UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

AMERICAN HARDWARE ) 

MANUFACTURERS ASSOCIATION, ) 

 ) No. 03 C 9421 

 ) 

Plaintiff, ) 

 v. ) Judge Matthew F. Kennelly 

 ) 

REED ELSEVIER INC., et al., ) 

 ) 

 ) 

 Defendants. ) 

REED’S MOTION FOR JUDGMENT AS A MATTER OF LAW UNDER RULE 50(A) 

AND FOR JUDGMENT ON PARTIAL FINDINGS UNDER RULE 52(C) 

REED ELSEVIER INC.

Michael I Rothstein 

Caesar A. Tabet 

Christopher D. Liguori 

Karina Zabicki DeHayes 

Timothy A. Hudson 

TABET DIVITO & ROTHSTEIN LLC 

209 South LaSalle Street, 7th Floor 

Chicago, IL 60604 

Telephone: (312) 762-9450 

Dated: January 31, 2011 
1

 By this motion, defendant Reed Elsevier Inc. (“Reed”) respectfully seeks judgment as a 

matter of law pursuant to Fed. R. Civ. P. 50(a) against plaintiff American Hardware 

Manufacturers Association (“AHMA”) on several claims, and judgment on partial findings 

pursuant to Fed. R. Civ. P. 52(c) against AHMA on the availability of the equitable remedy of 

rescission. In support of this motion, Reed states as follows: 

ARGUMENT

I. BECAUSE NO REASONABLE JURY COULD FIND IN AHMA’S FAVOR ON ITS ALLEGATION 

THAT REED FRAUDULENTLY INDUCED AHMA TO ENTER INTO THE SETTLEMENT 

AGREEMENT, THE COURT SHOULD ENTER RULE 50(A) JUDGMENT AS A MATTER OF LAW 

AGAINST AHMA ON ALL CLAIMS THAT PRE-DATE THE SETTLEMENT AGREEMENT. 

Before AHMA can obtain the $566 million jury verdict that it seeks on claims that predate February 26, 2003, AHMA first must establish that Reed fraudulently induced AHMA to 

enter into the Settlement Agreement, which included a mutual release of all claims.1

 The 

Settlement Agreement plainly states that AHMA “hereby releases, covenants not to sue and 

forever discharges Reed ... from any and all claims ... for the period from the beginning of time 

through the date hereof.” (Reed Ex. 202 at ¶ 7(b).) Because no reasonable jury could find in 

AHMA’s favor on the issue of fraudulent inducement and AHMA presented no evidence to 

justify its 10-month delay in seeking rescission, the Court should enter judgment as a matter of 

law against AHMA on all of its pre-release claims. 

A. Even if Reed’s involvement in other trade shows breached the Settlement 

Agreement, the release remains valid and AHMA cannot resurrect the 

released claims unless it proves fraudulent inducement and the Court 

exercises its equitable powers to rescind the entire contract. 

 Mere breach of the Settlement Agreement – even a material breach – is not sufficient to 

set aside the release. While in some circumstances a material breach by one party may excuse 

 

1

 There is no dispute that AHMA knew about each of the alleged practices that form the basis of its prerelease claims at the time it entered into the Settlement Agreement – indeed, AHMA repeatedly 

confronted Reed about those practices on multiple occasions before the Settlement Agreement was 

executed. (Tr. at 532; Reed Ex. 173.) 
2

further performance by the other, a release “is a contract whereby a party abandons a claim.” 

Int’l Ins. Co. v. Sargent & Lundy, 242 Ill. App. 3d 614, 622 (1st Dist. 1993) (emphasis added). 

Unlike a covenant not to sue, which “affect[s] only the right to bring suit and not the underlying 

cause of action itself,” a release “extinguishes” the claim. Id. at 627. Thus, there is no further 

performance to be excused. See, e.g., Sears, Sucsy & Co. v. Ins. Co. of N. Am., 396 F. Supp. 820, 

822 (N.D. Ill. 1975) (applying Illinois law) (failure to pay promissory note made in partial 

consideration for release does not invalidate the release; proper remedy is to sue on the note). 

Rather, under Illinois law, a party must justify the rescission of the entire agreement to 

set aside a settlement agreement. See Solar v. Weinberg, 274 Ill. App. 3d 726, 733 (1st Dist. 

1995); see also Medina v. City of Chicago, No. 00-c-00001, 2001 U.S. Dist. LEXIS 14650, at *5 

(N.D. Ill. Sept. 14, 2001) (a party cannot “keep the parts of the agreement [it] likes . . . and 

jettison the one part [it] now dislikes”). A breach of contract justifies rescission only where the 

breach is “so fundamental as to defeat the objects of the parties in making the agreement.” 

