the evidence relating to each category of damages illuminates the district court’s erroneous assumptions regarding the jury’s capacities. 4

1. The Domestic Programs Library

On a common law fraud claim, Illinois law permits Medcom to be placed in the same financial position it would have been in had the misrepresentation been true. Brown v. Broadway Perryville Lumber Co., 156 Ill.App.3d 16, 108 Ill.Dec. 593, 599, 508 N.E.2d 1170, 1176 (1987). To prove damages for the domestic programs, library, MHC had to establish the amount of lost profits from the obsolete programs that Baxter had represented as “current” programs. MHC relied on the testimony of its expert, litigation economist Dr. Steven Schwartz, to establish and to calculate damages. Dr. Schwartz testified that because MHC received fewer “current” programs than Baxter promised, MHC suffered approximately $6,305,000 in lost profits. At trial, Baxter disputed Dr. Schwartz’s conclusion that Medcom pos *1399 sessed only 554 current domestic programs in 1986 and claimed that Dr. Schwartz’s method of calculating damages was flawed.

The district court found that the jury was entitled to accept Dr. Schwartz’s assumption that only 554 program's were current in 1986. The court found, however, that the evidence did not afford the jury an opportunity to adjust the damages downward. The district court’s reasoning is perplexing. Dr. Schwartz based his calculation of lost profits on the assumption that all noncurrent programs could achieve the same sales average as the average current program. His analysis was based upon the company’s actual 1989 sales. The district court found this problematic because a Medcom employee testified that in 1989, Medcom marketed only the 500 best selling programs. Thus, the district court stated that “Schwartz’s thesis that every noncurrent program could be a ‘best seller’ was unsupported by the evidence.” (MemoRANdum Opinion And ORDER, 6/29/90, 1990 WL 104039 at *12.) Baxter’s expert criticized Schwartz’s opinion regarding the number of current programs and the potential sales of noncurrent programs without offering an alternative projection. The district court therefore concluded that the evidence afforded the jury “no basis to adjust the amount of damages downward. Consequently, the $3,500,000 award for the domestic library must be set aside.” Id. at *13.

First, we agree with MHC that the district court has mischaracterized Dr. Schwartz’s testimony. The district court’s characterization would be apt if Dr. Schwartz used the average sales figure for the top ten or 100 “current programs” out of the total number of approximately 500 “current programs.” But he did not. Dr. Schwartz based his calculations on the assumption that the “non-current” programs, had they actually been “current” as Baxter had represented, would have sold as well as the average “current” program that Medcom actually sold. Dr. Schwartz testified that there were approximately 500 current programs. The fact that these current programs sold better than the approximately 1000 noncurrent programs is not surprising. It does not, however, change the fact that Dr. Schwartz used the average sales figure for the “current” programs. This rationale is plainly reasonable and does not support the district court’s conclusion that Dr. Schwartz assumed that every non-current program could be a “best seller.”

Apart from our concern with the district court’s characterization of the testimony, we must conclude that the district court erred in vacating the jury’s award. The court’s decision was based on its assumption that the jury was not capable of adjusting the amount of damages downward:

Schwartz’s calculations were based on the palpably errant notion that each noncur-rent program could achieve exceptional sales. Schwartz’s calculations do not lend themselves to easy adjustment. Medcom failed to offer any analysis based upon reasonable sales expectations, and the jury cannot be expected to appropriately revise Schwartz’s model.

Id. (emphasis added).

We disagree. The court-underestimates the jury’s abilities. Dr. Schwartz was the subject of lengthy cross-examination. In addition, Baxter’s responsive expert discussed Dr. Schwartz’s analysis at length. The jury had the information it needed to decide whether Dr. Schwartz’s analysis was flawed. Thus, the jury could reasonably adjust the analysis to reflect the percentage of programs that were proven to be “noncurrent” and to reflect the appropriate amount of lost profits' from each noncurrent program.

The jury must bring in a verdict within the range of the valuation testimony presented.

.... Where experts differ on the amount of damages there is no rule of law requiring that a jury agree with one or the other or that its award be capable of precise determination. Furthermore, a jury may reduce an expert’s damage calculations without invalidating the verdict.

F.L. Walz, Inc., 167 Ill.Dec. at 47, 586 N.E.2d at 1319 (citations omitted). Moreover, under Illinois law, it is not necessary to prove lost profits with absolute certainty; it is permissible to establish “criteria by which the probable profits can be estimated with reasonable certainty.” Havoco of America, Ltd. v. Sumitomo Corp. of America, 971 F.2d *1400 1332, 1345 (7th Cir.1992) (quoting Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill.2d 306, 113 Ill.Dec. 252, 257, 515 N.E.2d 61, 66 (1987)).

We emphasize that the calculation and assessment of damages is a question of fact that is reserved for the jury. F.L. Walz, Inc., 167 Ill.Dec. at 47, 586 N.E.2d at 1319. Expert testimony may begin the inquiry into damages because it “will assist the trier of fact to understand the evidence or to determine a fact in issue_” Fed.R.Evid. 702. Expert testimony, however, cannot end the inquiry. The jury must determine the facts in issue. The rules of evidence recognize that “an expert on the stand may give a dissertation or exposition of scientific or other principles relevant to the case” but it is the trier of fact who “applies] them to the facts.” Fed.R.Evid. 702, advisory committee notes.

The district court did not apply Illinois law when it determined that the jury was not capable of reducing MHC’s expert’s damages calculations. When reviewed against the appropriate standard, the verdict is not against the weight of the evidence. The jury reduced the damages award, as it was free to do.

