McMahan’s has experienced downturns before and always managed to rebound, however, this decline dating back to late 2006 has been considerably longer and deeper than anything they’ve [sic] previously experienced."
In 1975, a water main near the company's Santa Monica store burst. The company and its insurer, Aetna, sued the city under the theory of inverse condemnation. The company wanted the jury to be instructed that "As to the merchandise losses suffered by plaintiffs, the compensation for those losses may be based on the retail value of the merchandise less average discounts." but the court refused to give the instruction, and the jury awarded damages corresponding to the wholesale value. The lower court's decision was upheld on appeal. The court of appeals quoted a restatement of the law of torts saying that "damages for the profits which the wholesale dealer or the retail dealer would normally anticipate from a sale are not ordinarily allowed."[17] The suit is considered one of "the leading cases" in California tort law about the value of inventory.[18]