Solar, 274 Ill. App. 3d at 733. Here, AHMA admitted that the release was not among AHMA’s 

three principal objectives for the Settlement Agreement. (Tr. at 757: AHMA’s three principal 

objectives were to end its relationship with Reed, to obtain the freedom to pursue any direction it 

wanted in the future, and to obtain the ability to start an independent hardware show.) Indeed, 

AHMA admitted that it achieved its three principal objectives notwithstanding Reed’s alleged 

breach. (Tr. at 757-58.) Based on the undisputed evidence, no reasonable jury could find that 

Reed’s purported breach alone meets the strict standard for rescission described above. 

B. AHMA has not presented sufficient evidence to establish fraudulent 

inducement and to avoid judgment as a matter of law under Rule 50. 

To resurrect its released claims, AHMA must establish that the entire Settlement 

Agreement should be rescinded based on fraudulent inducement. As explained below, AHMA 
3

has failed to introduce sufficient evidence as to several required elements of its fraudulent 

inducement claim. Each failure of proof independently warrants entry of judgment as a matter of 

law pursuant to Rule 50(a).2

1. AHMA has not presented sufficient evidence that Reed intended to 

induce AHMA to enter into the Settlement Agreement. 

AHMA’s claim for fraudulent inducement is part of its fraud claim (Count I) as well as 

an affirmative defense to Reed’s claims. AHMA’s fraudulent inducement claim relates to an 

alleged vague, undocumented, oral promise on February 17 and 18, 2003 that Reed “will not 

participate” in the Midwest Builders Show, the International Security Conference, the Home 

Automation Show, or “any other trade show that would violate paragraph 11(a) of the ’77 

agreement.” (Tr. at 510–511.) AHMA claims that this vague, undocumented, oral promise 

induced it to enter into the Settlement Agreement eight days later, on February 26, 2003. (Id. at 

519; 524.) 

 To prevail on its fraudulent inducement claim, AHMA must establish by clear and 

convincing evidence that Reed made the alleged oral promise with “an intent to induce the other 

party to act.” See Hoseman v. Weinschneider, 322 F.3d 468, 476 (7th Cir. 2003) (applying 

Illinois law). To the contrary, the evidence has established that Reed was willing to continue the 

parties’ relationship under the 1977 Show Agreement, but that AHMA was persistently pursuing 

a full Settlement Agreement that would allow AHMA to conduct its own hardware show: 

 

2

 Under Rule 50(a), a court may resolve a jury issue against a party and enter judgment as a 

matter of law when “a party has been fully heard on an issue during a jury trial and the court 

finds that a reasonable jury would not have a legally sufficient basis to find for the party on that 

issue.” See Fed. R. Civ. P. 50(a). A mere “scintilla” of evidence in support of an issue is not 

sufficient to defeat a Rule 50(a) motion. Hall v. Forest River, Inc., 536 F.3d 615, 619 (7th Cir. 

2008); Filipovich v. K&R Express Sys., 391 F.3d 859, 863 (7th Cir. 2004). Rather, “the question 

is simply whether the evidence as a whole, when combined with all reasonable inferences 

permissibly drawn from that evidence, is sufficient to allow a reasonable jury to find in favor of 

the plaintiff.” Hall, 536 F.3d at 619. 
4

• On February 20, 2002, AHMA sent a letter to ConvExx stating that AHMA was “on an 

extremely fast track” because AHMA wanted to conduct its own hardware show in 2002. 

(Reed Ex. 126; Tr. at 561–563.) 

• On July 25, 2002, AHMA’s Board of Directors unanimously voted “to follow the previously 

approved strategy to terminate the Show Agreement.” There is no mention of any conditions 

on Reed’s involvement in the three other trade shows. (Reed Ex. 148 at p. 7.) 

• On July 25, 2002, William Farrell sent a letter to Mike Rusbridge of Reed stating that he had 

received the “full support and approval” of AHMA’s Show Committee “to pursue the early 

termination” of the 1977 Show Agreement and “would like to expedite that whole process.” 

(Reed Ex. 149; Tr. at 581-582.) 

• In July 2002, AHMA was “pushing” the settlement to “get it done fast.” (Tr. at 582.) 

• On August 30, 2002, AHMA informed Reed that the “termination of the AHMA/Reed 

relationship is in the mutual best interest of our organizations” and that termination “would 

allow for the pursuit of each of our organization’s divergent goals.” AHMA recommended a 

“mutual and general release of claims” and did not mention any conditions on Reed’s 

involvement in the three other trade shows. AHMA also stated that it would “endeavor to 

minimize the provisions involved in the termination agreement in order to allow our 

respective organizations to operate freely thereafter, and to achieve this with all possible 

expediency.” (Reed Ex. 155; Tr. at 584-585.) 

