Chicago Business Litigation Lawyer Blog

Our firm’s Illinois non-compete agreement litigation lawyers were pleased to note a ruling by the First District Court of Appeal that a doctor may not bring a lawsuit against his former business partner for breaching a non-compete agreement. Bisla v. Parvaiz, No. 1-07-1647 (Ill. 1st., Feb. 21, 2008), arose out of a soured employment arrangement between Dr. Virenda Bisla and Dr. Akhtar Parvaiz, both doctors in Chicago. Bisla hired Parvaiz as an employee in 1998, under an agreement specifying that Parvaiz would have the opportunity to become a 50% partner in Bisla’s medical company after three years, if he met certain criteria. It also specified that Bisla would provide medical insurance for Parvaiz and his family, and malpractice insurance in Indiana for Parvaiz.

Neither type of insurance was provided to Parvaiz, according to the First District. And when the three years in the agreement had passed, Bisla did not offer Parvaiz a 50% share of the company, as agreed. Instead, he offered Parvaiz a 45% share, spread over five years, and presented him with a new employment contract and stock purchase agreement. Bisla told Parvaiz that it was in his best interests to sign these papers, but Parvaiz refused because they did not comply with the original employment agreement. He continued working for Bisla’s company for the next five years, but believed that they were using an oral contract since the first employment contract had expired.

The next year, Bisla’s company was temporarily dissolved by the State of Illinois for nonpayment of a filing fee. Bisla did not tell Parvaiz about the dissolution, which automatically terminated their employment agreement. However, in 2005, Parvaiz began working for a competing medical company. When Bisla found out, he demanded a share of the proceeds, then fired Parvaiz and eventually brought a lawsuit seeking to stop him from competing. Parvaiz countered that he believed the agreement was over. The trial court agreed, finding that their agreement was invalid because the employment agreement was breached by both the temporary dissolution and Bisla’s refusal to make Parvaiz a partner. It denied the injunction Bisla sought against Parvaiz, and Bisla appealed.

In its analysis, the First District Court of Appeal said Bisla would only be protected by the contract if it was valid and in force at the time of the alleged breach. Bisla argued that the contract was still valid because seeking a modification does not constitute repudiation, an argument that the court did not agree with. Citing Marwaha v. Woodridge Clinic, S.C., 339 Ill. App. 3d 291, 790 N.E.2d 974 (2003), it noted that caselaw says non-competition clauses expire when their employment agreements do.

Furthermore, the court wrote, Bisla’s failure to offer Parvaiz a 50% equity share in the company constituted a material breach of the contract, which also invalidated the covenant not to compete. And arguments that the dissolution and reinstatement shouldn’t matter fail, the court said, because the employment agreement didn’t specify that it should survive a dissolution. Saying that “Bisla cannot successfully argue that the clause does not mean what its plain language sets forth,” the appeals court affirmed the trial court’s decision to deny an injunction against Parvaiz.

With Illinois courts more and more likely to invalidate covenants not to compete for doctors on public policy grounds, our Chicago non-compete clause litigation and business trial attorneys were particularly interested in the reasoning behind this decision. At DiTommaso-Lubin, we represent both employers and employees in non-compete clause lawsuits. Based in Oakbrook Terrace, near Wheaton and Naperville, Ill., and Chicago, our firm represents businesses and workers in the greater Chicagoland area and throughout Illinois, as well as in Wisconsin and Indiana. To set up a confidential consultation on your covenant not to compete litigation today, please contact us online or call 1-877-990-4990.

In an Illinois state qui tam lawsuit, the Fourth District Court of Appeal has ruled that an accounting company may be held liable for knowingly allowing another company to submit a fraudulent claim to the state. In Illinois Health Facilities Authority ex rel. Scachitti v. Morgan Stanley, 887 N.E.2d 601 (April 2, 2008), three individual plaintiffs brought suit against financial services company Morgan Stanley Dean Witter and accounting firm Ernst & Young for an alleged scheme to defraud the Illinois Health Facilities Authority under the Illinois Whistleblower Reward and Protection Act.

