1985 Bears Sue of "Super Bowl" Shuffle

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Any time a professional athlete's name or likeness is used, there is usually money to be made. This is particularly true when a group of athletes have succeeded in making something very specific famous. The problem with using the athlete's name or likeness in order to make money is the fact that the athlete is the sole owner. Therefore, any time that the likeness or name are used, the athlete must be informed and given a share of the profits.

Even those of us who are not football fans have probably at least heard of the "Super Bowl Shuffle". It was a music video created by the six members of the 1985 Chicago Bears, also known as the "Shufflin' Crew". Now those members have filed a lawsuit claiming that the music video, which they say was intended to help families in need, has been used for non-charitable purposes without their permission.

The lawsuit alleges that the Super Bowl Shuffle rights owner, Julia Meyer, and Renaissance Marketing Corp., Meyer's agent," have marketed, distributed and sold licenses relating to the Super Bowl Shuffle Crew members' identities, images, names, photographs, likenesses, voices and performances in the Super Bowl Shuffle without the Shufflin' Crew's permission." The lawsuit further alleges that, since Red Label Records assigned its interest in the shuffle to Meyer's husband in 1986, the defendants have benefited financially from the Super Bowl Shuffle without the consent of the plaintiffs.

The lawsuit was filed in Chicago on behalf of the six members of the "Shufflin' Crew", Richard Dent, Steve Fuller, Willie Gault, Jim McMahon, Mike Richardson, and Otis Wilson. However, Gault was the one who discovered that the music video was allegedly being misused and alerted the other members of the "Shufflin' Crew" and now it looks like he might be the main plaintiff in the case. "I certainly put my name into [the lawsuit] because they made a whole lot of money off of us," Wilson said in a statement. "Now that things are coming to light, I left it up to Willie to handle it. So I am 100 percent behind him. For my opinion, they used us and they made a lot of money and now is the time to pay up."

Walid Tamari, a Chicago-based attorney who is representing the athletes in the current lawsuit, said that "The lawsuit provides that an important, and stated, objective of the Super Bowl Shuffle when it was produced in 1985, was to give back to Chicago's neediest families".

According to the lawsuit, the defendants allegedly either failed or refused to inform the members of the "Shufflin' Crew" of the revenue that they had been receiving from manufacturing, advertising, sales, licensing and merchandising of the Super Bowl Shuffle. The lawsuit also alleges that the former football stars were also not made aware of the financial benefits received from the use of their likenesses, names, voices and performances, both in and out of the shuffle.
In order to ensure that something like this does not happen again, the lawsuit is seeking, among other things, the establishment of a constructive trust for charitable purposes that they select in order to continue the Super Bowl Shuffle's charitable objective.

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Federal Court Dismisses Certain State Law Claims in Multidistrict Litigation Case Alleging ATM Overdraft Fee Fraud

file4651278643375.jpgA federal judge denied most of a motion to dismiss brought by multiple banks in a consolidated case alleging overdraft fee fraud. In re Checking Account Overdraft Litigation, 694 F.Supp.2d 1302 (S.D. Fla. 2010). The Judicial Panel on Multidistrict Litigation (JPML) consolidated multiple claims into a single matter in the Southern District of Florida in order to deal efficiently with common pretrial matters. The plaintiffs asserted causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing (“GFFD covenant”), and many individual causes asserted common law breach of contract claims and state law consumer protection claims. The defendants filed an omnibus motion to dismiss, which the trial court granted in part and denied in larger part. The court dismissed claims under certain state consumer statutes, as well as claims based on the laws of states in which no plaintiffs lived.

The central issue of the litigation was the ordering of ATM transactions from highest to lowest, regardless of the order in which the account holder performed the transaction. This allegedly reduced the account holder’s total account balance more quickly, garnering more overdraft fees for the defendants. At the time the court rendered its order on the omnibus motion to dismiss, the litigation consisted of fifteen separate complaints, each brought against an individual bank. All of the fifteen complaints pending at the time of the court’s order involved breach of GFFD covenant claims. Five complaints were filed in California as putative class actions on behalf of California customers. Eight complaints were filed outside California, putatively on behalf of nationwide classes excluding California. One complaint was filed by a California resident and sought to represent a nationwide class. The final complaint was filed by a Washington resident on behalf of a class of Washington customers. According to the JPML, the consolidated litigation has involved one hundred separate complaints since 2009, with forty-four still involved as of March 5, 2013.

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Rapper Ordered to pay $1 Million Plus Reward Allegedly Tries to Evade Judgment

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While an offer of reward might not be viewed as a contract (much less a reward offered via social media sites such as Twitter and YouTube), such an offer can still be considered binding. That is the claim made by Armin Augstein who found and returned the laptop belonging to the "Diamond Girl" singer, Ryan Leslie.