• On October 8, 2002, AHMA sent Reed a draft Settlement Agreement and stated that it 

wanted “to execute the termination agreement as soon as possible.” (Reed Ex. 166 at 9; Tr. 

at 600–601.) 

• On October 15, 2002, Reed ended settlement negotiations with AHMA and stated that Reed 

was “prepared to work under the existing agreement” and to “work jointly toward next year’s 

show.” (Reed Ex. 167.) 

• On December 2, 2002, William Farrell summarized for AHMA’s Show Committee the 

history of AHMA’s “failed termination attempts.” The Committee then discussed AHMA’s 

options, including “termination of the Show Agreement” or “litigation with Reed.” Members 

of the Committee stated that termination of the relationship was “essential” and that AHMA 

“must work quickly to terminate the Show Agreement and prepare a strategic plan to launch 

the AHMA Hardware Show in head-to-head competition with Reed.” The Committee 

determined “decisively to terminate the relationship with Reed.” (Reed Ex. 171 at pp. 2-4.) 

• On December 9, 2002, AHMA’s Executive Committee unanimously approved a formal 

motion and “resolved to terminate the show agreement as soon as possible and establish the 

AHMA hardware show thereafter.” William Farrell admitted that Reed did not induce 

AHMA to pass that unanimous motion. (Reed Ex. 172 at p. 6; Tr. at 650.) 
5

• William Farrell admitted that he had received full authority from AHMA’s Board of 

Directors in December 2002 and needed no additional authority to approve the Settlement 

Agreement. (Tr. at 652-653.) 

• On February 6, 2003, with prior knowledge of Reed’s involvement in the Security 

Show/Home Automation Show and in the Midwest Builders Show, William Farrell sent a 

letter to Dennis MacDonald stating that he had “full authority from AHMA’s Board of 

Directors and Executive Committee to negotiate a termination agreement; in fact, I have a 

directive from the Board to ‘make it happen’ or propose an alternative.” (AHMA Ex. 201.) 

• None of the correspondence between AHMA and Reed, none of the draft settlement 

agreements, none of the AHMA Board minutes and no other documents reflect the alleged 

oral promise or the alleged inducement, and William Farrell is not aware of any such 

documents. (Tr. at 666.) 

AHMA thus has not presented sufficient evidence to permit a reasonable jury to find that 

Reed induced AHMA to enter into the Settlement Agreement, especially when the overwhelming 

evidence establishes that AHMA initiated the termination effort and that it did not need 

encouragement or inducement to enter into the Settlement Agreement.3

 

2. AHMA has not presented sufficient evidence that it justifiably relied 

on the alleged oral promise. 

 AHMA also must establish by clear and convincing evidence that it entered into the 

Settlement Agreement “in reliance on the truth of the statement” made by Reed. See Hoseman, 

322 F.3d at 476. Moreover, AHMA must show that its reliance was justifiable “in light of all the 

facts of which plaintiff had actual knowledge as well as those of which he might have availed 

himself by the exercise of ordinary prudence.” Teamsters Local 282 Pension Trust Fund v. 

Angelos, 839 F.2d 366, 370 (7th Cir.1988) (applying Illinois law; emphasis in original; internal 

quotations omitted). AHMA has not presented sufficient evidence that it actually relied on the 

alleged oral promise, or that such reliance was justifiable. 

 

3

 See Seefeldt v. Millikin Nat'l Bank of Decatur, 154 Ill. App. 3d 715, 720 (4th Dist. 1987) (affirming 

grant of summary judgment on fraud claim because record was clear that plaintiffs were not “encouraged” 

by the defendant to enter into the transaction, and the transaction was not “instigated” by the defendant). 
6

 First, as explained above in Section I(B)(1), no reasonable jury could find that AHMA 

proved by clear and convincing evidence that it actually relied on MacDonald’s alleged, 

undocumented statement when AHMA made its decision to terminate its relationship with Reed 

and enter into the Settlement Agreement. Apart from William Farrell’s bare statement that he 

“wouldn’t have been able to sign” the Settlement Agreement without Reed’s alleged promise 

(Tr. at 524), the evidence overwhelmingly established that AHMA did not rely on the alleged 

statement in entering into the Settlement Agreement. Indeed, AHMA’s board made its 

unanimous decision in December 2002, more than two months before the alleged oral promise. 