The case arose out of a bond refinancing attempt by the Authority. In order to pay off revenue bonds, it issued “advance refunding” bonds, which are normally tax-exempt. However, if the proceeds of these bonds are reinvested in securities with a higher yield, they lose their tax-exempt status unless the profits go to the U.S. Treasury. To ensure they did not lose the tax exemption, the Authority hired Morgan Stanley as an underwriter for the advance refunding bonds and Ernst & Young to verify Morgan Stanley’s work.

Defendants accuse Morgan Stanley of fraudulently “yield burning” by charging abovemarket rates for the bonds -- ensuring that they would not become taxable -- and pocketing the $21,000 difference. They also accuse Ernst of abetting this behavior by knowingly hiding it in its audit. They both companies for violating the Whistleblower Act, and Ernst for aiding and abetting Morgan Stanley’s violations. The Cook County trial court dismissed the claims against Ernst for failure to state a sufficient cause of action. The plaintiffs appealed.

In its analysis, the appeals court focused on the language of the Whistleblower Act. The first part of that law says a defendant is liable if it “knowingly presents or causes to be presented” a false claim “for payment or approval.” In this case, the court wrote, the defendants are alleging that Ernst and Morgan Stanley presented a materially false report, not a false claim for payment. Any misrepresentations were in the paperwork for the bonds, not in their invoices. Thus, the court struck down the part of the lawsuit that relied on that language.

It next moved to language making defendants liable if they knowingly make “a false record or statement to get a false or fraudulent claim paid or approved by the State.” Under the facts that the plaintiffs allege, the court wrote, this is a valid cause of action. Thus, it reversed the trial court’s decision on that part of the claim and remanded the case to trial court for more proceedings. In doing so, it dismissed arguments by Ernst that because it did not itself submit a false claim, it cannot be held liable. The “cause to be presented” language in the law clearly does not require that the defendant have submitted the claim itself, the court wrote, and caselaw cited by Ernst was not convincing.

Finally, the court disposed of the plaintiffs’ argument that it should have been allowed to continue its claim against Ernst for aiding and abetting Morgan Stanley’s fraud. Language permitting liability for aiding and abetting is simply not in the Whistleblower Act, it wrote, and it does not wish to find an implied claim for aiding and abetting. Thus, the trial court’s decision was affirmed in part, reversed in part and remanded.

The consumer rights law firm of DiTommaso-Lubin represents whistleblowers who are pursing qui tam lawsuits at any level of government, including claims under the Illinois Whistleblower Act, the Chicago whistleblower ordinance and the federal False Claims Act. Based in Chicago and Oak Brook, Ill., our Illinois and Wheaton, Waukegan, Naperville, Aurora, Elgin and Chicago area qui tam and False Claims Act lawyers stand ready to represent whistleblowers throughout the United States -- regardless of whether prosecutors have decided to join the lawsuit. If you know about fraud against a government agency and you’re ready to speak up, you can learn more about whistleblower lawsuits at a free, confidential consultation. To set one up, please contact DiTommaso-Lubin online or call 1-877-990-4990 today.

Our Illinois legal malpractice lawyers recently noted an appellate decision from the Second District establishing that attorney fees are "actual damages" within the meaning of Illinois law. Nettleton v. Stogsdill, No. 2-07-1215 (Ill. 2nd Dec. 29, 2008). The ruling arose out of a legal malpractice claim by Margaret Nettleton, who was unhappy with the representation provided by attorney William J. Stogsdill, Jr., in her divorce.

Nettleton retained Stogsdill in 2001 for her divorce, whose trial was set for late 2002. On the day before trial, however, an associate from Stogsdill's office appeared to ask for a continuance because Stogsdill was in another trial and unable to attend or prepare. The motion was denied, but a two-day continuance was granted the next day when Stogsdill himself appeared. On the day of the new trial, Stogsdill asked for a voluntary nonsuit, which was denied because he hadn't given notice to all of the parties. He then called Nettleson to the stand, where he asked her to state and spell her name. He then rested her case. The divorce was not granted. Stogsdill filed a second petition for dissolution, but Nettleton fired him about two months later. (She was represented by four other firms before her divorce was granted.)

