Chicago Business Litigation Lawyer Blog

Our Illinois business and commercial emergency attorneys were interested to read an article about a lawsuit suggesting corporate “dirty tricks” by the parent company of the Jewel-Osco chain of grocery stores. Rubloff Development Group Inc., a commercial real estate developer, made that accusation in a lawsuit filed in Chicago federal court in June. According to the Chicago Tribune’s Chicago Breaking Business blog, Rubloff believes Jewel-Osco hired Saint Consulting, a Massachusetts company, in secret to “harass and interfere” with a shopping center Rubloff was trying to develop in Munedelin, Ill., with a Wal-Mart as its “anchor.” Rubloff and other developers are seeking a declaratory judgment that documents in its possession do not contain confidential trade secrets belonging to Saint, as Saint has alleged.

According to Rubloff’s complaint (PDF), file in late June, Rubloff has documents it believes show that Jewel-Osco “secretly retained” Saint to delay or stop development of shopping centers slated to contain Wal-Mart stores, which might compete with Jewel-Osco. The complaint alleges that Saint is responsible for “false statements and sham litigation” against several of the plaintiffs’ developments, particularly the one in Mundelin. Sometimes, this was enough to make the Wal-Mart pull out, causing tens of millions of dollars in costs to the developers, it says. Rubloff claims it sent SuperValu a letter in early May with these accusations. Although that letter did not name Saint and was not sent to Saint, the complaint said, Saint responded a week later with a threat to sue Rubloff for “wrongful possession of ... confidential, proprietary business information.”

Rubloff and its co-plaintiffs responded with this lawsuit. In it, they ask the court for a declaratory judgment that the information at issue is not privileged, confidential or trade secrets. They also ask the court to enjoin the defendants from spoiling any evidence, something they claim the defendants do routinely, and request damages for any evidence already spoiled. If permitted to submit the controversial information to the court under seal, they say they can raise claims of racketeering, tortious interference with business opportunities, fraud, antitrust claims and more, with tens of millions in potential damages.

As Chicago business emergency lawyers, we believe a declaratory judgment is a smart way for Rubloff and the other plaintiffs to strike first and avoid potentially damaging litigation in Massachusetts. A declaratory judgment is a court order declaring the legal relationships and obligations between the parties. In this case, it is likely to be a judgment declaring whether the documents at issue are trade secrets that deserve protection under Illinois law. If Saint is bluffing about this, filing for a declaratory judgment allows Rubloff to establish that fact without fighting a frivolous lawsuit, and in its own home court rather than halfway across the United States. A declaratory judgment in Rubloff’s favor would also allow the developer to go forward with its own business lawsuit against Saint and Jewel-Osco.

Continue reading " Developer’s Lawsuit Accuses Grocery Chain of Using ‘Dirty Tricks’ to Keep Wal-Mart Out of Town " »

Our Chicago business litigation lawyers were interested in a recent decision from the First District Court of Appeal. Carpenter et al. v. Exelon Enterprises Company, No. 1-09-1222 (Ill. 1st March 18, 2010) posed a certified question to the court: Does the three-year statute of limitations established by the Illinois Securities Law apply to a claim that a majority shareholder breached its fiduciary duty to minority shareholders? In this case, the First decided that it does not, allowing Timothy Carpenter and seven co-plaintiffs to pursue a claim under a more generous five-year statute of limitations under the Illinois Code of Civil Procedure. Their victory in this interlocutory appeal allows them to continue their claim at the trial court level.

The plaintiffs all held minority shares of InfraSource, Inc., a Delaware corporation. The majority shareholder at 97% was Exelon, a Pennsylvania corporation. In 2003, Exelon created a new company for the purpose of divesting its interest in InfraSource, which allowed it to merge InfraSource with the new company. The resulting corporation sold some of its (formerly InfraSource’s) assets and business units to Exelon and others to GFI Energy Ventures, an independent third party. InfraSource would continue as a company, but the former minority shareholders were paid a pro-rated share of the proceeds. In 2007, the plaintiffs sued Exelon, alleging that it abused its power as majority shareholder. They accused Exelon of structuring the transaction in a way that did not adequately compensate them for the market value of their shares.

A second amended complaint said Exelon sold itself the InfraSource assets at an artificially low price and awarded itself preferred stock. It alleged causes of action for breach of fiduciary duty, civil conspiracy, and, against Exelon’s parent company, aiding and abetting those actions. Exelon moved to dismiss the second complaint based on the three-year statute of limitations in the Illinois Securities Law. The trial court denied this, finding that the five-year statute of limitations applied. However, it stayed further proceedings until the instant interlocutory appeal had been decided, answering the question of which statute of limitations is correct.

The First District started its analysis by examining the statue of limitations portion of the Illinois Securities Law. That language says plaintiffs have three years from the date of the relevant sale to bring claims under the Act, or on matters for which the Act grants relief. Plaintiffs specifically stated their claim under Delaware law in order to distance themselves from this statute of limitations, but Exelon argued that the statute still applies under the language allowing its use for matters for which the Act grants relief, and cited two cases in support. The plaintiffs countered that Illinois courts found that because the Act is modeled after federal securities laws, courts should look at how those laws are interpreted for guidance in interpreting the Act. Tirapelli v. Advanced Equities, Inc., 351 Ill. App. 3d 450, 455 (2004).

The First rejected both lines of case law, saying that the decision “actually depends on the resolution of a straightforward and fundamental question of statutory construction.” The relevant portion of the Illinois Securities Law gives any party in interest the right to bring legal action to enforce compliance or stop a violation. Exelon relies on that language to place the plaintiffs’ complaint under the Act, the court wrote, but incorrectly. When the Legislature added this language to the Act, it explicitly said it was trying to give Illinois security holders the right to stop illegal acts. It included the right to sue for rescission, the court said, but only to enforce the remedy the law provides. In fact, Guy v. Duff & Phelps, Inc., 628 F. Supp. 252 (N.D. Ill. 1985) explicitly examined whether the law gives a retrospective right of rescission to securities sellers and concluded that it should not be interpreted that way.