2. The September 30, 1986 Balance Sheet

[12] MHC also sought damages based on the $10.6 million balance sheet. MHC relied upon the warranty in the SPA providing that Baxter would pay MHC the amount of any overstatement in the balance sheet. Thus, the district court found that the award must be justified by reference to the breach of contract claim.

MHC produced one witness, Michael Reagan of the accounting firm of Deloitte, Has-kins & Sells, to testify to the amount of overstatement. Reagan testified that a 40 percent reduction of the balance sheet was appropriate, resulting in approximately $4.1 million in damages. The jury returned a verdict in the amount of $2,225,000. ,

Reagan analyzed the balance sheet overstatement line-item by line-item. For each item that he concluded that Baxter had overstated in the balance sheet, he testified as to why he reached this conclusion and by how much Baxter had overstated the value of the asset. Reagan was cross-examined on each balance sheet line-item. He also testified extensively on both direct and cross examination regarding his workpapers, which were provided to the jury as exhibits. In addition, Baxter called an accounting expert, who rebutted each of Reagan’s opinions line-item by line-item. Baxter’s expert also suggested that Reagan’s entire analysis should be rejected and that there were flaws that should lead to partial rejection of some line-items.

The district court again- found that the jury was not capable of adjusting the damages award.

' [MHC] asserts that the jury had Reagan’s working papers, permitting the jury to determine the proper amount to reduce the balance sheet. These voluminous papers are unintelligible to a lay person. They do not provide guidance to the jury_ [MHC] ’s evidence did not permit the jury to adjust its verdict downward if it decided only to partially accept Reagan’s qualified opinion that the balance sheet should be reduced by $4,000,000. Since the $2,225,000 verdict is not rationally related to the evidence, the verdict is set aside.

CMEMORANDUM OPINION AND ORDER, 6/29/90, 1990 WL 104039 at *14.) Again, the district court’s finding contradicts Illinois law and underrates the jury’s abilities. The jury’s function is to decide which evidence to accept and which evidence to reject. The jury took into account Baxter’s numerous challenges to Reagan’s analysis and the testimony of Baxter’s own expert. The jury then determined that the balance sheet was overstated by only $2,225,000. As MHC points out, there are numerous permutations that would permit the jury to arrive at a verdict of $2,225,000' rather than $4.1 million. See Wagner v. City of Chicago, 254 Ill.App.3d 842, 193 Ill.Dec. 676, 689, 626 N.E.2d 1227, 1240 (1993) (“A jury’s award will not be subject to remittitur where it falls within the ‘flexible range’ of conclusions which can be reasonably supported by the facts.”), aff'd, 166 Ill.2d 144, 209 Ill.Dec. 672, 651 N.E.2d 1120 (1995).

*1401 Even if we assume that the jury could not run the exact numbers and calculations of Reagan’s model with “mathematical certainty” (which we are hesitant to assume), the jury was entitled to “reduce an expert’s damage calculations without invalidating the verdict.” F.L. Walz, Inc., 167 Ill.Dec. at 47, 586 N.E.2d at 1319. Under the appropriate standard, Illinois law, the verdict is not against the weight of the evidence.

3. The Medcom I Jury’s Count-By-Count Damages Awards

Baxter argues that the jury mistakenly divided the total amount of compensatory damages among the three separate counts, and that this mistake provides an independent basis for affirming the court’s ruling vacating the compensatory damage awards. As the district court noted:

The special verdict form required the jury to indicate the amount of damages it desired to award under the rule 10b-5 claim, the fraud claim and the breach of contract claim. The next instruction on the special verdict form required the jury to indicate the total compensatory damages award. The jury apparently reasoned that the sum of the separate awards for the three counts must equal the total award. The jury awarded $1,000,000 under rule 10b-5 (Count I), $3,000,000 for common law fraud (Count IV) and $1,725,000 for breach of contract (Count V). The jury awarded total compensatory damages of $5,725,000. Since the court has ordered a new trial on the issue of compensatory damages, issues arising from the jury’s allocation of damages among the three counts are moot.

(MEMORANDUM OPINION AND ORDER, 6/29/90, 1990 WL 104039 at *15 n. 8.) Because this Court has found that the district court erred in ordering a new trial on compensatory damages, the issue is now before us.

Baxter argues that count-by-count awards evidence real confusion by the jury regarding the standards it was supposed to apply in two instances. First, there is no rational explanation for the difference in jury awards on Count IV and Count V, because the jury was instructed that the same benefit of the bargain measure of damages applied to both counts. Baxter believes that the award should have been the same, and to the extent it was different, the Count IV award should have been smaller, because that count (common law fraud) had additional elements and a higher burden of proof than Count V (breach of contract). Second, as the district court noted, MHC relied upon the warranty in the SPA providing that Baxter would pay MHC the amount of any overstatement in the balance sheet. “Accordingly, the award must be justified, if at all, by reference to [MHC’s] breach of contract claim.” (Memorandum Opinion And Order, 6/29/90, 1990 WL 104039 at *13.) Yet the jury awarded MHC $500,000 more on the balance sheet claim than it did on the corresponding count for breach of contract.

We recognize that the jury may have been confused by the special verdict form in this regard. In fact, the district court warned counsel prior to submission of the form to the jury that they had agreed upon a confusing special verdict form. This confusion does not require vacating the jury’s award of damages, however, because the jury’s intent was clear. See Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd.,