Nettleton eventually sued, alleging that Stogsdill and his firm committed malpractice by being unprepared, by moving for a nonsuit without her consent and by putting her on the witness stand and then resting without her consent. The damages she cited included loss of the attorney fees paid to both Stogsdill and other attorneys. The trial court granted Stogsdill's motion for summary judgment on the grounds that Nettleton hadn't demonstrated actual damages caused by Stogsdill's actions -- she hadn't shown that she would have received a larger divorce settlement if not for Stogsdill. After various other legal maneuvers, Nettleton appealed.

Nettleton's appeal contended that the trial court misapplied the law on actual damages because the attorney fees were the direct result of Stogsdill's alleged negligence, and no caselaw disallows such a finding. The appeals judges agreed. Relying on Sorenson v. Fio Rito, 90 Ill. App. 3d 368, 374 (1980) and Sterling Radio Stations, Inc. v. Weinstine, 328 Ill. App. 3d 58, 63 (2002), they wrote that Nettleton incurred new attorney fees in an attempt to undo the effects of alleged negligence -- to get the divorce that she was not granted originally. Relating the malpractice damages to the size of the divorce settlement Nettleton received was "illogical," the court wrote, because it was not at issue in the malpractice claim.

The appeals court also examined Nettleton's claim that the trial judge erred in granting summary judgment on the issue of whether Stogsdill proximately caused her damages. Nettleton claimed this was a genuine issue of material fact inappropriate for summary judgment, and the appeals judges agreed. Deposition testimony showed that at least some of the divorce would have to be litigated again because of Stogsdill's actions, and thus a reasonable person could conclude that Stogsdill caused at least some of the new attorney fees. Caselaw cited by the defendants was, again, irrelevant. Thus, the appeals court reversed the summary judgment decision and remanded it to trial court.

As legal malpractice attorneys in Chicago, DiTommaso-Lubin has substantial experience sorting out the fine distinctions that make the difference between success and failure of a malpractice case. We represent both clients and attorneys involved in Illinois malpractice claims. Located in Chicago and with offices in Oak Brook near Naperville, Wheaton and Aurora, we serve clients in the greater Chicago area and throughout the Midwest. To speak to us today about your malpractice case, please contact us through our Web site for a confidential consultation.

Individual whistleblowers may sue a defense contractor that allegedly defrauded the Iraqi provisional government out of millions during the early part of the Iraq war, the Fourth U.S. Circuit Court of Appeals ruled April 10. United States of America ex rel. DRC Inc. v. Custer Battles LLC, No. 07-1220 (April, 2009) was a federal whistleblower lawsuit testing whether the federal False Claims Act, which allows lawsuits against contractors defrauding the federal government, applies to the multinational interim Iraqi government set up after the U.S. invasion of that country. The Fourth Circuit found that it did, reasoning that U.S. personnel working for the CPA may still have been working in their capacity as federal employees.

The case grew out of the discovery of fraud by Custer Battles LLC, a contractor hired to help the CPA replace existing Iraqi dinars that bore Saddam Hussein’s face with dinars without his face. They were paid $15 million for this work, including a $3 million check from the U.S. Treasury and other payments from the CPA’s funds authorized by U.S. personnel. The fraud was discovered after the firm’s founders accidentally left a spreadsheet at a meeting site showing they had inflated the bills submitted to the CPA for reimbursement by many thousands of dollars.

Subcontractor DRC Inc., its managing director, Robert Isakson, and former Custer Battles employee William Baldwin sued Custer Battles on behalf of the federal government under the False Claims Act. They alleged fraud on both contracts as well as illegal retaliation against Baldwin, who said he was fired after trying to investigate the fraud. The trial court dismissed parts of the claim on summary judgment and limited the plaintiffs’ recovery to the $3 million that it could trace with confidence to the U.S. Treasury. Considering only that part of the case, the jury returned the maximum possible $3 million verdict, plus $165,000 in damages for Baldwin’s retaliation claim.

Nonetheless, the district court quickly vacated that judgment by granting judgment as a matter of law to Custer Battles, saying that the fraudulent claims for payment were not presented to the U.S. government, as required by the language of the law. Plaintiffs appealed this and the limitation of the damages to $3 million.