The First agreed, saying another reading would make other sections of the law irrelevant. It then dismissed arguments based on the Seventh Circuit’s finding in Klein v. George G. Kerasotes Corp., 500 F.3d 669 (7th Cir. 2007), saying the arguments that led to its contradictory conclusion did not apply, for all of the reasons discussed above. Because there is no retrospective right of rescission in the Act, the First said, the plaintiffs are not seeking relief on any matter for which the Act grants relief. Nor, as noted earlier, are they seeking relief under the Act itself. For that reason, the three-year statute of limitations provided by the Act does not apply, the court concluded. It answered the certified question posed by the trial court in the negative, essentially upholding that court’s decision, and remanded it for further proceedings.

Continue reading " Illinois Securities Law Statute of Limitation Does Not Apply to Breach of Fiduciary Duty Claim " »

Our Chicago business attorneys were interested to note a ruling establishing that an Illinois venue is correct in a case of dueling lawsuits between companies working in Illinois and New York. In Whittmanhart, Inc. v. CA, Inc. and Niku LLC, No. 1-09-3136 (Ill. 1st June 22, 2010), Whittmanhart bought software from CA and its wholly owned subsidiary, Niku, in 2006 and entered into an end-user license agreement. They later entered into a statement of work saying CA employees would help Whittmanhart implement and develop the software, in exchange for an hourly fee and expenses. CA invoiced Whittmanhart several times during the project, but claims no invoices were ever paid. Whittmanhart claims CA and Niku breached their own contract by failing to deliver a fully functioning software system by a specified date and failing to invoice monthly, as specified.

CA and Niku sued Whittmanhart in New York federal court Nov. 12, 2008 for breach of contract and account stated. They sought payment of the invoices, plus attorney fees and court costs. In December of that year, Whittmanhart told the court it would move to dismiss for lack of federal diversity jurisdiction, as all three companies are Delaware citizens. On the same day, CA and Niku filed a claim in New York state court. Two hours later, they voluntarily dismissed the federal case. About 40 minutes later, but in a different time zone, Whittmanhart filed a lawsuit against CA and Niku in Cook County trial court, creating dueling lawsuits. That claim asks for financial damages, attorney fees and court costs and a declaratory judgment that it did not owe further money to CA and Niku.

Whittmanhart did not answer the New York state complaint and CA moved for default judgment. Whittmanhart then argued that it had not been properly served and successfully moved to dismiss. CA then filed an identical claim in New York state court, which Whittmanhart moved to dismiss on the grounds that the Illinois action was pending and on forum non conveniens. This was denied. CA later moved to dismiss the Illinois action on the grounds that New York was considering the same claim, and this motion was granted. Whittmanhart appealed to the First District Court of Appeal.

In its analysis, the First started by dismissing arguments made by CA and Niku based on things that happened after the trial court made its decision. The court then acknowledged that the lawsuits in both states had identical parties and were based on the same contracts -- the statement of work and end-user license agreement. Those contracts were written with reference to other states’ laws. But this by itself was not enough to dismiss the claim, the court said; courts may still allow parallel claims to go forward according to their judgment. “Illinois is clearly the more logical forum for this dispute,” the First wrote, noting that much of the disputed work took place in Cook County and that the Illinois action was the first properly filed claim.

Furthermore, Whittmanhart’s Illinois action has a claim for monetary damages that was not made in New York, the court noted, meaning there was a better chance of complete resolution in Illinois. And if Whittmanhart were to file a counterclaim in New York, it could proceed independently of a decision in favor of CA. That means res judicata would not completely bar the Illinois action. For those reasons, the First found that the trial court had abused its discretion. It reversed the decision and remanded the case to Cook County trial court.

Continue reading " Court Rules Illinois Courts Should Hear Contract Dispute Despite Case in New York " »

3rd Circuit Overturns 8-Figure Settlement in Lending Class Action -- Again
By Shannon P. Duffy

Law.com reports:

For the second time, a federal appeals court has overturned an eight-figure settlement in a class action predatory lending suit on the grounds that the trial judge failed to follow the rigorous and precise steps involved in certifying a settlement class.

In its 100-page opinion in In re Community Bank of Northern Virginia, a unanimous, three-judge panel of the 3rd U.S. Circuit Court of Appeals overturned a $47.6 million settlement on the grounds that the trial judge applied the wrong legal standard in ruling on class certification.

The ruling is a stunning second setback for both the plaintiffs and the defendants whose prior settlement of $33 million was overturned by the 3rd Circuit in 2005. It's a coup for a coalition of objectors, represented by lawyers from Alabama, North Carolina, Missouri, Maryland and Georgia, who have now succeeded twice in blocking settlements of claims they say are worth more than $3 billion.

You can read the full article here.

Continue reading " Law.com reports: "3rd Circuit Overturns 8-Figure Settlement in Lending Class Action -- Again" " »

Attorney Mark Lanier on the legal challenges facing the oil company and automaker.

Continue reading " Star Trial Attorney Mark Lanier on BP and Toyota Lawsuits " »

Confessions of former debt collectors
These people share their experiences in the collections industry -- and why they left.
By Mel Harsh

CNN has a terrific article containing confessions from debt collectors. You should read all of the confessions to get a eye opening view of the world of debt collectors. One of the many debt collectors quoted in the article had this to say about her "profession":

Collectors I knew regularly held contests to see who could make the most people cry in one day.

A co-worker at my office overheard another collecting agent telling a debtor in Spanish that she was going to send someone over to his house to beat him with a tire iron, because she didn't think anyone in the office would understand her.

You'd be surprised what goes on behind closed doors. Every day, you were asked to break the law. ...

Continue reading " CNN Money Reports:"Confessions of former debt collectors" " »

'Cookies' Cause Bitter Backlash
Spate of Lawsuits Shows User Discomfort With Latest Innovations in Online-Tracking Technology
By JENNIFER VALENTINO-DEVRIESAnd EMILY STEEL

The Wall Street reports:

Since July, at least six suits have been filed in U.S. District Court for the Central District of California against websites and companies that create advertising technology, accusing them of installing online-tracking tools that are so surreptitious that they essentially hack into users' machines without their knowledge. All of the suits seek class-action status and accuse companies of violating the federal Computer Fraud and Abuse Act and other laws against deceptive practices. ...