(Reed Ex. 171 at p. 4; Reed Ex. 172 at p. 6.) As William Farrell testified, AHMA did not and 

could not rely, and the alleged oral promise had no bearing whatsoever, on the AHMA board’s 

unanimous and “decisive” decision in December 2002 to enter into the Settlement Agreement 

with Reed. (Tr. at 650-651.) 

 Second, no reasonable jury could conclude that AHMA’s purported reliance on Reed’s 

alleged oral promise was justifiable. Reliance is not justified where, as here, “ample opportunity 

existed to discover the truth.” Neptuno Treuhand-und Verwaltungsgesellschaft MBH v. Arbor, 

295 Ill. App. 3d 567, 575 (1st Dist. 1998). “A person may not enter into a transaction with his 

eyes closed to available information and then charge that he has been deceived by another.” 

Chicago Export Packing Co. v. Teledyne Indus., Inc., 207 Ill. App. 3d 659, 663 (1st Dist. 1990). 

Rather, “[w]hen afforded the opportunity of knowing the truth or falsity of the alleged 

representation, a party is chargeable with that knowledge” and, “[i]f the party does not avail 

himself of the means of knowledge open to him, he cannot be heard to say he was deceived by 

misrepresentation.” Goetz v. Avildsen Tool & Machines, 82 Ill. App. 3d 1054, 1066 (1st Dist. 

1980). It is undisputed that AHMA knew that Reed’s participation in the three other trade shows 
7

was publicly announced on each show’s website at all times, and there is no evidence that Reed 

concealed its continued involvement in those shows in any way, at any time. For example: 

• AHMA knew that Reed’s participation in the three shows was publicly announced on each 

show’s website. (Tr. at 490-491, 499-503, 681; AHMA Exs. 196, 484, 485, 489.) Prior to 

the alleged oral promise, Tim Farrell printed hard copies of these websites that reflected 

Reed’s involvement and presented them to William Farrell. (Tr. at 488-489, 498, 681.) 

• Between the time of the alleged promises and the time that AHMA signed the Settlement 

Agreement, AHMA did not review those websites and offered no evidence that it did 

anything whatsoever to determine if Reed had ended its participation in those shows. (Tr. at 

683.) There is no evidence that anyone checked the public websites or any other source. 

• AHMA never contacted anyone associated with the Midwest Builders Show or checked the 

show’s website to confirm whether Reed had ended its participation in that show. (Tr. at 

682-684, 927-928.) Reed’s involvement in the Midwest Builders Show was announced on 

the first page of that show’s website on every day of every year that the website was up 

through 2008. (Tr. at 901, 923-924.) 

Had AHMA checked the websites or contacted the other shows at any time prior to entering into 

the Settlement Agreement, it would have learned that Reed was continuing to participate in those 

shows. Based on the foregoing, no reasonable jury could conclude that AHMA justifiably relied 

on Reed’s alleged statement that it would stop its participation in the other shows. 

3. AHMA has not presented sufficient evidence that the alleged oral 

promise was material, or that Reed’s involvement in the other shows 

was a material breach of Reed’s contractual obligations. 

 AHMA also must show by clear and convincing evidence that the alleged false promise 

was material. See Hoseman, 322 F.3d at 476. Under Illinois law, “a misrepresentation is 

‘material’ if the plaintiff would have acted differently had he been aware of it, or if it concerned 

the type of information upon which he would be expected to rely when making his decision to 

act.” Miller v. William Chevrolet/Geo, 326 Ill. App. 3d 642, 649 (1st Dist. 2001). Here, no 

reasonable jury could find that the alleged oral promise was material to AHMA’s decision to 

enter into the Settlement Agreement. AHMA cannot identify any way in which it was damaged 

as a result of Reed’s involvement with the three other trade shows. (Tr. at 753-756.) Further, 
8

Reed’s involvement in the Security Show/Home Automation Show could not be material to 

AHMA’s decisions in 2003 because AHMA knew about Reed’s involvement in those shows 

(along with detailed descriptions of the exhibitors, attendees and products displayed at those 

shows) since 1998. (Reed Ex. 82 at pp. 220-222; Tr. at 601-610.) 

Likewise, Reed’s involvement in the Midwest Builders Show could not be material to 

AHMA’s decisions because Reed’s involvement in that show “had no bearing whatsoever” on the 

Home Builder Association’s decision to conduct that show, and the Home Builders Association 

intended to proceed with the Midwest Builders Show in March 2003 regardless of Reed’s 

participation. (Tr. at 909-910.) Indeed, the 2003 Midwest Builders Show was a fraction of the size 

of the 2003 National Hardware Show, and Reed simply exchanged promotional support, receiving 

only $6,200 in profit. (Tr. at 908, 917-18, 920, 922; 1261-62.) No reasonable jury could find that 

Reed’s publishing division’s production of a show guide for which it made $6,200 in profit is a 

sufficiently material basis to resurrect AHMA’s $500 million in released claims. 