The Fourth Circuit took their side. Using a close reading of the False Claims Act, it pointed out that the text prohibits false claims for payment made to a “grantee or any other recipient[,] if the United States Government provides any portion of the money or property which is requested or demanded.” Thus, the justices said, the existence or amount of the alleged fraud the plaintiffs may claim does not depend on how much the U.S. government paid directly. For the same reason, it also did not matter whether the U.S. government had control of funds it granted to the CPA; accepting those funds made the CPA a grantee or recipient under the language of the law. The False Claims Act applies to all of the claims Custer Battles made under the dinar contract, the court said.

The court turned next to the judgment as a matter of law. In support of the judgment, Custer Battles argued that even though the claims were presented to U.S. government officials, those people were working for the CPA at the time -- not in their capacity as government officials. The court disagreed. It relied on “ample evidence” submitted by the relators that the CPA officials were working in their official U.S. government capacities, including evidence that they were authorized, supervised and paid by the government. There was no requirement that the claims be presented to U.S. government officials, so the district court erred in entering judgment as a matter of law.

Thus, the Fourth Circuit reversed the vacated judgment as well as the limitation on damages, and remanded the matter. It instructed the district court to offer the plaintiffs a new trial, and rule on the remaining issues if they did not choose a new trial. The decision was closely watched because it may open the floodgates for other whistleblower claims over fraudulent behavior of private contractors working for the CPA or quasi-government entities.

If you know about fraud against a government agency, you can blow the whistle on that fraud with a False Claims Act lawsuit. These lawsuits, filed under seal and away from the public eye, give you a chance to involve federal prosecutors in your claim and collect 15% to 25% of any money recovered. The Chicago and Wheaton qui tam and whistleblower attorneys at DiTommaso-Lubin stand ready to represent employees and others involved in whistleblower lawsuits. Based in Chicago and near Wheaton, Ill., we handle qui tam claims at the local, state and federal levels in Illinois, Indiana, Wisconsin and nationwide. To learn more at a free, confidential consultation, please call us toll-free at 1-877-990-4990 or contact us through our Web site.

The Federal Trade Commission ("FTC") website provides useful information regarding recognizing telephone and telemarketing frauds. A full copy of the Fair Debt Collection Practices Act is also linked to the site and you can view it here. The FTC website states:

Debt Collection FAQs: A Guide for Consumers

If you’re behind in paying your bills, or a creditor’s records mistakenly make it appear that you are, a debt collector may be contacting you.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Here are some questions and answers about your rights under the Act.
What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.
Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.
How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.
Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.
What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.
Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.
What practices are off limits for debt collectors?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

* use threats of violence or harm;
* publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
* use obscene or profane language; or
* repeatedly use the phone to annoy someone.

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

* falsely claim that they are attorneys or government representatives;
* falsely claim that you have committed a crime;
* falsely represent that they operate or work for a credit reporting company;
* misrepresent the amount you owe;
* indicate that papers they send you are legal forms if they aren’t; or
* indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

* you will be arrested if you don’t pay your debt;
* they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
* legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

* give false credit information about you to anyone, including a credit reporting company;
* send you anything that looks like an official document from a court or government agency if it isn’t; or
* use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

* try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
* deposit a post-dated check early;
* take or threaten to take your property unless it can be done legally; or
* contact you by postcard.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.
Can a debt collector garnish my bank account or my wages?

If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.
Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:

* Social Security Benefits
* Supplemental Security Income (SSI) Benefits
* Veterans’ Benefits
* Civil Service and Federal Retirement and Disability Benefits
* Service Members’ Pay
* Military Annuities and Survivors’ Benefits
* Student Assistance
* Railroad Retirement Benefits
* Merchant Seamen Wages
* Longshoremen’s and Harbor Workers’ Death and Disability Benefits
* Foreign Service Retirement and Disability Benefits
* Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
* Federal Emergency Management Agency Federal Disaster Assistance

But federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.
Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.
What should I do if a debt collector sues me?

If a debt collector files a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.
Where do I report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General’s office (www.naag.org) and the Federal Trade Commission (www.ftc.gov). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.
For More Information

To learn more about debt collection and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government’s portal to financial education.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

If you are a victim of debt collector harrassment or fraud and believe you may have a claim under the Fair Debt Collection Practices Act our Illinois based consumer fraud, class-action and unfair debt collection private sector lawyers may be able to assist you obtaining redress. Click here to contact us and fill out a form telling us about the facts of your case.