The laptop went missing in October 2010 from the back of a Mercedes S350 that was briefly left unattended when Leslie was escorted by security into a nightclub in Cologne, Germany. The bag containing the laptop also held $10,000 in cash and Leslie's passport. But it was the computer and the hard drive, which contained the rapper's music, that Leslie was anxious to have returned to him. He initially offered a $20,000 reward for the return of the MacBook. Then he took to Twitter and YouTube to announce that the reward had been increased to $1 million.

52-year-old German Armin Augstein said he found the laptop on a park bench while walking is dog in Stommelerbusch, Germany, about a month after the laptop went missing. The rapper allegedly reneged on his promise of the $1 million reward, claiming he couldn't retrieve his recording sessions from the hard drive. Augstein then sued the Harlem-based musician for backing out of his promise of a reward to whomever should return the laptop. Michael Fischman, Augstein's U.S.-based attorney, was quoted at the time as saying that it was "unfortunate that my client has to go to such lengths to recover the reward." The lawsuit, which was filed in U.S. District Court in Manhattan and sought the $1 million reward, plus interest and listed Ryan Leslie and his company, NextSelection, as defendants.

A New York federal jury ruled in favor of Augstein's claim for the reward in 2012 and ordered Leslie and NextSelection to pay Augstein $1.18 million. Leslie has still refused to pay up though, and Augstein is now accusing the R&B artist of hiding funds in order to avoid paying him the court-ordered reward. Augstein has recently asked state judges to order Leslie to pay the promised reward from funds held by Les is More, the corporation that pays all of Leslie's personal bills. The lawsuit, which was filed in Manhattan Supreme Court, alleges that "Les is More was formed to replace NextSelection and thereby shield (Leslie's) assets."

While many people insist on having certain promises made in writing for fear that, otherwise, there will be no way to make sure the person making the promise comes through on their end of the deal, such lengths are not always necessary. Many courts recognize verbal contracts and, in a scenario such as this one, where there is a digital record of the promise, a case can easily be made that a contract was entered into. Leslie's tweet and YouTube video led Augstein to reasonably believe that he would receive a substantial reward in return for returning the musician's MacBook and hard drive, regardless of whether anything could be retrieved from them.

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Wisconsin Class Action Against Insurance Company Remanded to State Court Because of State Law Claims - LaPlant v. Northwestern Mut. Life Ins. Co.

527px-Northwestern_Life_Insurance.jpgOur Chicago class action attorneys note that a class action claim against an insurance company, which the defendant had removed to federal court, fell within an exception to the federal jurisdiction statute, according to a federal district judge in LaPlant v. The Northwestern Mutual Life Insurance Company, No. 11-CV-00910, slip op. (E.D. Wis., Aug. 20, 2012). The court remanded the case to Wisconsin state court under the corporate governance exception to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d). It held that the plaintiffs’ claims related exclusively to the defendant’s “internal affairs,” based on Wisconsin law. The defendant issued an annuity insurance policy to the lead plaintiff. As a mutual insurance company, the defendant was “owned cooperatively by its policyholders,” LaPlant, slip op. at 1, and paid dividends to policyholders out of its profits. In 1985, it moved policyholders’ money into a separate fund and began paying dividends based on interest generated by the fund. Id. The amount of the payments received by the policyholders allegedly decreased as a result of this change. Wisconsin law gives policyholders the right to participate in annual profit distributions. Wis. Stat. § 632.62(2). The lead plaintiff brought a class action lawsuit for breach of contract and breach of fiduciary duty on behalf of a class of policyholders in Wisconsin. The class prevailed at trial, and the lead plaintiff moved to expand the scope of the class to include policyholders in other states. The defendant removed the case to federal court under CAFA, which confers jurisdiction to federal courts over class actions with more than one hundred class members, more than $5 million in controversy, and diversity of citizenship between the defendant and at least one class member. The plaintiff moved to remand the case to Wisconsin state court based on the “corporate governance exception,” which applies when a class action’s claims solely relate (1) “to the internal affairs or governance of a corporation” (2) based on the laws of the state of incorporation. LaPlant, slip op. at 2, citing 28 U.S.C. §§ 1332(d)(9)(B), 1453(d)(2).