Moreover, the evidence established that Reed’s alleged promise not to participate in the 

other shows in fact was not material to AHMA. The other trade shows at issue were not even 

identified on AHMA’s internal lists of competitive industry trade shows: 

• The shows do not appear on AHMA’s list of “Industry Trade Shows for 2001-2003” wherein 

AHMA identifies dozens of separate industry trade shows that it believes are competitive. 

(Reed Ex. 116.) 

• The shows do not appear on AHMA’s list of “2003 Competitive Trade Shows Conducted in 

First Quarter” or AHMA’s list of “Trade Shows – 2003” which William Farrell sent to 

AHMA’s Show Committee on November 27, 2002. (Reed Ex. 170, at 2; Tr. at 613-614.) 

• The shows do not appear among the “competitive events” identified in the Competitive 

Intelligence Analysis of the AHMA Hardware Show’s 2004 Strategic Plan. (Reed Ex. 229 at 

pp. 7-10; Tr. at 703-705.) 

In addition, although William Farrell testified that AHMA’s Board of Directors required that all 

terms and conditions of the Settlement Agreement be in writing and be explained to the Board 
9

(Tr. at 582-583), it is undisputed that no documents whatsoever reflect in any manner the alleged 

vague, oral promise that Reed would not participate in the three other shows, or conditions the 

Settlement Agreement on Reed’s non-participation in those three shows. (Tr. at 666.) Nor does 

William Farrell recall ever reporting Reed’s alleged oral promise to AHMA’s Board of 

Directors. (Tr. at 669.) 

For all the reasons set forth above, no reasonable jury could find that the alleged false 

promise was a material consideration in AHMA’s decision to enter into the Settlement Agreement. 

4. AHMA has not presented sufficient evidence to allow a reasonable 

jury to conclude that Reed’s involvement in the three other shows 

even breached Reed’s contractual obligations. 

AHMA’s fraudulent inducement claim includes the alleged oral promise that Reed would 

not participate in “any other trade show that would violate paragraph 11(a) of the [Show 

Agreement].” (Tr. at 510–511.) But paragraph 11(a) prohibits Reed’s participation only in a show 

that “primarily relates to hardware, lawn, garden and/or home improvement products” (Reed Ex. 

10, emphasis added). AHMA has not presented evidence from which a reasonable jury could 

conclude that the other trade shows are “primarily” related to the prohibited products. 

To the contrary, Madge Douglas, the person who created the 2003 Midwest Builders Show, 

testified that (1) the Midwest Builders Show was not a show for displaying hardware, lawn and 

garden, or home improvement products; (2) the products exhibited at the show were not home 

improvement products, but rather were “new home building products;” and (3) only 0-5% of the 

show consisted of tools. (Id. at 911:12-16.) Similarly, Richard Chace, the CEO and Executive 

Director of the trade association that sponsored the 2003 Security Show/Home Automation Show 

testified that the show was not primarily related to home improvement products. (Tr. at 1239-42.)4

 

 

4

 As disinterested witnesses, the testimony of Madge Douglas and Richard Chace should be 

considered in support of this motion. Indeed, on a Rule 50 motion, the Court “should give 
10

In addition, AHMA’s expert witness, Michael McClelland, admitted that he “never 

attempted to quantify the extent to which the ISC related to hardware home improvement 

products,” and that he does not know “whether the hardware home improvement products 

displayed at the security show were more or less than 10 percent of all products displayed.” (Tr. 

at 1233-1234.) McClelland testified similarly with respect to the Home Automation Show and 

the Midwest Builders Show. (Tr. at 1245, 1267–1268.) 

Because AHMA presented no evidence whatsoever regarding the extent to which the 

products exhibited at the other trade shows were home improvement products, and the 

disinterested witnesses testified that none of those shows primarily related to home improvement 

products, no reasonable jury could find that the shows satisfy the requirement under paragraph 

11(a) of the Show Agreement that other shows must “primarily” relate to the relevant products. 

Moreover, regardless of whether Reed’s involvement in the other shows was a technical 

breach of paragraph 11(a), no reasonable jury could find that Reed’s involvement in those shows 

was a material breach of the contract for the reasons explained above. Because AHMA has failed 

to present sufficient evidence to allow a reasonable jury to find in AHMA’s favor on several 

elements of its fraudulent inducement claim, the Court should enter judgment pursuant to Rule 

50(a) against AHMA on that claim and on all of AHMA’s claims that are barred by the release. 

