Smart Marketing Group Inc. v. Publications International Ltd.
2010 U.S. App. LEXIS 22412
| 7th Cir. | 2010Background
- Smart Marketing sued Publications for breach of contract; jury awarded $5.6M in damages but appeal granted new-trial limited to damages.
- Publications and Smart pursued two programs (Approved and Leads & Listings); October 2003 two-year contract superseded prior agreements.
- Publications terminated the October contract in November 2003 for misrepresentation, negative impact on brand, and >10% monthly attrition; termination letter gave no explanations.
- Damages were supported by mixed expert testimony (Birnbaum, MacDonald, Katz); Birnbaum’s methodology questioned for lack of industry familiarity.
- District court denied Publications’ Rule 50(b) motion; court later granted a new trial on damages; cross-appeal addressed prejudgment interest; judgment on liability left intact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Damages sufficiency under Illinois law | Smart argues sufficient evidence supported lost profits | Publications contends evidence was speculative | No clear error in denial of Rule 50(b) |
| Rule 50(b) JMOL adequacy | Smart's damages model could justify jury award | Damages were too speculative | No reversible error in denying JMOL |
| Excessiveness of damages; new trial on damages warranted | Damages were properly calculated from reliable data | Damage award was shockingly high | New trial on damages warranted; damages vacated |
| Prejudgment interest eligibility | Interest should be awarded where damages are easily calculated | Damages not easily calculated; interest inappropriate | Prejudgment interest denied on remand basis |
Key Cases Cited
- Best v. Taylor Mach. Works, 179 Ill.2d 367 (Ill. 1997) (damages must be within range of fair compensation; not arbitrary)
- Tate v. Exec. Mgmt. Servs., Inc., 546 F.3d 528 (7th Cir. 2008) (review of damages on appeal; standard for reversal)
- Drs. Sellke & Conlon, Ltd. v. Twin Oaks Realty, Inc., 143 Ill.App.3d 168 (Ill.App.) (new-business lost profits may be speculative; need reliable data)
- MindGames, Inc. v. Western Publishing Co., 218 F.3d 652 (7th Cir. 2000) (lost profits in new product cases; evidentiary standards)
- Computrol, Inc. v. Newtrend, L.P., 203 F.3d 1064 (8th Cir. 2000) (new software profits too speculative under Illinois law)
- TAS Distributing Co., Inc. v. Cummins Engine Co., Inc., 491 F.3d 625 (7th Cir. 2007) (comparative market evidence must be analogous and reliable)