## Facts

- U.S. Can and KW Plastics were opposing parties in consolidated commercial litigation involving claims including breach of contract, trade-secret misappropriation, and tortious interference.
- U.S. Can designated John McGowan, a U.S. Can financial officer, as an expert to quantify alleged damages, including lost profits and unjust enrichment.
- KW Plastics moved in limine to exclude McGowan’s expert testimony under Federal Rule of Evidence 702.
- The court required McGowan to provide an expert report meeting civil procedure requirements and to sit for a second deposition; KW renewed its motion after the report and deposition.
- Key inputs in McGowan’s lost-profits model lacked factual support, including an estimate of KW’s production capacity that McGowan described as a “guess.”
- McGowan’s deposition testimony conflicted with his written report, leaving unclear the basis and repeatability of his calculations.
- McGowan lacked documentary support for critical assumptions and cost inputs (including facility and equipment costs) that were available to be investigated.

## Issues

1. Whether U.S. Can carried its burden under Federal Rule of Evidence 702 to show that McGowan’s damages opinions were based on sufficient facts or data and reliable methods reliably applied.
2. Whether McGowan’s lost-profits calculations were reliable and helpful to the jury given unsupported assumptions, missing documentation, and inconsistencies between his report and deposition.
3. Whether McGowan’s unjust-enrichment opinions reliably connected alleged trade-secret misappropriation to quantified gains in a manner relevant to the claims.

## Decision

- The court granted KW Plastics’ motion in limine and excluded McGowan’s expert testimony on lost profits and unjust enrichment.
- The court held that U.S. Can failed to establish that McGowan’s opinions rested on sufficient facts or data or that he used reliable methods reliably applied.
- The court found the lost-profits analysis speculative, lacking foundation, and affected by an indeterminate error rate.
- The court held that McGowan’s in-house status did not relax expert standards; he was required to meet the same professional and methodological rigor as other damages experts.
- The court concluded that the unjust-enrichment analysis suffered from similar reliability and relevance defects and did not assist the trier of fact.

## Legal Principles

- The proponent of expert testimony bears the burden to show admissibility under Rule 702 by a preponderance of the evidence.
- Expert testimony is admissible only if it is based on sufficient facts or data, is the product of reliable principles and methods, and reliably applies those methods to the case facts.
- Damages opinions for lost profits or unjust enrichment must be grounded in verifiable data and a coherently applied economic methodology; conjecture and undocumented assumptions are insufficient.
- Internal inconsistencies between an expert’s report and deposition testimony may indicate an unreliable methodology and an inadequate factual basis.
- An in-house employee offered as an expert must satisfy the same reliability and documentation expectations as an outside expert.

## Conclusion

The court excluded U.S. Can’s designated damages expert because the lost-profits and unjust-enrichment opinions were built on unsupported assumptions, lacked documentary grounding, and were internally inconsistent, failing Rule 702’s reliability and helpfulness requirements.


KW Plastics v. United States Can Co., 131 F. Supp. 2d 1289 (M.D. Ala. 2001)