Robert Webster allegedly owed fiduciary duties, including duties of loyalty and honesty, to his employer, CellMark. He was also subject to contractual obligations restricting him from competing with CellMark or soliciting its customers or employees on behalf of himself or others. According to CellMark, Webster began breaching these duties in 2023 after deciding to leave the company and allegedly taking steps to move certain customers away from CellMark.
CellMark claimed that, before Webster’s departure in June 2024, he had either diverted or prepared to divert several customers to CellMark’s competitors. The company further alleged that Göran Sohl, Fortex Americas, LLC, and DRC Industries, Inc., a supplier that later became a competitor, assisted or encouraged Webster’s conduct because they stood to benefit from the resulting business opportunities. CellMark also alleged that these entities were aware of Webster’s fiduciary and contractual obligations but proceeded despite those obligations.
Based on these allegations, CellMark brought several claims, including breach of fiduciary duty, breach of restrictive covenants, violations of the Kentucky Uniform Trade Secrets Act and the Defend Trade Secrets Act, and civil conspiracy.
CellMark retained Jay R. Cunningham to offer expert testimony on its damages. Defendant Rob Webster and the Fortex Defendants (Fortex Americas, LLC, Dinah Bowman, and Göran Sohl) filed respective motions to exclude the testimony of testimony of Cunningham.
Accounting Expert Witness
Jay Ryan Cunningham has more than 20 years of accounting and finance experience as a consultant in litigation, investigative and other business dispute matters.
He has managed or assisted on engagements providing advisory services to clients in a wide variety of disputes and performing a variety of damage analyses. He has also managed or assisted in special investigations related to accounting restatements, fraud, and other inappropriate business practices.
Cunningham is a graduate of Murray State University, Kentucky, with a B.S.B. degree in accounting and an M.P.Acc. degree.
Discussion by the Court
A. Cunningham’s disgorgement analysis must be excluded because it is unhelpful
CellMark believed it was entitled to disgorgement as a remedy for Webster’s alleged misconduct. To quantify this remedy, CellMark had Cunningham analyze the amount Webster should allegedly disgorge. To do so, Cunningham added up figures from a CellMark payroll spreadsheet.
Webster argued that Cunningham’s disgorgement analysis was merely “basic math” and should be excluded because it was not beyond the ken of common knowledge.
The parties agreed that Cunningham performed basic math to analyze the amount of disgorgement allegedly available. The Court therefore concluded that Cunningham’s opinions on disgorgement “should be excluded on such grounds.”
B. Cunningham’s overall lost-profits methodology is not fatally flawed
Webster contended that Cunningham failed to follow “a reliable methodology” because Cunningham “did not consider the other factors that could have caused CellMark’s losses, making his opinion unreliable and inadmissible.” The Fortex Defendants primarily contended that Cunningham’s methodology relied too much on CellMark’s “management’s belief, not on an analysis of CellMark’s” financial data, and also failed to consider “whether industry trends or market conditions could have impacted sales.”
While these may be reasons to criticize Cunningham’s analysis, they are not valid grounds for excluding all of Cunningham’s lost-profits testimony.
It is also true that Cunningham adopted a particularly rosy view of how things would have supposedly turned out for CellMark had the alleged misconduct not occurred—and did so based primarily on information provided to him by CellMark. But Cunningham is entitled to that optimistic perspective so long as it is based on evidence and not clearly contradicted by the evidence.
The Court cannot say that Cunningham’s entire lost-profits analysis is so “clearly contradicted” by the evidence in this case that it must be excluded merely because he believed that CellMark’s historical performance would have continued undisturbed but for the alleged conduct of Webster and the Fortex Defendants.
In sum, Cunningham’s overall methodology is not so defective or unreliable as to render all of his testimony about lost profits completely excludable.
C. Cunningham’s invention of an unsupported seven-month “transition period” is improper and should be excluded
While Cunningham’s overall methodology is not fatally flawed, one element of his analysis is. Webster and the Fortex Defendants asserted that when Cunningham tacked on a seven-month “transition period” to the damages period for each CellMark customer, he impermissibly relied on baseless speculation.
When Cunningham’s report discussed the time period he used to analyze lost profits, he noted that he “included an additional seven-month transition period” for every customer because he believed Webster’s year-long non-compete period would, in turn, cause an additional “reasonable delay” before Webster could successfully solicit customers. Cunningham’s choice of a seven-month period, he asserted, was “based upon an estimated average time to solicit and onboard customers, as well as order and receive associated product.”