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Court Retains Most of a Deceptive Business Practices Putative Class Action Against a Bank for Overdraft Fees - White v. Wachovia Bank

Overdraft_-_Punch_cartoon_-_Project_Gutenberg_eText_16113.pngA federal court allowed most causes to proceed in a putative class action against a bank for allegedly fraudulent overdraft fees. White, et al v. Wachovia Bank, N.A., No. 1:08-cv-1007, order (N.D. Ga., Jul. 2, 2008). The plaintiffs, who alleged that the bank had recorded transactions out of chronological order to maximize overdraft fee liability, claimed violations of state deceptive trade practice laws and several claims related to breach of contract. The court denied the defendant bank’s motion to dismiss as to all but two of the plaintiffs’ claims.

The two lead plaintiffs opened a joint checking account with Wachovia Bank in 2007. They signed a Deposit Agreement that stated that the bank could pay checks and other items in any order it chose, even if it resulted in an overdraft. It also stated that the bank could impose overdraft charges if payment of any single item exceeded the balance in the account. The plaintiffs alleged in their lawsuit that Wachovia ordered its posting of transactions in a way that would cause their account to incur overdraft fees, even when they had sufficient funds to pay the items. They also alleged that the bank imposed overdraft fees when no overdraft had occurred.

The lawsuit, originally filed in a Georgia state court in February 2008, asserted violations of the Georgia Fair Business Practices Act (FBPA), O.C.G.A. §§ 10-1-390 et seq., and breach of the duty of good faith. The plaintiffs also claimed that the clause of the Agreement related to the ordering of transaction was unconscionable, that the bank had engaged in trover and conversion, and that it had been unjustly enriched. The defendant removed the case to federal court under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), which allows defendants to remove certain class actions to federal court. It then moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which allows a court to dismiss a lawsuit that “fail[s] to state a claim upon which relief can be granted.” To defeat such a motion, a plaintiff must show a plausible factual basis for their claims.

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Court Reverses Class Certification in Case Alleging Wrongful Withholding of Bonus Compensation - InPhyNet Contracting Services v. Soria -- Our Chicago Class Action Attorneys Defend Businesses in Class Cases

file000388465185.jpgA Florida appellate court reversed an order certifying a class of doctors claiming breach of fiduciary duty and other causes of action against their employer. InPhyNet Contracting Services v Soria, 33 So.3d 766 (Fl. Ct. App. 2010). The case began as a suit alleging breach of a covenant not to compete against one physician, leading the physician to counterclaim on behalf of a putative class with regards to a bonus compensation plan. After separating the physician’s individual claims from the class claims, the trial court certified a class. The appellate court reversed, finding that the class claims did not meet the requirements of commonality or predominance over class members’ individual claims.

InPhyNet Contracting Services (ICS) places physicians in hospitals around the state of Florida on a contractual basis. It offers incentives to physicians to work in hospital emergency rooms through a Physician Incentive Plan (PIP), which pays doctors out of a “bonus pool” associated with a hospital based on performance and similar factors. Id. at 768. ICS placed Dr. David Soria in the emergency room of Wellington Regional Medical Center, where he worked as Medical Director. The dispute between Soria and ICS began when Wellington terminated its contract with ICS and contracted with a competitor, and Soria began working for the competitor.

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Breach of Contract Claims May Proceed in Putative Class Action Against Health Spa Chain, According to Illinois Federal Court - Grabianski v. Bally Total Fitness -- Our Chicago Class Action Lawyers Pursue Consumer Rights Class Actions

file0001915885273.jpgOur Chicago class action lawyers have noted a recent decision where an Illinois federal court dismissed several claims in a putative class action lawsuit against a nationwide chain of health spas, but allowed two causes of action for breach of contract to proceed. Grabianski, et al v. Bally Total Fitness Holding Corp., et al, No. 12 C 284, memorandum opinion and order (N.D. Ill., Feb. 21, 2013) (the “2013 Order”). The dismissed claims alleged additional breaches of contract and violations of state consumer protection statutes. The court had dismissed the plaintiffs’ original complaint in the same cause, granting them leave to amend, in an order dated September 11, 2012 (the “2012 Order”).

The plaintiffs purchased memberships at Bally Total Fitness (“Bally”), a nationwide chain of gyms, during a period from 1986 until 2002. They all purchased “Premier” or “Premier Plus” memberships, which gave them the right to use any Bally location in the country. Bally allowed transfer of these membership plans, so while some of the plaintiffs purchased their plans directly from Bally, others obtained them in a secondary market. After declaring bankruptcy, Bally sold 171 of its clubs, more than half of its total, to LA Fitness, subject to an Asset Purchase Agreement (“APA”) dated November 30, 2011. According to the plaintiffs’ amended complaint, LA Fitness assumed their membership agreements as part of the sale.

