## Facts

- Bankcard America, Inc. provided credit-card transaction processing services; Universal Bancard Systems, Inc. marketed and referred merchant accounts to Bankcard under a referral/processing agreement.
- Under the agreement, Bankcard processed referred transactions and paid Universal residual commissions tied to merchant account activity.
- Bankcard sued Universal for breach of contract, alleging deficient servicing and mishandling of merchant accounts.
- Universal counterclaimed for breach of contract, alleging Bankcard withheld commissions and diverted referred merchant accounts away from Universal.
- Universal also brought civil RICO counterclaims against Bankcard principals Samuel Buchbinder and Paul Alperstein, alleging a fraudulent scheme using mail and wire communications to deprive Universal of commissions and accounts.
- In a first jury trial, the jury found for Universal on the contract claim and on two RICO counts against Buchbinder and Alperstein; the RICO damages were trebled to a large total award.
- After reassignment, the district court vacated the first verdict and ordered a new trial based on instructional errors and evidentiary problems affecting the RICO submission.
- In a second jury trial, the jury again found Bankcard liable for breach of contract with a larger damages award, but found for Buchbinder and Alperstein on the RICO claims.
- The district court then set aside the second jury’s contract damages award and entered judgment as a matter of law for Bankcard, concluding Universal’s damages proof was legally insufficient.
- Universal appealed the new-trial order and the judgment as a matter of law; Bankcard cross-appealed on related issues.

## Issues

1. Whether the district court properly granted a new trial after the first verdict, particularly due to defects in the RICO instructions and improper materials reaching the jury during deliberations.
2. Whether admission or use of settlement-related statements and exhibits violated Federal Rule of Evidence 408 when offered to prove liability.
3. Whether objections to exhibits or materials submitted to the jury were waived by failure to object at the time the materials were sent into the jury room.
4. Whether Universal’s evidence of contract damages was legally sufficient to support the jury’s award, precluding judgment as a matter of law.
5. Whether any errors requiring a new RICO trial also required retrial of the breach-of-contract claim, or whether the contract verdict could be preserved independently.

## Decision

- The Seventh Circuit affirmed the grant of a new trial as to the RICO claims, finding the first RICO submission materially affected by erroneous instructions and evidentiary handling.
- The Seventh Circuit left in place the second jury’s verdict rejecting Universal’s RICO claims against Buchbinder and Alperstein.
- The court reversed the grant of a new trial on the breach-of-contract claim, holding the problems warranting a new RICO trial did not require setting aside the first jury’s contract verdict.
- The court reversed the judgment as a matter of law for Bankcard on contract damages, concluding the damages evidence—though imprecise—was sufficient for a reasonable jury to award substantial damages.
- The court directed restoration of Universal’s recovery on the contract claim based on the first trial’s contract verdict, while Universal took nothing on RICO.

## Legal Principles

- A new trial may be warranted where jury instructions permit liability to rest on legally or factually unsupported theories, particularly in RICO cases requiring proof of qualifying predicate acts.
- It is reversible error for a court to permit the jury to consider improper materials during deliberations without adequate corrective instruction when the materials could affect the verdict.
- Federal Rule of Evidence 408 bars admitting statements made during compromise negotiations when offered to prove the validity or invalidity of a disputed claim (i.e., liability), though the rule does not exclude such evidence when offered for a permitted purpose.
- An evidentiary objection can be waived if not raised at the proper time, including when exhibits or materials are actually submitted to the jury for deliberations.
- Contract damages need not be proven with mathematical certainty; reasonable estimates grounded in competent evidence may support a verdict, and judgment as a matter of law is improper where a rational jury could find damages from the record.
- When errors affect only part of a case, a court should avoid ordering unnecessary retrials of separable claims not infected by the error.

## Conclusion

The Seventh Circuit upheld a new trial and ultimate defense verdict on Universal’s RICO claims due to defects in the first RICO trial, but reinstated Universal’s contract recovery by restoring the first jury’s breach-of-contract verdict and rejecting the district court’s conclusion that Universal’s damages evidence was legally insufficient.


Bankcard Am., Inc. v. Universal Bancard Sys., Inc., 203 F.3d 477 (7th Cir. 2000)