In one of the lawsuits, filed last week in the Central District of California, three California residents sued Cable News Network, Travel Channel and others over alleged tracking of Web surfing on mobile phones using technology that the suit says is particularly difficult to delete. A spokesman for Scripps Networks Interactive Inc., which controls the Travel Channel, said the company doesn't comment on pending litigation. Time Warner Inc., which owns CNN. ...

The tools cited in the suits are part of an "arms race" in tracking technologies, said Chris Hoofnagle, director of the Berkeley Center for Law & Technology's information-privacy programs. Some users, uncomfortable with tracking, now routinely block or delete cookies. "There are some in the industry who do not believe that users should be able to block tracking, so they are turning to increasingly sophisticated tools to track people," he said. One such technology involves "Flash cookies," which use Adobe Systems Inc.'s popular Flash program to save a small file on a user's computer. ....

Read more by clicking here.

Continue reading " The Wall Street Journal Reports: "'Cookies' Cause Bitter Backlash" " »

Public Citizen's blog is a great resource to learn about consumer rights issues. It regularly publishes insightful posts on many cutting edge consume rissues such as how large corporations and law firms abuse their power through misuse trademark law to silence criticism and infringe free speech rights.

You can view the blog by clicking here.

Click here and here to read two interesting posts about how a large law firm uses trademark law.

Continue reading " Best Websites on the Internet for Class Action and Consumer Law Issues -- Public Citizen's Blog Presents a Unique and Insightful Point of View on Consumer Rights Issues " »

"Lars Johnson Has Goats on His Roof and a Stable of Lawyers to Prove It --
Having Trademarked the Ungulate Look, Restaurateur Butts Heads With Imitators."
By JUSTIN SCHECK And STU WOO

The article discusses how a simple marketing idea of goats on a roof (which is simply a typical practice in some countries can be trademarked as a restaurant marketing symbol. The restaurant has filed lawsuits to enforce these claimed trademark rights against other restaurants which it claims copied its idea. The article states:

Any other business thinking of putting goats on the roof will have Mr. Johnson's lawyers to contend with. A goat named Flipper stood on the grass roof of Al Johnson's Swedish Restaurant. Some patrons drive from afar to eat at the restaurant and see the goats that have been going up on Al Johnson's roof since 1973. The restaurant 14 years ago trademarked the right to put goats on a roof to attract customers to a business. "The restaurant is one of the top-grossing in Wisconsin, and I'm sure the goats have helped," says Mr. Johnson, who manages the family-owned restaurant. ...

Last year, he discovered that Tiger Mountain Market in Rabun County, Ga., had been grazing goats on its grass roof since 2007. Putting goats on the roof wasn't illegal. The violation, Al Johnson's alleged in a lawsuit in the U.S. District Court for the Northern District of Georgia, was that Tiger Mountain used the animals to woo business. ...

Danny Benson, the offending market's owner, says that "legally we could fight it, because it is ridiculous." But it would have been too expensive to fight, he says.

To read the full article which gives insight into how even what appears to be a less than novel concept can lead to litigation click here.

Continue reading " The Wall Street Journal Reports: "Lars Johnson Has Goats on His Roof and a Stable of Lawyers to Prove It " " »

Toyota settles suit over high-profile, fatal crash
By Ken Bensinger

Chicago Tribune Reports: "Wreck near San Diego last year drew national attention to sudden acceleration in its vehicles and led to huge recalls. The settlement leaves out a co-defendant Lexus dealership."

This article gives alot of insight in Toyota's overall legal strategy for beating back the many lawsuits filed against it for sudden acceleration and should be read in full at the above link. The article states:

Toyota Motor Corp. has quietly settled a high-profile lawsuit over a fatal crash near San Diego last year that drew national attention to sudden acceleration in its vehicles and led to massive recalls and an unprecedented apology from its president.

The automaker revealed the settlement in a letter to a California Superior Court judge but declined to provide any details of the terms, which it is seeking to keep confidential.

By getting the case off its growing plate of legal woes, Toyota can focus on an aggressive strategy to fend off lawsuits with less dramatic evidence, many of which point to potential electronic problems in vehicles.

You can read the full article here

Our Geneva, Illinois consumer rights private law firm handles individual and class action predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law 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. The Chicago consumer lawyers at DiTommaso-Lubin are 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 consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers' rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Hinsdale and Waukegan consumer attorneys provide assistance in fair debt collection, 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 consumer protection attorneys who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.

You can view our Oak Brook and Chicago attorneys listings on Super Lawyers. Super Lawyers only selects 5% of the attorneys in the State to receive the Super Lawyer designation.

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Judge Sues After Surgical Sponge Was Left In Him

This article in the Miami Herald is worth reading at the above link. The article reports:

A Belle Glade judge plans to sue two radiologists and a surgeon after a foot long sponge that was left in him after surgery and went undiagnosed for five months, even as he developed serious health issues from it. ...

As part of the settlement he reached with hospital and its owner, Tenet Healthcare System, Bailey is allowed to talk publicly about his experience in hopes that hospitals will make changes so something like this never happens again.

To view the full article click here.

Our Chicago Class Action Lawyers Have Represented Auto-Buyers and buyers of other defective products in State-Wide and National Class Actions in courts in different parts of the United States. You can call one of our Nationwide class action lawyers for a free consultation at (877) 990-4900 or contact us online.

Nationwide Class Action Filed Over Egg Contamination
Lawyer says suit could cover 76,000 individuals

The article states:

The Iowa egg farms apparently responsible for the recent salmonella outbreak have been named in a class action lawsuit, brought on behalf of six consumers who became sick after eating tainted eggs. The suit, filed Wednesday in a Chicago federal court, says that Wright County Egg and Hillandale Farms “failed to adequately and properly test, inspect and comply with federal and statutory regulations,” leading to the outbreak that sickened over 1,500 consumers.

... the class could eventually grow to over 76,000 people.

Our Chicago class action law firm handles class claims similar to this one.