II. THE COURT SHOULD ENTER JUDGMENT ON PARTIAL FINDINGS AGAINST AHMA ON THE 

AVAILABILITY OF RESCISSION – AND JUDGMENT AS A MATTER OF LAW ON ALL OF 

AHMA’S PRE-RELEASE CLAIMS – BECAUSE AHMA HAS PRESENTED NO CREDIBLE 

EVIDENCE TO JUSTIFY ITS 10-MONTH DELAY IN SEEKING RESCISSION. 

 The Court should enter judgment on partial findings pursuant to Rule 52(c) against 

AHMA on the availability of equitable rescission – and therefore enter judgment as a matter of 

 

credence to ... evidence supporting the moving party that is uncontradicted and unimpeached, at 

least to the extent that that evidence comes from disinterested witnesses.” Davis v. Wis. Dep’t of 

Corr., 445 F.3d 971, 976 n. 1 (7th Cir. 2006). 
11

law on AHMA’s pre-release claims – for the independent reason that AHMA has not presented 

any credible evidence justifying its 10-month delay in seeking the remedy of rescission. 

 Under Rule 52(c), a court may find against a party on a non-jury issue and enter 

judgment on partial findings when “a party has been fully heard on an issue” and under the 

controlling law the party’s claim or defense “can be maintained or defeated only with a favorable 

finding on that issue.” See Fed. R. Civ. P. 52(c). Unlike a motion for judgment as a matter of 

law under Rule 50(a), when a court considers a motion for judgment on partial findings, the nonmovant is not entitled to any inference in its favor. Pinkston v. Madry, 440 F.3d 879, 890 (7th 

Cir. 2006). Rather, the Court must weigh the evidence, consider the witnesses’ credibility, and 

determine where the applicable burden of proof lies. Rule 52(c) authorizes the judge, having 

heard all the evidence the plaintiff has to offer, to make findings of fact adverse to the plaintiff, 

including determinations of credibility, without waiting for the defense to put on its case, since 

the evidence presented by the defendant would be unlikely to help the plaintiff. See Wsol v. 

Fiduciary Mgmt. Assocs., 266 F.3d 654, 656 (7th Cir. 2001). A Rule 52(c) motion is appropriate 

to resolve issues to be decided by the Court even if the Court also conducts a jury trial.5

 

 As this Court well knows, rescission of a contract is an extraordinary equitable remedy. 

Rescission is available only when a litigant acts “promptly” to disavow the contract; otherwise, 

the equitable remedy of rescission is foreclosed: 

For anyone who seeks to rescind a contract on the grounds of fraud in this 

state, time is clearly of the essence. Illinois law has long recognized that the 

victim of contract fraud who wishes to rescind that contract must not only 

announce his or her election promptly but must act on that intention with like 

promptness. 

 

5

 See Long v. Howard Univ., 512 F. Supp. 2d 1, 10-11 (D.D.C. 2007), aff’d, 550 F.3d 21 (D.C. 

Cir. 2008); Progressive Cas. Ins. Co. v. Luna, No. 05-cv-4194, 2007 U.S. Dist. LEXIS 41436, at 

**1-3 (S.D. Ill. June 7, 2007) (bifurcating jury claims and requests for equitable relief and 

proceeding under Rule 52 for non-jury claims). 
12

Swartz v. Schaub, 826 F. Supp. 274, 277 (N.D. Ill. 1993) (emphasis in original). If a party does 

not act “promptly” to disavow the contract and seek rescission, but rather attempts to avail itself 

of the benefits of the contract, then it loses the right to rescission. Id. at 278 (9-month delay is 

not prompt, and rescission is therefore unavailable); see also Luciani v. Bestor, 106 Ill. App. 3d 

878, 881-83, 436 N.E.2d 251, 254-55 (3d Dist. 1982) (7-month delay is not prompt, and 

rescission is therefore unavailable); Madison Assocs. v. Bass, 158 Ill. App. 3d 526, 540 (1st Dist. 

1987) (6-month delay is not prompt, and rescission is therefore unavailable). As explained in 

Madison Associates v. Bass: 

[A]s soon as an individual learns of the fraud, he is required to disaffirm or 

abandon the transaction with all reasonable diligence. If he acts as though the 

transaction is still binding, he waives all benefits of relief from the 

misrepresentations. 

Madison Assocs., 158 Ill. App. 3d at 540. 

 AHMA has not presented any credible evidence to establish that its 10-month delay was 

prompt, as required by Illinois law. To the contrary, the evidence has established that: 

• From February 26, 2003 through December 30, 2003, Reed’s participation in the allegedly 

competing shows was publicly announced and available on the shows’ websites at all times. 

