Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 03 C 8780-John F. Grady, Judge.
The opinion of the court was delivered by: Cudahy, Circuit Judge.
ARGUED SEPTEMBER 21, 2009
Before CUDAHY, WOOD, and TINDER, Circuit Judges.
In 2001, Advertising Specialty Institute (ASI) and The Motivation Show entered into a contract that purported to form a "strategic alliance" to "promote the professional use of promotional products and distributors." The parties agreed to provide "ASI with the right of first refusal concerning any activity, alliance, or opportunity concerning the promotional product/advertising specialty industry." The present dispute arises from The Motivation Show's co-locating a trade show in Chicago with Promotional Products Association International (PPAI), which is ASI's close competitor. The district court found that, in doing so, the defendants (collectively, "The Motivation Show") breached their contract with ASI by failing to honor the latter's right of first refusal. However, in light of ASI's failure to prove damages with reasonable certainty, the court awarded nominal damages in the amount of one dollar. ASI contends that the district court committed clear error in finding insufficient proof of damages. The Motivation Show cross-appeals the district court's liability determination. For the reasons that follow, we affirm the holding of the district court in all respects.
ASI is a trade-information publisher that facilitates the meeting of purveyors and purchasers of corporate promotional products. ASI has approximately 21,000*fn1 distributor members and 3,300 supplier members. Through its affiliate, the ASI Show, ASI holds roughly 80 shows per year throughout the United States. Of these, five are "major," or multi-day, shows that are held in Chicago, Dallas, Las Vegas, New York and Orlando. The Chicago show has been held in May or July every year since 1999. Both ASI and The ASI Show are owned by the Cohn family. Matthew Cohn (Mr. Cohn) is the vice chairman of ASI and president of the ASI Show.
The present case involves ASI's relationship with Hall-Erickson and National Premium Show, Inc. (NPS), the latter of which does business as The Motivation Show. Hall-Erickson is the exhibition manager for this show, which is held annually in the fall at McCormick Place in Chicago. Peter Erickson (Mr. Erickson) is the president and sole shareholder of Hall-Erickson. He is also vice president and sole shareholder of NPS.
On February 6, 2001, The Motivation Show entered into an agreement with ASI that purported to create a "strategic alliance." The contract created a three-year obligation on the parties jointly to operate a promotional-products pavilion within The Motivation Show. ASI sought to benefit its members by exposing them to end-buyers, as well as to promotion and advertising agencies. For its part, The Motivation Show stood "to gain additional exhibitors and booths representing distributors and suppliers . . . to sell products to end-buyers." Paragraph nine of the agreement, which bestowed upon ASI "the right of first refusal concerning any activity, alliance, or opportunity concerning the promotional product/advertising specialty industry," is of central importance to the present appeal. The contract provided that it would be subject to Pennsylvania law. Paragraph eight stated that the agreement would "not be extended to any other promotional products association, trade show, or conference (i.e., PPAI)." As noted, PPAI is a close rival of ASI.
The parties differ markedly in how they construe the events leading up to the present dispute. ASI contends, and the district court agreed, that Mr. Erickson "solicited and invited" PPAI to co-locate its trade show with The Motivation Show at McCormick Place in Chicago. This, the district court found, violated paragraph nine of the contract because The Motivation Show failed to grant ASI a right of first refusal over this co-location opportunity, which the court determined to be in the promotional-product/advertising-specialty industry.
The district court determined that The Motivation Show literally bent over backwards "to make clear to all attendees at both shows that this was a joint endeavor," which was the attractive quality that enticed PPAI to the co-location. Tr. at 736. Judge Grady further found that Mr. Erickson and The Motivation Show's sponsorship was central to PPAI's success in obtaining approval from the Chicago Convention and Tourism Bureau (CCTB) to lease space in McCormick Place in September 2003. The district court also held that Mr. Erickson's "failure to advise ASI of his cooperation with PPAI . . . was deliberate and was designed to conceal from ASI the fact that there was an opportunity in the offing." Judge Grady concluded that Mr Erickson "knew that ASI would be interested, and he had every reason to believe that had he offered the opportunity to ASI, ASI would have been likely to accept it." Indeed, he found that ASI would have accepted such an offer, had it been forthcoming. Unsurprisingly, ASI fully supports these findings on appeal.
Hall-Erickson and NPS present a more innocuous account. They appeal primarily to the testimony of Mr. Erickson, who stated that he received an independent courtesy call from Mr. Slagle, president and chief financial officer of PPAI, who supposedly said that PPAI was looking to move its trade show to a post-Labor Day period that would be near The Motivation Show. He observed that shows with similar audiences can impact each other negatively, as attendees will go to one, but not to both. Based on this perceived fact, and given that PPAI was apparently intent on coming, Mr. Erickson testified that any detrimental impact could be eliminated by steering PPAI to The Motivation Show. Indeed, by persuading PPAI to come to McCormick Place on the same dates, he asserted that "there could be a very positive impact for The Motivation Show and for the ASI pavilion." Tr. at 376-77. He further stated that he provided the CCTB, at PPAI's request, with information that The Motivation Show and PPAI were not competitive. Id. at 380. This was information that the CCTB deemed relevant in determining whether PPAI was entitled to a permit. Mr. Erickson concluded that he did not believe that anything he had done breached The Motivation Show's agreement with ASI.
The district court rejected Mr. Erickson's testimony, characterizing it as "just regrettably false" and further labeling certain of his explanations as "completely untruth- ful." Judge Grady readily concluded that the co-location was an "opportunity" for the purpose of paragraph nine. The district court thus found that The Motivation Show had violated its contract by failing to make available to ASI the opportunity to exercise its right of first refusal.
However, despite concluding that the defendants were in breach of contract, the district court found that ASI had failed to prove damages with reasonable certainty. Although it reached this conclusion without addressing the factual record in great depth, the district court did note that "in view of [its] attitude toward the defendants' breach, [it] would not be reluctant to make a reasonable estimate of damages if [it] believed that [it] could do so."
In the present appeal, ASI contends that the district court committed clear error in finding that damages had not been proven with reasonable certainty. The Motivation Show ...