Our Chicago class action attorneys handle individual and class action predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law 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. The Geneva consumer class action lawyers at DiTommaso-Lubin are 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 consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers' rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Chicago class action attorneys provide assistance in fair debt collection, 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 Oak Brook consumer law attorneys who can assist in lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime 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.

Our Illinois alternative dispute resolution lawyers were interested to see an appeals case clarifying that parties can only be compelled to binding arbitration if they have an explicit written contract. In Heider v. Knautz, No. 2-09-0808 (Ill. 2nd Dec.4, 2009), Arlie Heider sued Carl Knautz for injuries arising out of a car accident, including a knee injury. During a September hearing on admission of Heider’s Wisconsin-based attorney to Illinois courts, that attorney asked to suspend his request for admission because both parties had agreed to binding arbitration. The court stayed the case for six months pending the arbitration.

However, some months later, Knautz filed for a protective order preventing Heider from attending the arbitration, saying that during discovery, he had learned that Heider had reinjured his knee in a subsequent car accident, despite statements to the contrary. He wanted to delay the arbitration to conduct further discovery, and because he had changed attorneys, but the plaintiff’s attorney refused to reschedule. The court denied Knautz’s motion, so he filed a motion for judicial determination of whether he could revoke his agreement to arbitrate. In that motion, he said the Illinois Uniform Arbitration Act did not apply because he had signed no written agreement to binding arbitration. The trial court disagreed, finding at Heider’s urging that the Act applies because Knautz agreed on the record during the September hearing that such an agreement existed, and because that hearing was written down and entered into the record. Knautz filed an interlocutory appeal.

After dismissing what it saw as a meritless jurisdictional argument by Heider, the Second District Court of Appeal turned to the merits of Knautz’s appeal. Knautz argued that he should not be compelled to use binding arbitration because he did not sign a formal written agreement to do so. In considering this, the court considered the plain language of the Act, which refers to “a written agreement” or “a provision in a written contract.” This language makes it clear that the Act was intended only to apply to written agreements, the Second wrote. In support, it cited multiple out-of-state cases based on very similar language, as the Illinois Act was adopted from the Uniform Arbitration Act. Furthermore, the court said, there is nothing in the transcript of the September hearing to suggest that the parties intended to make a binding contract to arbitrate.

That order was based on an oral agreement, the court said, and the common law says oral agreements to arbitrate may be revoked anytime before an award is entered. The Act does not abrogate that rule, the court wrote, so Knautz is entitled to revoke his agreement to arbitrate. In fact, it wrote, if it were to decide otherwise, “parties who choose to enter into only an oral agreement could never obtain an order staying trial court proceedings pending arbitration, for fear that such an order would be viewed as a written agreement subjecting them to the Act and thereby destroying the purpose of entering into only an oral agreement for arbitration.” Thus, it reversed the order to arbitrate and remanded the case to trial court.

Continue reading " Second District Declines to Compel Arbitration Based Only on Oral Agreement " »

For-profit college risk: Huge debt, questionable degree
By Stephanie Chen, CNN

STORY HIGHLIGHTS

A class-action lawsuit alleges Westwood College used deceptive recruitment practices
GAO report revealed 15 for-profit universities used deceptive recruiting practices
Dane Lockman, 33, took out $40,000 in student loans to pay for Westwood
He doesn't have enough money to pay back his loans, which has ruined his credit

CNN Reports:

At least 750 former Westwood students and employees have come forward with complaints about the school engaging in deceptive recruiting practices that have left some students with an unmanageable amount of debt, according to a class-action lawsuit filed in U.S. District Court in Denver, Colorado, in August.

Some students, like Lockman, have also complained that the school failed to give them accurate information about future job prospects or whether their degrees would be recognized by other schools or employers.

"This is a massive problem that's going to change the face of education if this isn't corrected," said Jillian Estes, an attorney at the Florida law firm James, Hoyer, Newcomer, Smiljanich & Yanchunis P.A., which filed the suit against Westwood. "This isn't only about the students; this is about you and I. Taxpayer money is funding the deceptive practices these schools are using. This has to be everyone's problem."

Westwood College, owned by Alta Colleges Inc., is one of about 3,000 for-profit colleges in the country. The college denies claims made in the lawsuit and has filed a defamation suit against the law firm. The defamation suit is pending.

This summer, the multibillion-dollar for-profit college industry has come under the scrutiny of the U.S. Senate. Some government officials say the industry is regulated too loosely. Senate hearings in August revealed government findings that 15 for-profit schools, including Westwood, were encouraging fraudulent practices among students. For example, some schools were caught suggesting that prospective students hide their savings to secure more federal aid.

Across the country, other for-profit schools are facing their own legal battles. ...

Our Chicago consumer rights attorneys are pursuing and investigating class-action lawsuits against for profit trade schools that have allegedly duped students into taking classes even though there is little or no prospect of the students obtaining work in the field after taking the course. We have obtained class certification in one such case and seeking to file other cases under the correct factual circumstances.

If you have been duped into paying a subtantial sum to a for profit trade school only to find that it is impossible to find a job in the field, please contact one of our Chicago consumer rights lawyers online by clicking here. DiTommaso-Lubin's Chicago consumer class action attorneys have been handling consumer rights and class action cases for over a quarter century. You can view the the types of cases we have handled at our website.

The Jacksonville Business Journal Reports: "Overtime lawsuits thrive in Florida's recession"

The article states:

Like unemployment, home foreclosures and bankruptcies, the number of lawsuits brought by employees alleging unpaid wages is also on the rise.

Nine Fair Labor Standards Act cases were filed during the first two weeks of January compared with three filed during the first quarter of 2008 and six filed in all of 2007 in the Jacksonville division of the U.S. District Court for the Middle District of Florida.

Fowler White Boggs PA attorney Robert Riegel said in recent months he’s seen the largest increase in Fair Labor Standards Act cases in his 27-year career focusing on employment litigation. Because the recession is expected to continue, he doesn’t expect the caseload to slow down any time soon.

Riegel and other attorneys said that employees typically don’t file suit until after leaving their employer, and as the unemployment rate rises, so does the number of employees seeking unpaid overtime wages.

