## Facts

- Tiger Electronics was a family-owned toy and game company in which Owen Randall Rissman held two-thirds of the shares and managed the business; Arnold R. Rissman held one-third and worked as a salesman.
- Although cumulative voting would have allowed Arnold to elect himself to the board, he did not do so.
- After the brothers fell out, Arnold sold his shares to Randall for $17 million, payable in installments.
- Arnold alleged Randall orally represented he would keep Tiger a “family firm” and would never take it public or sell it, while secretly planning to sell after buying Arnold out.
- During negotiations, Arnold asked Randall to include a written promise never to sell Tiger; Randall refused and instead warranted only that he knew of no offers and was not in negotiations for a sale.
- The written stock-sale agreement included (i) an anti-reliance/integration-type provision stating the parties were not relying on statements not contained in the agreement, (ii) a release of claims, and (iii) an acceleration clause making remaining installments immediately due if Tiger were sold before payment was complete.
- Thirteen months later, Tiger sold its assets (including its name and trademarks) to Hasbro for $335 million; Arnold then sued seeking the additional value he claimed he lost by selling earlier.

## Issues

1. Whether Arnold could prove the reliance element of a § 10(b) and Rule 10b-5 claim based on alleged extra-contractual assurances, given the agreement’s anti-reliance representations and deal terms anticipating a possible sale.
2. Whether Arnold’s state-law claims (including fraud-related theories) were barred by the agreement’s release.

## Decision

- The Seventh Circuit affirmed summary judgment for Randall and Glick.
- The court held Arnold’s federal securities claims failed because he could not establish reliance in light of the written anti-reliance representations and the contract’s structure (including the acceleration provision).
- The court held the contract’s release barred Arnold’s remaining state-law claims arising from the transaction.

## Legal Principles

- Reliance is an essential element of a private § 10(b) and Rule 10b-5 claim; without reliance there is no actionable securities fraud.
- When a sophisticated party signs a written agreement disclaiming reliance on representations not contained in the contract, that party generally cannot later base a Rule 10b-5 claim on alleged oral statements outside the agreement.
- A party’s attempt to secure a specific promise in writing, followed by acceptance of a contract that omits that promise and contains an anti-reliance clause, strongly negates any claim of reliance on the omitted promise.
- Contract terms contemplating the very risk allegedly disclaimed (e.g., an acceleration clause triggered by sale) undercut claims that the plaintiff relied on assurances that the event was impossible or would not occur.
- A broad release in a stock-sale agreement can extinguish related state-law claims connected to the same transaction.

## Conclusion

The court enforced the parties’ written allocation of risk: Arnold’s anti-reliance representations and the agreement’s sale-contingency terms defeated reliance for Rule 10b-5 purposes, and the contractual release barred the remaining state-law claims.


Rissman v. Rissman, 213 F.3d 381 (7th Cir. 2000)