Our firm and attorneys we work with have helped a number of victims of unfair debt collection practices obtain redress with awards of statutory damages and actual damages for emotional distress with the debt collectors paying attorneys fees and costs.

Our consumer rights private law firm handles individual and class action cases that government agencies and public interest law firms such as Trial Lawyers for Public Justice may not be able to pursue. Class action lawsuits our firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocates, the National Consumer Law Center, and local law school consumer programs. DiTommaso-Lubin is proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to unfair collection practices, consumer fraud and consumer rip-offs, and in the right case filing Fair Debt Collection Practices Act or consumer protection lawsuit or and class-action you too can help ensure that other consumers' rights are protected from corporate misdeeds.

Our Naperville, Aurora, Waukegan, Joliet, Northbrook, Wilmette, Wheaton, Oak Brook, and Chicago consumer attorneys provide assistance in debt collector harrassment, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases we have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Chicago area consumer protection or unfair debt collection practices lawyers who can assist in lemon law, unfair debt collection, junk fax, prerecorded telephone solicitations, and other consumer, consumer fraud or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.

In a decision with wide-reaching implications for Chicago land owners and developers, the First District Court of Appeal found March 6 that at least part of the Chicago Landmarks Ordinance was unconstitutionally vague. Hanna v. City of Chicago, No. 1-07-3548 (Ill. 1st Dist. March 6, 2009) is an Illinois real estate lawsuit alleging that the ordinance was overly vague, improperly delegated the city’s legislative authority and violated the due process and equal protection clauses of the Illinois Constitution.

Plaintiff Albert Hanna owned property in Chicago’s Arlington Deming neighborhood, and plaintiff Carol Mrowka owned property in the East Village neighborhood. Both had been approved as Landmark Districts, which means that property owners in those areas must get approval from the Commission of Chicago Landmarks for any alteration, construction, demolition or other work on their property. Land owners may contest the designation at a hearing. The plaintiffs sued the City of Chicago, the Commission and several city officials to overturn the ordinance, which authorizes the designations.

Count I of the complaint alleges that the ordinance is so vague that citizens have no way to tell how they should behave to comply with it. Counts II and III allege that the ordinance violates provisions of the Illinois Constitution reserving legislative power to the city council and state legislature. Counts V through XX allege that the ordinance violates the constitution’s equal protection clause and substantive due process clause. In trial court, the city moved to dismiss the multiple counts of their complaint for failure to state a claim. The trial court granted the motion as to counts I through III and V through XX. The plaintiffs now appeal that decision.

The First District Court of Appeal started with the vagueness allegation. The plaintiffs alleged that numerous parts of the ordinance are so vague that ordinary people must guess at their meaning. The court agreed, saying words like “value,” “important,” “significant” and “unique” were so broad that an ordinary person could not predict which areas might be designated as landmarks or even which people might sit on the Commission. By itself, this is enough to state a cause of action, so the court reversed the dismissal of Count I.

The court next turned to Counts II and III, which alleged that the authority granted to the Commission is impermissible under the state constitution. Again, the First District agreed. The city argued that the Commission is an advisory body only because the City Council has a final vote on whether to adopt the Commission’s recommendations. However, the court said, if the city takes no action, those recommendations become law after one year. For that reason, the Commission is really a declaratory body with authority that is improper under the Illinois Constitution, the court found. And even if that were not true, the court wrote, its standards might still be impermissibly vague. Again, this is sufficient to state a cause of action, the court wrote.

On the remaining counts, V through XX, the First District declined to make a ruling until the trial court can make a finding on whether the ordinance is unconstitutionally vague. If it so finds, the appeals court wrote, the issues of whether the ordinance violates the equal protection and due process clauses of the state constitution are moot. Thus, it reversed the lower court’s decision and remanded it for a trial.

The Chicago and Oakbrook Terrace, Ill,, real-estate litigation law firm of DiTommaso-Lubin represents clients throughout the Chicago area including in Naperville, Aurora, Wheaton, Oak Brook and Highland Park in disputes over both residential and commercial real estate. Our Chicago real estate trial attorneys have handled lease disputes and breach of contract claims, zoning problems, construction disputes and many other real estate matters. In addition to Illinois state law matters, our Midwest real estate trial lawyers represent people in federal court and in state courts in Indiana and Wisconsin. If you’re involved in a real estate lawsuit and you’re looking for experienced representation, DiTommaso-Lubin can help. To set up a free consultation, please contact us online or call 1-877-990-4990 today.

