Breach Of Contract Damages Must Be Established With Reasonable Certainty
ADVERTISING SPECIALTY INSTITUTE v. HALL-ERICKSON, INC. (April 7, 2010)
Advertising Specialty Institute (ASI) is in the promotional products business. It facilitates transactions between the buyers and sellers of corporate promotional materials. It has an affiliate, ASI Show, which puts on numerous trade shows throughout the year. Hall-Erickson and National Premium Show (NPS) put on The Motivation Show annually at McCormick Place in Chicago. In 2001, The Motivation Show and ASI entered into an agreement to co-sponsor a promotional product event at The Motivation Show. In the agreement, The Motivation Show gave ASI the right of first refusal regarding any other opportunity within the promotional products industry and also agreed that it would not extend the same opportunity to any other association or conference, specifically including by name ASI's close competitor, Promotional Products Association International (PPAI). Notwithstanding this agreement, The Motivation Show agreed to co-locate a show with PPAI. The district court determined that The Motivation Show breached its contract with ASI but, finding that ASI failed to offer sufficient proof of damages, awarded only nominal damages. ASI appeals the damages determination -- defendants cross-appeal the liability determination.
In their opinion, Judges Cudahy, Wood, and Tinder affirmed. The Court concluded that the right of first refusal was clear and unambiguous in the contract and that The Motivation Show violated that provision and breached the contract when it put on the show with PPAI. The Court also affirmed with respect to the damages issue, although it did express its view that the damages case was not as weak as described by the district court. Under Pennsylvania law, damages are not recoverable beyond that which is established with reasonable certainty by the evidence. The Court found portions of the evidence did provide some basis for the claim of damages. However, giving deference to the findings of the District Court, the Court also noted several gaps in the evidence. For example, ASI never introduced evidence of specific companies that either attended the joint show at issue or would have attended an ASI show, it did not introduce evidence of PPAI's own revenue or profits from the show, and it did not produce evidence of what PPAI would have done had it not shared the show with The Motivation Show. Given the ambiguities and gaps in the evidence, the Court found no clear error.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select