Bankcard America v. Universal Bankcard Systems

United States District Court · Evidence

998 F. Supp. 961 (1998)

Updated July 19, 2026

Evidencebreach of contractlost profitsnet profitsgross revenuespeculationproof of damagesjudgment as a matter of law

Facts

Bankcard, a lead ISO in the credit card processing business, contracted with Universal, a sub-ISO, under an agreement that allowed termination without cause on thirty days' notice and gave Universal residuals on its accounts so long as it serviced them, subject to cutoff upon a sale of Bankcard's merchant base to a bona fide third party. Bankcard later terminated Universal immediately for cause and stopped paying residuals; Universal claimed Bankcard had breached by appropriating merchant applications, underpaying residuals, and failing to give the contractual thirty-day notice. Universal offered some testimony supporting breach, including testimony that Bankcard may have taken many merchant accounts submitted by Universal, but its damages proof consisted mainly of testimony about the average value of merchant accounts and equipment-related revenues. Universal's tax returns and a summary document did not allocate profits or losses to the Bankcard contract or show losses caused by the alleged breach.

Issue

Whether Universal presented legally sufficient evidence to allow a rational jury to award contract damages for Bankcard's alleged breach. More specifically, could a damages award stand where the plaintiff proved only gross revenue figures and did not provide evidence from which net lost profits attributable to the breach could be estimated without speculation?

Rule

In a breach of contract action seeking lost profits, damages must be based on net profits, not gross revenues. The plaintiff must present evidence of revenues minus costs, including costs that would have been incurred or saved, so that the jury can estimate actual loss reasonably traceable to the breach; under Illinois law, damages may not rest on speculation or guesswork.

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In Chicago, Larkspur Payment Solutions contracted with Midlake Merchant Services to market payment-processing accounts for two years. Midlake abruptly terminated the contract, and Larkspur proved that each lost account would have brought in about $420 in annual revenue, but offered no evidence about commissions, customer-service payroll, application fees, or other costs of obtaining and servicing those accounts.

If Larkspur seeks lost-profit damages for breach of contract, what is the strongest argument for Midlake's Rule 50 motion?

Explanation. Lost-profit damages must be based on net profits, not gross revenues. The plaintiff must provide evidence of revenues minus costs that would have been incurred or saved so the jury can make a non-speculative estimate of actual loss. Here, evidence of annual revenue per account alone is insufficient.