Northrop Grumman Corporation agreed April 2 to settle a federal whistleblower lawsuit for $325 million, the New York Times reported. The lawsuit alleged that TRW Inc, a defense contractor that Northrop later acquired, intentionally suppressed evidence that certain electrical parts it manufactured did not work properly, causing the expensive failure of several defense satellites in orbit. Then, an attorney quoted in the article said, the contractor charged the federal government millions of dollars to investigate the problems with a satellite. The deal included another settlement of an unrelated case by Northrop against the government, leaving the company with no net gain or loss.

The qui tam lawsuit grew out of allegations from scientist Robert Ferro, who worked for a subcontractor to TRW. Ferro found problems with certain transistors TRW manufactured for defense satellites, the article said, and reported them to TRW. But TRW not only did not report the problems to the government, but allegedly continued to sell the parts and blocked Ferro’s attempts to include the information in a report to the Air Force later. He filed a lawsuit in 2002, but because the case was under seal (as required by federal law), his name was only revealed after the settlement. As part of the settlement, Ferro will receive $48.8 million.

Federal, state and local laws allow people like Ferro to bring whistleblower lawsuits against organizations they believe are defrauding government agencies or misusing government resources. Because this typically requires inside knowledge about an organization, the False Claims Act has two unusual features giving them a special incentive. One is the requirement that the original claim and the whistleblower’s name be kept from public knowledge. The other is that the whistleblower stands to receive 15% to 30% of any money the government wins. Prosecutors can choose to intervene under the False Claims Act, but even if they do not, the whistleblower has the right to continue the suit as a “private attorney general,” often with help from a private law firm.

If you have evidence that a company you work with is defrauding a government agency, you may be able to pursue a qui tam action, with or without help from prosecutors. DiTommaso-Lubin's Chicago and Oak Brook whistleblower and qui tam attorneys stand ready to represent whistleblowers pursuing claims under the False Claims Act, the Chicago False Claims Act and the Illinois Whistleblower Reward and Protection Act. Based in Chicago and Oakbrook Terrace, Ill., our firm handles claims throughout Illinois, Indiana, Wisconsin and the United States. To learn more about your options at a free, confidential consultation, you can contact DiTommaso-Lubin via email or call toll-free at 1-877-990-4990.

DiTommaso-Lubin’s auto fraud, lemon law, and consumer fraud trial lawyers were impressed by a recent First District Court of Appeals ruling against the credit arm of General Motors for a wrongful repossession. The court said a trial court was correct to rule that General Motors Acceptance Corporation acted unfairly when it repossessed a truck in violation of its agreement with the owner. In Demitro v. General Motors Acceptance Corporation, No. 1-06-3417 (Ill. 1st. Feb. 9, 2009), the appeals court declined to overturn a Cook County trial court ruling that GMAC violated the Illinois Consumer Fraud and Deceptive Business Practices Act.

Demitro purchased a Chevrolet Suburban in 2002 and had no trouble making payments until 2003, when he underwent surgery and went on disability in May of 2003. His payment checks for June and July of that year bounced, and in August, he spoke with a GMAC representative who told him so. The next day, Demitro called GMAC and authorized about one month’s payment to be deducted from his checking account. The GMAC representative then called a repossession agency that had already been authorized to take Demitro’s truck and put the repossession on hold. The representative sent Demitro a letter giving him seven days to make the back payments and keep his account current. After that time expired, it said, GM could exercise its right to repossess the truck.

On the very next day, Demitro awoke to discover that his truck had been repossessed. The GMAC representative was notified. He acknowledged that the repossession was a mistake and a violation of the seven-day extension in the letter, but nonetheless recommended to management that they keep the truck. They did, and informed Demitro that he was now liable for repossession charges of $39,695.04 as well as the outstanding balance on his account. Unable to get to the bank, Demitro informed GMAC that his telephone payment would bounce. GMAC later withdrew that payment from his account after he had added more money, but failed to credit him for the payment.