The growing number of overtime wage cases in the Jacksonville division, which includes the Jacksonville metropolitan area and outlying counties, mirrors a growing national trend, said Archibald Thomas, a partner at Thomas & Klink and the attorney representing Justin Wood, a former superintendent at Pulte Homes Corp. More disputes are settled before suits are even filed.

The Fair Labor Standards Act, one of the major pieces of the New Deal legislation drafted during the Great Depression, outlawed child labor and set a guaranteed minimum wage. Over the years, amendments to the law guaranteed employees other rights, including overtime pay.

Overtime pay is fairly easy to calculate for hourly employees who work more than the standard 40 hours, but is less easy to determine for salaried employees. The act lists a number of salaried jobs that are exempt from receiving overtime pay, including executives, management, professionals, outside sales associates and administrators.

The common thread in many of the recently filed cases, which range from pest control companies to country clubs, are that the employees received salaries, but allege they were due overtime pay.

Ed Trent, an attorney at Akerman Senterfitt who represents employers in labor disputes, but is not representing any of the employers in the cases filed in January, said many of the cases are a misunderstanding of the statute. “The intent of the employer is irrelevant. You either got it right or you didn’t.”

The Chicago wage claim attorneys at DiTommaso-Lubin represent employees from all industries, jobs and backgrounds in claims for unpaid overtime pay. Federal law makes overtime a right -- not a privilege that can be denied in order to save money for the employer. Nonetheless, too many employers tighten their belts by essentially stealing labor from their employees, by shaving hours off timecards, pressuring employees to work off the clock or incorrectly classifying them as exempt from overtime. Our Wheaton, Ill. employee rights attorneys handle both individual and class-action lawsuits from workers who are ready to stand up for their rights and collect hundreds or thousands of dollars in unpaid wages. Based in Chicago and Oak Brook, we represent or have represented clients throughout Illinois, Indiana, Wisconsin, Michigan and all over the United States.

If you believe your labor has been stolen by an employer that consistently refused to pay overtime, the Chicago based attorneys at DiTommaso-Lubin can help. To set up a free consultation with one of our Naperville, Aurora, Geneva or Chicago unpaid overtime attorneys, call us toll-free at 1-877-990-4990 or send us an email.

Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers for 2011 in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin's Oak Brook and Chicago business law attorneys have over a quarter of century of experience in litigating complex class action, consumer rights and business and commercial litigation disputes. As a Chicago business law firm handle emergency business law suits involving injunctions, and TROS, covenant not to compete and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.

DiTommaso-Lubin's Wheaton, Naperville, Hinsdale, and Chicago business trial attorneys have more than two and half decades of experience helping business clients unravel the complexities of Illinois and out-of-state business laws. Our Chicago business, commercial, class-action and consumer litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and sucessfully as possible, helping business clients protect their investements and get back to business as usual. From offices in Oak Brook, near Wheaton, Naperville, Evanston, and Chicago, we serve clients throughout Illinois and the Midwest.

If you’re facing a business or class-action lawsuit, or the possibility of one, and you’d like to discuss how the experienced Illinois business dispute attorneys at DiTommaso-Lubin can help, we would like to hear from you. To set up a consultation with one of our Chicago, Wheaton, Elmhurst, Geneva, Aurora, Elgin, Rockford or Naperville class action attorneys and Chicago business trial lawyers, please call us toll-free at 1-877-990-4990 or contact us through the Internet.

NPR Reports: "Stephen Breyer: The Court, The Cases And The Conflicts"

This fascinating broadcast reveals how Justice Breyer makes decisions through a "living Constitution". The broadcast states:

In Making Our Democracy Work: A Judge's View, Supreme Court Justice Stephen Breyer outlines his ideas about the Constitution and about the way the United States legal system works.

Breyer, who was appointed to the Supreme Court by President Clinton in 1994, explains that he interprets the Constitution as a living document, in opposition to some of his colleagues — including Justice Antonin Scalia — who see it as a static and literal set of rules that do not change over time.

Breyer argues that the framers knew that the interpretation of the document would continue to change as America evolved — and that members of the Supreme Court should apply the Constitution's values to modern circumstances.

Based in Chicago and Oak Brook, Illinois, DiTommaso-Lubin represents clients in business litigation throughout Illinois, the Midwest and the United States. We represent Chicago area businesses of all sizes, from family-owned small businesses to large corporations and partnerships. Our Oak Brook business attorneys also handle claims of trade libel and online or internet based defamation of a product, service or business, as well as unfair competition and other business claims. If your business is facing or wants to bring a lawsuit including on online infringement and unfair defamation of your products or services, we can help. To set up a consultation with one of Chicago business law attorneys to learn more about us, please contact us online or call us toll-free at 1-877-990-4990.

USA Today Reports:

Permanent mortgage modifications, which lower mortgage payments have been given to only about a third of the 1.3 million borrowers.

The class-action lawsuits allege that the trial payment plans are contracts that obligateBank of America and other servicers to abide by them and to give permanent loan modifications to homeowners who otherwise can't pay their mortgages and would face foreclosure and loss of their homes.

The article should be read in full if you are following the foreclosure crisis. The article states in part:

Whether a Lake Stevens, Wash., couple keep their home may hinge on the outcome of a legal strategy that aims to join struggling homeowners with similar experiences in the HAMP program in a class-action lawsuit against the nation's largest bank. On Sept. 30 in Nashville, a federal court hearing is scheduled to consider consolidating the Sopers' case with more than a dozen others against Bank of America....

To review the full article click here.

If you are unable to resolve your consumer complaint and it involves issues of unfair dealing, consumer fraud or deception, our private consumer protection law firm can bring and individual or class action lawsuit in the right case to protect your rights and those of other consumer victims.

Our Chicago class action attorneys handle individual and class action predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law 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. The Naperville consumer class action lawyers at DiTommaso-Lubin are 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 consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers' rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Chicago class action attorneys provide assistance in fair debt collection, 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 Oak Brook consumer law attorneys who can assist in lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime 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.

Movie Studios Can Subpoena Internet Users' Names, Data In File-Sharing Cases

AP reports:

A federal judge on Friday allowed the holder of a movie copyright to subpoena the names of people accused of illegally downloading and distributing a film over the Internet.

