This section contains the nature of the case and procedural background.

At the first trial, in 1996, a jury found that P breached its contract with D and that P's founders Samuel Buchbinder and Paul Alperstein violated RICO. Citing errors at the first trial, Judge Posner threw out the verdict and ordered a new trial, at which he presided. At the second trial, in 1998, the jury found in favor of Buchbinder and Alperstein on the RICO claims but again concluded that P breached the contract, this time awarding D $ 4.1 million on that claim. But Judge Posner got rid of that verdict, too, entering judgment for P because the evidence of damages was insufficient. D, after nearly a decade of litigation, with nary a penny, appealed. P sued D for breach of a credit card servicing contract. D was forbidden to steer merchants it had signed up to competitors of P. P terminated the contract in March 1993. D then sent accounts to P’s competitors. D claimed that it had reached a settlement with P which allowed such actions. At the first trial, the judge allowed evidence of settlement talks for the purpose of explaining why D took the actions it did. This appeal eventually resulted.

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