(See Section I (B)(2).) 

• AHMA gave no notice of any purported violation concerning Reed’s involvement in these 

other shows between February 26, 2003 and December 30, 2003. (Tr. at 706.) 

• AHMA never attempted to resolve any disputes concerning Reed’s involvement in these 

other shows between February 26, 2003 and December 30, 2003. (Tr. at 707.) 

Rather than promptly seek rescission of the Settlement Agreement, AHMA instead 

pursued its business plan to compete for Reed’s 400 largest customers. (Reed Ex. 210; Tr. at 

690-692.) For more than a year, from February 26, 2003 through AHMA’s hardware show in 

April 2004, AHMA competed head-to-head with Reed. (Tr. at 699-700, 705.) Without the 

Settlement Agreement, this competition would not have been permitted. 
13

 In sum, AHMA achieved the three principal objectives it sought through the Settlement 

Agreement: (1) it terminated its relationship with Reed; (2) it freed itself to pursue any direction 

it would choose in the future; and (3) it gained the ability to start its own independent hardware 

show. (Tr. at 757-758.) AHMA conducted its own hardware show and competed against Reed’s 

National Hardware Show for more than a year after entering into Settlement Agreement and 

more than a year after the other shows were publicly held with Reed’s public participation. 

AHMA also obtained (and provided) full mutual and general releases of all claims, just as it had 

originally proposed on August 30, 2002. It would be inequitable to allow AHMA to receive and 

retain all of its principal benefits under the Settlement Agreement while allowing AHMA to 

jettison the one part it now dislikes, the full release of its claims against Reed. 

 Because AHMA accepted and fully used the benefits of the Settlement Agreement for 

more than 10 months, AHMA cannot now seek to rescind the Agreement and contend that it 

never should have existed. Reed therefore respectfully requests that the Court enter judgment on 

partial findings pursuant to Rule 52(c) against AHMA on the issue of rescission and enter 

judgment as a matter of law on all of AHMA’s pre-release claims. 

III. THE COURT ALSO SHOULD ENTER JUDGMENT AS A MATTER OF LAW AGAINST AHMA

ON ITS POST-RELEASE CLAIMS. 

A. AHMA has not presented any evidence of damages relating to its claim that 

Reed breached the 2003 Settlement Agreement (Count XIII). 

AHMA claims that Reed breached the Settlement Agreement by (1) participating in the 

Midwest Builders Show, and (2) improperly using AHMA’s trademark in the 2004 Tradeshow 

Week Data Book and on a Reed website. (See, e.g., AHMA’s Proposed Jury Instruction No. 82.) 

Merely showing that a contract has been breached without demonstrating actual damages does 

not suffice under Illinois law to establish a claim for breach of contract. See TAS Distributing 
14

Co., Inc. v. Cummins Engine Co., Inc., 491 F.3d 625, 631 (7th Cir. 2007), citing W.W. Vincent & 

Co. v. First Colony Life Ins. Co., 351 Ill. App. 3d 752, 759 (1st Dist. 2004).6 

AHMA failed to present any evidence that it suffered damages as a result of Reed’s 

alleged breaches of the Settlement Agreement, as required under Illinois law. See, e.g., Avery v. 

State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, 149 (2005); Monarch Gems v. Malca-Amit USA, 

LLC, No. 04-7664, 2007 U.S. Dist. LEXIS 76832, at *36-*37 (N.D. Ill. Sept. 27, 2007). AHMA 

also failed to present a reasonable basis for computation of its damages to a reasonable degree of 

certainty. TAS Distributing, 491 F.3d at 632-33. Indeed, neither Michael McClelland (AHMA’s 

competing show expert) nor Jeff Litvak (AHMA’s damages expert) offered any opinions 

regarding any damages suffered by AHMA on its breach of the Settlement Agreement claims or 

any method for determining damages. Nor can AHMA identify any way in which it was damaged 

as a result of Reed’s involvement with the three other trade shows. (Tr. at 753-756.) 

Consequently, no reasonable basis exists upon which to calculate the damages necessary for 

AHMA to prove its claim, and no reasonable jury could find that AHMA has suffered damages 

that are ascertainable with any reasonable degree of certainty. 

B. AHMA has not presented any evidence of customer deception or confusion as 

required for its false advertising claim (Count VII) and its trademark 

infringement and unfair competition claims (Counts VIII, IX, X, and II). 