Courts have held that Internet subscribers do not have an expectation of privacy once they convey subscriber information to their Internet service providers, U.S. District Judge Rosemary Collyer ruled.

Collyer denied motions by some computer users to quash subpoenas for subscriber information.

The decision came in the case of a German limited partnership which is suing some Internet users for copyright infringement of the movie "Far Cry," a video game adaptation.

DiTommaso-Lubin is a full-service business law firm. Our Chicago trial lawyers have an active practice in Internet trademark and copy right litigation, including representing both plaintiffs and defendants in trademark and copy right infringement claims. Our Wheaton, Joliet and Chicago, Illinois online trademark litigation attorneys and Wheaton trial lawyers also handle related claims of product disparagement or trade libel, both on- and offline. Based in Chicago and Oak Brook, Ill., our Chicago business lawyers represent clients throughout the United States and the Midwest. If your business is under fire and you’re ready to learn more about your rights, please contact us online or call 1-866-990-4990 to set up a consultation.

A Boom in ‘Overtime’ Lawsuits? Blame Technology

The Wall Street Journal reports:

It’s something the world is growing accustomed to, for better or worse: the ever-shrinking divide between work and leisure time. Ubiquitous Internet-access, Blackberrys, cell phones — all sort of technological advances — make it easier to take a “work from home” day when a child is sick. At the same time, the advances give employers the ability to make 24/7 demands, and expect 24/7 responses.

With the blurring of “on” and “off the clock,” lawsuits have arisen. Two recent suits, the WSJ reports on Monday, raise the following question: should hourly workers be paid for time spent responding to work calls or emails while off the clock?

Last month, three current and former employees sued T-Mobile USA Inc., claiming they were required to use company-issued smart phones to respond to work messages after hours without pay. In a March suit, a former CB Richard Ellis Group Inc. maintenance worker seeks pay for time spent after hours receiving and responding to messages on a work-issued cellphone.

The federal Fair Labor Standards Act says employees must be paid for work performed off the clock, even if the work was voluntary. When the law was passed in 1938, “work” was easy to define for hourly employees. As the workplace changed, so did the rules for when workers should be paid.

Continue reading " The Wall Street Journal Reports: "A Boom in ‘Overtime’ Lawsuits? Blame Technology" " »

This video compilation of the Bill Gate's deposition in the United State's government anti-trust case against Microsoft provides good examples of how not to behave at a deposition.

Based in Chicago and Oak Brook, Ill., DiTommaso-Lubin represents clients throughout Illinois and across the United States who are involved in serious or high-stakes business litigation. Our Illinois business lawyers work for both plaintiffs and defendants in cases of share holder freeze outs, closely held family business disputes, contract disputes, intellectual property infringement, trade secrets, restrictive covenants, indemnification and any other claims that could have a serious effect on the finances and future of the business. Our clients include companies in every field and businesses of all sizes, from small family businesses to major corporations. To learn more or speak to an experienced Chicago business litigation attorney, please contact us through our website or call 1-877-990-4990 today.

HP Sues Ex-CEO Hurd Over Oracle's Job Offer
by Richard Gonzales
NPR reports:

Mark Hurd recently was fired from his job as CEO of Hewlett-Packard after a scandal involving an extra-martial relationship. One of HP's main tech rivals -- Oracle -- wants to make Hurd its co-president. That's prompted HP to sue, claiming Hurd can't possibly perform the new job without tapping into HP's trade secrets.

Our Chicago non-compete agreement lawyers have defended high level executives in cases with similar claims to the Hurd case. A case in which our firm defended a former Motorola executive was covered in Crain's Chicago business. You can view that article by clicking here.

DiTommaso-Lubin handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business litigation attorneys have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results.

DiTommas-Lubin a Chicago business law firm represent both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Based in Oakbrook Terrace and downtown Chicago, our Schaumburg noncompete clause lawyers take cases from Wheaton, Lake Forest, Hinsdale and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact us through the Internet or call toll-free at 1-877-990-4990 today.

H-P Sues to Stop Ex-Chief's Job
By ROBERT A. GUTH, BEN WORTHEN And JOANN S. LUBLIN .

The Wall Street Jornal Reports:

Hewlett-Packard Co. sued to block its former chief executive from joining rival Oracle Corp. as a senior executive, alleging Mark Hurd's hiring breaches his exit agreement and will inevitably lead to a transfer of its trade secrets to a competitor. ... While it isn't unusual for companies to sue departing executives to enforce exit agreements, H-P's suit Tuesday against Mr. Hurd is atypical in that former CEOs are rarely subject to such legal actions, experts said.

H-P's suit focuses on a confidentiality agreement, which restricts Mr. Hurd from disclosing sensitive information about his former employer.

Continue reading " The Wall Street Journal Reports: H-P Sues to Stop Ex-Chief's Job " »

Landis Said to File Suit Against Cycling Team
By JULIET MACUR
Published: September 3, 2010

Floyd Landis, who was stripped of the 2006 Tour de France title for doping, is claiming that Lance Armstrong’s former team defrauded the government. This article in the New York Times describes the entire scandal and the lawsuit Landis has filed.

The New York Times article states in part:

Landis is claiming that team management was aware of the team’s widespread doping when the contract with the Postal Service clearly stated that any doping would constitute default of their agreement, the people said. They did not want their names published because the suit is still under seal.

Continue reading " New York Times Reports: Landis Files Whistle Blower Suit Against Armstrong " »

Wall Street Banks Benefit From Tougher Suit Standards in U.S.
By Thom Weidlich - Sep 8, 2010

This Bloomberg article should be read in full at the above link. It describes how all knids of lawsuits will be tougher to pursue in federal court with stricter standards for setting forth facts in order to even proceed with a lawsuit. The article states in part:

Two U.S. Supreme Court decisions making it tougher to pursue lawsuits may have begun to bear fruit for corporations fighting investor claims or employee litigation.

Where once it was enough to give a defendant “fair notice” of a claim and the grounds on which it rested, the high court’s 2007 holding in Bell Atlantic Corp. v. Twombly required an antitrust complaint to contain enough facts to show a claim that is “plausible on its face.” Two years later, in Ashcroft v. Iqbal, the court applied Twombly to all federal civil suits.