Demitro offered to pay his entire account balance, minus the repossession charges, before the seven-day period was up, but the offer was refused. GMAC sold the repossessed truck, applied the proceeds to Demitro’s payment plan, and held Demitro legally responsible for paying the remainder, as well as repossession and sales costs. Demitro sued and the parties filed cross-motions for summary judgment. After a hearing, the trial court granted him summary judgment on his Consumer Fraud Act claim, saying GMAC violated the law by retaining the repossessed vehicle in violation of the seven-day extension letter. He was granted actual damages, attorney fees and costs totaling more than $61,000. GMAC appealed.

The First District started with GMAC’s argument that no evidence of a Consumer Fraud Act violation existed. The act requires that the defendant’s conduct was deceptive or unfair, that consumers relied on it and that it happened during trade or commerce. Demitro’s suit claimed GMAC’s conduct in violating its seven-day extension was unfair because it was oppressive. Noting that the facts were not in dispute, the appeals court agreed. GMAC did not merely breach a contract, as it argued, because its behavior raised consumer protection concerns.

GMAC also argued that it was entitled to repossess because Demitro’s telephone payment bounced, either because he defaulted under the agreement or because that action was a repudiation of the contract. In either case, the court wrote, Demitro still had six days under the letter to bring his account current, and made multiple statements showing he intended to do so. In fact, the judges wrote, the undisputed facts show that GMAC prevented Demitro from meeting the terms of the extension by refusing to accept his offer of payment in full by the deadline.

Finally, the court rejected multiple arguments by GMAC that the large attorney fees award was unreasonable, since GMAC never requested a hearing on the matter and “vigorously contested all issues.” It upheld the trial court in all respects and remanded the case for consideration of an additional attorney fees award for Demitro for the appeal.

The Chicago consumer rights litigation firm of DiTommaso-Lubin represents consumers like Demitro who have been victims of auto dealer finance fraud by an auto company or a lender. Based in Chicago and Oakbrook Terrace, Ill., we represent consumers all over the Chicago area including in Naperville, Wheaton and Aurora who were harmed financially by misconduct by a business including car dealers and automobile finance companies. If you’re a victim of these unfair business practices and you’re ready to fight back, please contact us to set up a free consultation.

Medical testing giant Quest Diagnostics settled a whistleblower lawsuit and a related criminal fine for a total of $302 million, the New York Daily News reported April 16. Quest and a subsidiary, Nichols Institute Diagnostics, were accused of defrauding Medicare by selling medical test kits that they knew did not work. The $302 million figure includes a $262 million settlement in a civil lawsuit brought by the federal government and a $40 million fine for Nichols Institute Diagnostics, which also agreed to plead guilty to felony misbranding charges.

A separate $45 million will be paid to the whistleblower in the case, Thomas Cantor, who alerted the government to Quest’s misbehavior. Cantor is a biochemist and the president of Scantibodies Labs Inc., a competitor to Quest. He realized there was a problem with the tests after doctors came to him requesting a second test, believing the results they got from Quest weren’t right. Further tests showed that the results from Quest were consistently wrong. With help from a private law firm, he filed a whistleblower lawsuit in 2004. His efforts led to the federal investigation and eventually to this settlement.

Under the federal False Claims Act (and similar state and local laws), people who know about fraud against the federal government may sue the company committing the fraud on behalf of the public. These lawsuits are first filed under seal -- meaning they’re not public knowledge -- but a copy is served to the federal Department of Justice. The federal government can choose to step in, but if it does not, the plaintiff is free to continue, acting as a private prosecutor in the public’s interest. As an incentive to report the fraud -- which can be difficult for employees who spot wrongdoing by their employers -- the whistleblower stands to collect 15% to 30% of any money won in the suit.

The Chicago and Oakbrook Terrace law firm of DiTommaso-Lubin is proud to represent whistleblowers seeking to expose fraud against the government and taxpayers. Our Chicago whistleblower and qui tam lawyers stand ready to represent people suing under the federal False Claims Act, the Illinois Whistleblower Reward and Protection Act and the Chicago False Claims Act, as well as laws in Indiana and Wisconsin. If you know about wrongdoing by your employer or another government contractor and you’re ready to step forward, we can help. To learn more at a free, confidential consultation, please contact DiTommaso-Lubin today.