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Under Evid. Code, §§ 801, subd. (b), 802, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative. Other provisions of law, including decisional law, may also provide reasons for excluding expert opinion testimony.
The University of Southern California entered into a contract with the plaintiff company to perform clinical testing of the company's new product. After initial success in the clinical trials, the university failed to present the reports required by the contract. Plaintiff sued the university for breach of contract, seeking damages for lost profits beginning in 1998, ranging from $ 200 million to over $ 1 billion. Plaintiff claimed that, but for the university's breach of the contract, the company would have become a worldwide leader in the dental implant industry and made many millions of dollars a year in profit. Following an evidentiary hearing, the trial court excluded as speculative the proffered testimony of an expert to this effect. The Court of Appeals reversed. The university challenged the decision.
Did the trial court err in excluding the opinion testimony of one of the company's experts for being speculative?
The court reversed the judgment of the court of appeal and remanded to that court for further proceedings. The court held that the trial court properly acted as a gatekeeper in excluding the testimony. Pursuant to Civ. Code, § 3301, lost profits had to be reasonably certain. To the extent that the expert relied on data from larger companies that were not comparable and thus not relevant to the measure of lost profit damages, the trial court acted within its discretion to exclude the testimony because it was not based on matter of a type reasonably relied upon under Evid. Code, § 801, subd. (b). Circularity in the expert's reasoning with regard to innovation and success was another reason to exclude the testimony under Evid. Code, § 802. The expert's testimony provided no logical basis to infer that the company would have achieved the market share the expert projected.