The Supreme Court rulings mean that someone who wants to sue in federal court “should not subject a defendant to the costs and burdens of litigation when there is no plausible basis for their claims,” Lisa Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform, said in an e-mail.

Continue reading " Bloomberg Reports: Tougher Standards for Filing Lawsuits Makes it Harder to Bring Employee and Investor Lawsuits " »

Our Illinois class action attorneys recently noted a Seventh Circuit decision ending a class-action case in the difficult realm of securities fraud. In Re Guidant Corporation, No. 08-2429 (7th Cir. Oct. 21, 2009), is a securities class action stemming from allegedly misleading statements Guidant Corp. made about its implanted defibrillators. A design flaw with certain lines of defibrillators was discovered in February of 2002, and by April, Guidant had corrected the problem in all of the new devices it made. However, the problem remained in machines already made, and Guidant failed to recall them or warn the public. All in all, Guidant knew in 2002 of at least 25 reports of short-circuiting from the older defibrillators. More reports emerged later.

Two years after this redesign, Guidant entered into merger talks with Johnson & Johnson. As part of these negotiations, it issued a press release expressing confidence about its growth prospects in the implanted defibrillator market. In their claim, plaintiffs said this was false and misleading because Guidant knew it still had liability for the Ventak defibrillators. Subsequent press releases on the merger also omitted this information, as were three merger-related forms Guidant filed with the SEC. However, in March of 2005, a young man died after his Guidant defibrillator short-circuited. Guidant issued several other SEC filings and press releases without disclosing this before it finally sent a letter to doctors in May of 2005 disclosing reported problems, an act prompted by an article about to be published in the New York Times.

The FDA recalled the defibrillators the next month, and Guidant’s stock dropped immediately. It dropped further when Johnson & Johnson announced that it was reconsidering the merger. All in all, the stock fluctuated between $63 a share and $80 a share until Guidant was purchased by Boston Scientific. The instant case is a consolidated class action filed against Guidant and eleven officers and directors as a result of these drops. In addition to alleging that all defendants made false and misleading statements about the company and omitted material information from their statements, it alleged that the individual defendants used insider knowledge and the approval of the Johnson & Johnson merger to sell stock during the period at issue.

Over the course of pre-trial motions, the plaintiffs attempted to amend their complaint at least three times, twice because of new information revealed in related product liability cases. At some point, Guidant moved to dismiss the complaint for failure to state a claim. The claims were brought under the Securities Exchange Act, which requires heightened pleading standards for plaintiffs alleging securities fraud. Specifically, the court found that the plaintiffs’ pleadings were not particular enough and failed to include facts showing that defendants knowingly and with malice misled investors. It dismissed the case with prejudice. It also declined to reconsider based on new evidence from a products liability case, and declined a motion to amend their complaint based on the same evidence. The plaintiffs appealed all three decisions.

In its analysis, the Seventh started by noting that plaintiffs had ample time to make changes to their complaint. In addition to the consolidated complaint from individual claims, it allowed an amendment at the start to change the class period. Plaintiffs notified the court twice of new evidence from other cases, but failed to amend their complaint with that evidence. The Seventh found that this was ample time for plaintiffs to amend their complaint to meet the admittedly strict standards provided for securities cases by the Private Securities Litigation Reform Act.

It then moved to the trial court’s denial of reconsideration of the dismissal. The plaintiffs claimed that it should have been reconsidered because they had new evidence from product liability cases, a standard ground for reconsideration. They acknowledged that those facts were older, but said the trial court stymied them by refusing to lift a stay of discovery. The Seventh found this unpersuasive, saying the trial court could have ruled either way without abusing its discretion. The trial court must have assessed the new evidence, it wrote, and decided that a new amended complaint would still have lacked the necessary specific facts and evidence of scienter. And the plaintiffs could have entered the new evidence into the record earlier. Thus, the district court did not abuse its discretion by denying reconsideration. For the same reasons, it was also not an abuse of discretion to deny the motion to amend, the Seventh said. Thus, all of the district court’s rulings were affirmed.

Continue reading " Investors May Not Go Forward With Flawed Fraud Claim, Seventh Circuit Rules " »

Fortune Reports: How Ronald Perelman Met His Match

Fortune magazine provides an insightful account of billionaire Ronald Perelman's litigation on behalf of his daughter against his ex-wife's family of New Jersey book store and publishing distributor magnates. The New Jersey state court sanctioned Perelman's counsel in excess of a million dollars for allegedly pursuing frivilous litigation. The article states:

When the Revlon chairman sued his ex-father-in-law Robert Cohen and his ex-brother-in-law James Cohen in 2008, hardly anyone batted an eyelash. ...

Even by modern standards of dysfunctional-family estate battles -- think of the Astor clan -- this one was a lulu. ... But Perelman, it turned out, tangled with the wrong octogenarian. ...

Judge Koblitz's decisions fell like a lash on Perelman's legal team. In June she found Robert Cohen competent, rejecting Perelman's demand that a guardian be appointed to represent him during the litigation. Later in the month she ruled on the central claim in Perelman's case, that Robert Cohen had made a promise to Claudia before Sept. 1, 1978. "It's just not there," the judge said. "You can't make a silk purse out of a sow's ear."

Continue reading " Fortune Reports: "How Ronald Perelman Met His Match" " »

Larger Bounties Spur Surge in Fraud Tips according to a recent Wall Street Journal article. The article can be read in full by clicking on the link to it at the start of this post. It describes that large bounties are now available to whistle blowers who report financial fraud. This should help uncover and stop financial fraud like the Madoff scandal and others that have harmed investors and the financial system. The article states in part:

New awards for informants who help the Securities and Exchange Commission uncover fraud are already prompting a surge in tips, the agency says.

The Dodd-Frank financial law passed in July provides for the larger bounties, with the hope of fingering wrongdoers such as Bernard Madoff before they swindle thousands of people.

People who supply "original information" about large frauds could net as much as 30% of the penalties and recovered funds collected by the SEC, which could add up to a multimillion-dollar payout.