But Cunningham cited no evidence in support of this “estimated average”—he did not, for example, consult industry data to establish a range for how long it might reasonably take a player in the market to develop a relationship with a customer currently being serviced by another supplier or how long it would generally take to build up an inventory to service such clients.
Cunningham’s seven-month transition period is the product of bare speculation. Cunningham himself tacitly acknowledged this: When questioned at his deposition about his basis for the transition period, Cunningham testified that the “seven-month period is an assumption,” that he did not “have data that suggests . . . how long does it take to get that customer,” and that there was no other data point that he could point to that would back up his choice to assume a seven-month transition period—or any other quantified time period, for that matter.
D. The Court will not exclude Cunningham’s opinions on lost profits related to Camelot / Integrity
Webster and the Fortex Defendants next argued that Cunningham’s analysis of lost profits relating to Camelot / Integrity is fatally defective because it is likewise too speculative.
CellMark responded by citing documentary evidence indicating that CellMark sold products to Camelot before its bankruptcy and sold products to Integrity in 2024 through a former Camelot representative that Integrity retained after Camelot was acquired by Integrity, thereby laying a foundation for Cunningham’s assumption of CellMark’s continued sales.
This is a close call. On the one hand, it seems tenuous to assume a company that acquired a CellMark customer after its bankruptcy would continue to purchase products from CellMark as though nothing had changed. Indeed, the document Cunningham cites for the proposition that CellMark expected future business with Integrity via Webster plainly did not reflect any firm purchasing commitment from Integrity. On the other hand, there is evidence that Integrity continued to purchase products from CellMark via the relationship Webster fostered with Camelot’s representative (whom Integrity kept on board) after Integrity acquired Camelot and that there was an ongoing relationship with CellMark. And there is evidence that Fortex made large volumes of sales shortly thereafter. Bearing in mind that there is thumb on the scale in favor of admitting expert testimony, the Court is reluctant to exclude Cunningham’s testimony about lost profits relating to Camelot / Integrity.
Therefore, the Court will not exclude Cunningham’s testimony relating to Camelot / Integrity.
E. No other theories that would justify partial exclusion
Webster and the Fortex Defendants raised a series of additional arguments for partial exclusion of Cunningham’s opinions.
First, the Defendants took issue with Cunningham’s unique damages period for Multi-Color Corporation. There is a factual dispute about whether CellMark would, in fact, have renewed its exclusivity agreement with Asia Pulp and Paper and continued on as an exclusive supplier for Multi-Color Corporation’s needs for months after Webster’s departure. Cunningham is therefore allowed to assume that CellMark would have done so. But the Defendants are equally allowed to contest the veracity of the facts underlying his assumption and to vigorously cross-examine Cunningham to determine the effect on his analysis if the jury does not credit CellMark’s evidence.
Second, Webster raised the issue of inflation, suggesting that Cunningham’s assumption of a 3.5% yearly price increase benefitting CellMark was unsupportable in light of “market data showing an industry in decline.” The Court concluded that the issue of whether Cunningham’s assumptions about inflation and market conditions were too optimistic is better addressed through cross-examination than outright exclusion.
Third, Webster contended that “Cunningham attributes customer sales declines to Webster” even though “CellMark’s corporate representative admitted there is no evidence implicating Webster.” Of course, this entire dispute is about whether Webster diverted business away from CellMark. Arguments rooted in factual disputes over what the evidence does and does not show and the related effects on an expert’s output are properly resolved through cross-examination—not wholesale exclusion.
Finally, Webster contended that Cunningham went beyond the scope of his expertise by offering certain statements about “industry customs and standards” in the paper industry. The Court did not find this argument convincing.
The Court concluded that Cunningham should be allowed to testify about what he understands are paper industry norms and how they inform his analysis of CellMark’s lost profits.
Held
- The Court granted in part and denied in part Webster’s motion to exclude the testimony of Jay Cunningham.
- The Court granted in part and denied in part the Fortex Defendants’ motion to exclude the testimony of Jay Cunningham.
Key Takeaway
Expert testimony “should be excluded if it is based on ‘unrealistic assumptions’” or “unsupported speculation.” Cunningham’s arbitrary seven-month “transition period” relied on both. This is a prime example of the sort of baseless testimony that courts may properly exclude. Cunningham may not testify at trial as to any “transition period” following the term of Webster’s non-compete period.
Accounting Experts’ Testimony on Exclusivity Agreement Limited
Case Details:
| Case Caption: | Cellmark, Inc. V. Webster |
| Docket Number: | 2:24cv181 |
| Court Name: | United States District Court, Kentucky Eastern |
| Order Date: | May 29, 2026 |
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