 To prove its claim for false advertising under the Lanham Act (Count VII), AHMA must 

establish that Reed made a statement that “actually deceives or is likely to deceive a substantial 

segment” of show customers. See First Health Group Corp. v. United Payors & United 

Providers, Inc., 95 F. Supp. 2d 845, 847-48 (N.D. Ill. 2000); see also Hot Wax, Inc. v. Turtle 

 

6

 Likewise, breach of a covenant not to compete is insufficient to warrant monetary relief under 

Illinois law unless the plaintiff first shows that it suffered an injury. See Marathon Petro. Co. v. 

Chronister Oil Co., 687 F. Supp. 437, 439 (C.D. Ill. 1988); Hamer Holding Gr., Inc. v. Elmore, 

244 Ill. App. 3d 1069, 1080 (1st Dist. 1993). 
15

Wax, Inc., 191 F.3d 813, 820 (7th Cir. 1999). Here, AHMA has presented no evidence of 

consumer deception, nor has AHMA attempted to avoid this requirement by establishing that the 

alleged statements were literally false or by seeking only injunctive relief. Nor has AHMA 

presented any evidence whatsoever regarding General Tools, Great American Marketing, or Pro 

Group. See First Health, 95 F. Supp. 2d at 847-48 (discussing limited exceptions). Reed is 

therefore entitled to judgment as a matter of law on AHMA’s false advertising claim. 

 Likewise, to establish trademark infringement or unfair competition under the Lanham 

Act (Count VIII), or under common law or the Illinois Consumer Fraud and Deceptive Business 

Practices Act (Counts IX, X, and II), AHMA must show that Reed’s use of AHMA’s mark “is 

likely to cause confusion among consumers.” Segal v. Geisha NYC LLC, 517 F.3d 501, 506 (7th 

Cir. 2008); World Impressions, Inc. v. MacDonald’s Corp., 235 F. Supp. 2d 831, 841 (N.D. Ill. 

2002). (Lanham Act standard applies to state law claims); Henry v. O’Keefe, No. 01-08698, 2002 

U.S. Dist. LEXIS 20028, at **19-21 (N.D. Ill. Oct. 18, 2002) (same). AHMA made no attempt 

to establish that Reed’s alleged use of AHMA’s trademark was likely to cause confusion in the 

marketplace. Therefore, the Court should enter judgment as a matter of law against AHMA on 

its trademark and unfair competition claims. 

CONCLUSION

 Based on all of the foregoing, Reed respectfully requests that the Court grant its motion; 

enter judgment as a matter of law against AHMA on AHMA’s fraudulent inducement claim and 

on all of AHMA’s claims pre-dating February 26, 2003; enter judgment on partial findings 

against AHMA on the availability of the equitable remedy of rescission; enter judgment as a 

matter of law against AHMA on its claims for breach of Settlement Agreement, false advertising, 

trademark infringement, and unfair competition; and grant all other relief proper in the 

circumstances. 
16

Michael I Rothstein 

Caesar A. Tabet 

Christopher D. Liguori 

Karina Zabicki DeHayes 

Timothy A. Hudson 

TABET DIVITO & ROTHSTEIN LLC 

209 South LaSalle Street, 7th Floor 

Chicago, IL 60604 

Telephone: (312) 762-9450 

Respectfully submitted, 

REED ELSEVIER INC. 

s/ Michael I Rothstein 

One of Its Attorneys 
17

CERTIFICATE OF SERVICE

The undersigned, an attorney, hereby certifies that on January 31, 2011, he caused a true 

and correct copy of Reed’s Motion for Judgment as a Matter of Law Under Rule 50(a) and 

for Judgment on Partial Findings under Rule 52(c), to be served electronically upon the 

parties listed below.

William P. Farrell, Jr. 

Scott J. Fisher 

Michael A. Nicolas 

NEAL, GERBER & EISENBERG LLP 

2 N. LaSalle Street, Suite 2200 

Chicago, Illinois 60602-3801 

E-mail: wfarrell@ngelaw.com 

E-mail: sfisher@ngelaw.com 

E-mail: mnicolas@ngelaw.com 

Service by CM/ECF System 

Gordon B. Nash, Jr. 

DRINKER BIDDLE & REATH LLP 

191 N. Wacker Drive, Suite 3700 

Chicago, Illinois 60606-1698 

Email: Gordon.Nash@dbr.com 

Service by CM/ECF System 

s/ Michael I Rothstein 

Michael I Rothstein 

Caesar A. Tabet 

Christopher D. Liguori 

Karina Zabicki DeHayes 

Timothy A. Hudson 

TABET DIVITO & ROTHSTEIN LLC 

209 South LaSalle Street, 7th Floor 

Chicago, IL 60604 

Telephone: (312) 762-9450