Lawyers who represent whistle-blowers have been spreading the word about the new incentives.

"We've gotten some very high-quality tips," said SEC official Stephen Cohen.

Continue reading " The Wall Street Journal Reports: Larger Bounties Spur Surge in Fraud Tips " »

The Wall Street Journal reports: Restaurateurs Under Siege
Multiple High-Profile Names Being Targeted in Lawsuits Alleging Wage Violations

The article describes the spate of lawsuits filed in New York against high profile restaurants for alleged wage theft for unpaid wages and tips. The increase in lawsuits for unpaid overtime and other wage claims is a trend being seen all around the country. The article which can be read in full by clicking on the link at the start of this post states in part:

Some of the city's hottest chefs and restaurateurs are increasingly being targeted by lawsuits filed by a handful of attorneys on behalf of small numbers of employees.

This week's targets include Michael White and Chris Cannon's restaurant group, which runs three upscale Italian restaurants in Manhattan, and Masaharu Morimoto of "Iron Chef" fame. They come on top of a suit filed in federal court last month against Italian giants Mario Batali and Joe Bastianich that has grown to at least 20 plaintiffs from two.

The suits have similar allegations: that restaurants are depriving low-level employees of due tip wages in violation of state and federal labor laws. Some also allege that restaurants fail to abide by a state law requiring that employees receive an extra hour of pay if they work for 10 or more hours in one day. They seek unpaid wages and tips, interest, liquidated damages and attorney's fees, and all seek class-action certification.

Continue reading " The Wall Street Journal Reports: Restaurateurs Under Siege " »

As Illinois closely held business dispute attorneys, we read with interest an appellate decision in a dispute over the extent to which a company officer can act without the board’s approval. In Fritzsche v. LaPlante, No. 2-09-0329 (Ill. 2nd March 2010), the “rogue” officer was M. Christine Rock, the secretary/treasurer for family business Fritzsche Industrial Park, Inc. (FIP), which leases real estate at an industrial park in Lakemoor, Ill. Rock also had power of attorney for her father, Herbert Fritzsche, and those two roles allowed her to lease property to Gregory LaPlante, her longtime live-in boyfriend. Separately, Rock also signed a promissory note to Gerald Shaver as payment for work he had done for FIP. This led to a lawsuit by other family members and corporate members, who alleged that she acted without authorization from the board and that the note and lease were invalid.

FIP was incorporated in 2005, although the family had owned the property for decades before. The other corporate officers were Herbert Fritzsche, president, and Scot Fritzsche, vice president and son of Herbert Fritzsche. Shares of stock were divided among the officers and other sons, daughters and grandchildren, with Herbert Fritzsche getting 68 percent. In July of 2006, Herbert Fritzsche suffered a brain hemorrhage, which affected his health and may have compromised his mental capacity. One result of this was that Rock and LaPlante moved into Herbert Fritzsche’s home after he moved in with another sibling. On the first day of August, Rock signed the lease to LaPlante, which gave him 16 properties at Fritzsche Industrial Park and 10 more owned by Herbert Fritzsche individually. LaPlante was to pay rent in the amount of the property taxes, plus 10 percent of his income, although it was not clear what that income referred to.

A week later, on August 8, Rock signed the promissory note to Shaver in exchange for work done on the property, possibly through his trucking and excavating business. It obligated FIP and Park National Bank, trustee of Herbert Fritzsche’s properties, to pay $450,000 by putting a lien on the properties they owned. Park National Bank did not sign. Three months later, Herbert Fritzsche, FIP, Park National Bank and First Midwest Bank, a trustee for some FIP properties, sued Rock and LaPlante, alleging Rock was not authorized to commit the company’s or her father’s resources. The complaint alleged that Rock was suspected of stealing rents from FIP to pay her personal expenses and refused to provide documentation of rental income, which led to a shareholder decision to remove her as secretary/treasurer in May of that year. After his illness, Herbert also allegedly revoked her power of attorney. Therefore, plaintiffs alleged, Rock had no authority to enter into the lease or the note, and they were invalid. They also claimed the rental agreement was too vague to be enforced.

During the next two years, discovery in the case moved very slowly, possibly because Rock and LaPlante also faced criminal prosecution for theft, conspiracy and financial exploitation of an elderly person. In December of 2008, the plaintiffs moved for summary judgment. They argued that even if Rock was not properly removed as power of attorney and a corporate officer, Illinois law does not allow her to enter into the lease or the note without the board’s approval. They also argued that FIP’s bylaws required approval of the note because it was a form of debt. Defendants responded that the board knew about the lease through e-mails sent among the members, and that no board approval was necessary for the lease and the note because Rock was exercising Herbert’s executive authority through the POA, and because many properties were owned by individual family members rather than the board. After oral arguments, the board granted summary judgment to the plaintiffs, saying Rock did not have the authority to act unilaterally as a matter of law. This appeal followed.

Because it was an appeal of a summary judgment order, the Second noted, it had only to decide whether there were genuine issues of material fact to try. Nonetheless, it found that the defendants failed to meet that standard. Under common law, the court said, the highest officer of a corporation must still get board approval to make contracts, especially ones that are unusual or extraordinary. The lease is such an unusual contract, it wrote, because it involved no trustees for the properties and provided LaPlante with the land for little or nothing. Rock also needed board approval for the lease under the Illinois Business Corporation Act, which requires corporate formalities for transactions involving “substantially all” the corporation’s assets. The lease covered all of the property in the industrial park, the court noted, thus making it impossible for FIP to continue its business.

The court came to similar conclusions about the note. However, in this case, the main support for voiding the note came from FIP’s bylaws. Those bylaws say loans and other forms of indebtedness must be authorized by a board resolution. No such resolution exists, the court said, but the note clearly puts a $450,000 lien on FIP. The appeals court noted that the Business Corporations Act requires board approval for actions outside the ordinary course of business, but believed that the bylaws argument was stronger. Thus, the appeals court upheld the trial court’s grant of summary judgment to the plaintiffs.

Continue reading " Treasurer Cannot Commit Resources of Family Business Without Board Authorization, Court Finds " »