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Amer. Hardware Mfrs. Assn. v. Reed Elsevier

January 16, 2011

AMER. HARDWARE MFRS. ASSN.
v.
REED ELSEVIER, INC.



Name of Assigned Judge Sitting Judge if Other or Magistrate Judge Matthew F. Kennelly than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

The Court rules as stated below on the remaining issues in the parties' motions in limine.

[ For further details see text below.] Docketing to mail notices.

STATEMENT

In this order, the Court deals with various in limine issues.

1. In two earlier decisions in this case, Judge James Moran ruled (among other things) that the parties' 1977 agreement was not ambiguous and that the agreement and its later amendments did not obligate Reed to share all revenues from the trade show with AHMA. See Dec. 28, 2004 decision at 16-17; Feb. 13, 2007 decision at 6-7. Those rulings are the law of the case. AHMA has provided no basis to revisit or overturn them at this juncture.

2. Those decisions, however, do not address the admissibility of other evidence or argument regarding whether Reed was obligated to disclose or share revenues, commissions, or discounts relating to the trade show, and they do not suggest that the 1977 agreement undermines a fiduciary duty claim by AHMA based on a joint venture theory. Indeed, in his February 13, 2007 decision, Judge Moran determined that AHMA had stated a claim for breach of fiduciary duty in light of the 1977 agreement as well as other factors. He concluded that the existence of the 1977 agreement was one, but only one, of several factors to be considered in determining the existence of a joint venture. See Feb. 13, 2007 decision at 14-15. These decisions are likewise the law of the case. Reed had provided no basis to revisit or overturn these rulings at this juncture.

3. During the final pretrial conference, from what the Court recalls, AHMA suggested that the 1977 agreement was not integrated and also pointed out that the agreement had later been amended. The Court understood this as a basis for suggesting that extrinsic evidence regarding the meaning of the 1977 agreement is admissible. The Court rejects this argument. Even if the agreement lacked an express integration clause, that would not, under Illinois law, render it incomplete or unintegrated. See, e.g., Davis v. G.N. Mtg. Corp., 396 F.3d 869, 879 (7th Cir. 2005) (Illinois law). The 1977 agreement was in fact integrated; on its face, it was a complete expression of the parties' agreement. See id. at 878. Indeed, the agreement contained a provision stating, "This Agreement constitutes the entire understanding between the parties . . . ." 1977 Agreement ¶ 13. Finally, The fact that an agreement is later amended has no bearing on whether it was an integrated agreement at the time it was initially made (a contrary rule would border on the absurd).

4. Under Illinois law, extrinsic evidence is admissible to show the meaning of a contract only if the contract is ambiguous -- i.e., reasonably susceptible of different constructions. See Davis, 396 F.3d at 879; Cromeens, Holloman, Sibert, Inc v. AB Volvo, 349 F.3d 376, 394 (7th Cir. 2003) (Illinois law). In responding to Reed's motion, AHMA pointed to no term of the agreement that it contended was ambiguous, nor has the Court located any such term on its own. The Court concludes that extrinsic evidence is inadmissible to show the meaning of the 1977 agreement.

5. This does not mean, however, that evidence outside the 1977 agreement is inadmissible to show the existence of a joint venture. Indeed, as noted earlier, Judge Moran ruled (and this Court reaffirms) that the existence of the 1977 agreement is only one of several factors to be considered in determining whether the parties had a joint venture at some relevant point in time.

6. The Court does not address whether what might be called extrinsic evidence concerning the 1977 agreement -- specifically, evidence about the parties' discussions prior to executing the agreement -- might be admissible to show the existence or non-existence of a joint venture or for some purpose other than to interpret the agreement. The parties have not briefed that issue, or at least they have not briefed it sufficiently. The Court directs the parties to file brief memoranda (no more than 4 pages) on this topic by no later than 4:00 p.m. on January 17. (The Court notes that in Reed's motion in limine and its recent proffer regarding the testimony of Cordell Overgaard, Reed erroneously conflates the issue of whether extrinsic evidence is admissible to interpret the 1977 agreement and the issue of whether such evidence is admissible to show, or whether the evidence in the case is sufficient to show, a joint venture. These are logically distinct points.)

7. Contrary to Reed's argument, Judge Moran did not address the admissibility of "course of conduct" or "conspiracy" evidence to prove AHMA's fraud, breach of fiduciary duty or unjust enrichment claims or to defend against Reed's defamation claim. The Court is persuaded that such evidence is relevant for these purposes, subject to the limitations provided in Federal Rule of Evidence 403. In addition, contrary to Reed's argument, Judge Moran's December 28, 2004 decision does not impose limitations on the scope of AHMA's fraudulent inducement claim. See Reed Mots. in Limine at 2 (citing Dec. 28, 2004 decision at 10).

8. Expert testimony regarding ownership of the trade show or its assets or the meaning of the 1977 agreement is inadmissible as an improper opinion interpreting the parties' legal obligations. The Court has previously concluded, however, that Richard White, a former Reed executive, may testify as a fact witness regarding what Reed understood. See Dec. 29, 2010 decision ΒΆ 7. As the Court indicated, it is unpersuaded that ...


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