Plaintiffs allege that after the sale was completed, they were denied access to Bally clubs now owned by LA Fitness. They claim that LA Fitness denied them access because their “home clubs,” where their memberships originated, were not part of the APA. In the cases of plaintiffs who acquired their memberships via a secondary market, the “home club” might be in a different state. While the plaintiffs could still access clubs that Bally owned, they did not live near any of those clubs.

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Sale of Domain Names Used for Online Health Food Retail Leads to Lawsuit for Fraud, Breach of Contract - Inventory Recovery Corp. v. Gabriel

640px-Broccoli_in_a_dish_2.jpgA business sued two individuals in a New Jersey federal district court in Inventory Recovery Corp. v. Gabriel, alleging that the defendants materially misrepresented the details of a sale of several hundred internet domain names. The plaintiff asserted multiple causes of action, including fraud, breach of fiduciary duty, and breach of contract. The court dismissed all but two of the causes of action on the defendants’ motion.

The plaintiff, Illinois-based Inventory Recovery Corporation (IRC), sought to purchase 324 internet domain names from the defendants, Richard Gabriel and Ashley Gabriel. The defendants used the domain names in the business of selling nutraceutical food, which the court describes as food with health benefits. IRC’s president met with the defendants in January 2010 to discuss the purchase of the domain names and the associated business, and negotiations continued into February. Richard Gabriel provided IRC with financial documents related to business income and expenses. This included expenses for Google advertising, the business’ main marketing activity. He allegedly described robust sales and a positive relationships with the merchant banks that serviced customer payments for the business.

The parties entered into a series of contracts on February 26, 2010 for the sale of the domain names. They closed the same day, and the plaintiff paid the $5.6 million purchase price with a real estate parcel in the Bahamas, an airplane, and a sum of cash. According to testimony presented in the case, the plaintiff allegedly later discovered that the business did not have good relationships with its merchant banks, its Google advertising account was suspended, and the defendants had allegedly artificially inflated the business’ revenues.

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Emails Becoming Smoking Gun Evidence in J.C Penney

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The age of emails has made it more difficult to get away with certain things. One might find it more difficult for example, to insist on one belief or attitude if he has been found to have said the opposite in an email. Such is the case for Ron Johnson, the former head of retail at Apple and now the chief executive of J.C. Penney. He has said that, because he believes in "perfect integrity" he would never ask a person to breach a contract.

However, he engaged in discussion with Martha Stewart to sell some of her items in J.C. Penny stores, despite Ms. Stewart having an exclusive contract with Macy's. Mr. Johnson has reportedly tried to get around the contract by claiming that there would be independent Martha Stewart stores within J.C. Penney stores.

While independent stores are allowed under the Macy's contract, J.C. Penney has not moved to lease space to Martha Stewart Living Omnimedia (MSLO). Instead, Mr. Johnson testified in court that J.C. Penney, and not MSLO, would set prices for the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop, J.C. Penney nonetheless insists that any space displaying the Martha Stewart mark and containing Martha Stewart merchandise qualifies as an MSLO store.

Despite his insistence that he is not inducing Ms. Stewart to breach her contract with Macy's, Mr. Johnson admitted in an email to Ms. Stewart that her contract with Macy's was "a major impediment" to their deal to sell her goods in J.C. Penney stores. In another email, he said, in reference to Ms. Stewart, "the ball is in her court now to talk to Macy's about a break in a tight, exclusive agreement they have with her." He also reportedly said that the "Macy's deal is key. We need to find a way to break the renewal right in spring 2013."

One person was apparently key to bringing about the J.C. Penny deal. That person was William Ackman, the activist investor whose hedge fund is J.C. Penney's largest shareholder. After the deal was announced, Mr. Johnson wrote to Mr. Ackman, "We put Terry in a corner. Normally when that happens and you get someone on the defensive, they make bad decisions. This is good."

The emails emerged in a New York courtroom where Macy's has accused J.C. Penney of inducing Martha Stewart to breach her contract with Macy's. Macy's is also attempting to block its competitor from opening Martha Stewart stores in J.C. Penney locations.
Legal experts have been surprised that this case has made it to trial at all, since the contract itself seems fairly straightforward. Martha Stewart herself told the judge, Justice Jeffrey K. Oing of New York State Supreme Court, "I keep looking at this entire episode of this lawsuit wondering why it isn't - it's a contract dispute. an understanding of what is written on the page, and it just boggles my mind that we're sitting in front of you."

The judge agreed and ordered the parties to pursue mediation to resolve the matter.
Macy's continues to promote Martha Stewart products with the tag line "Only at Macy's."

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Court Grants Preliminary Injunction in Non-Compete Case, Grants equitable Extension of Non-Compete Covenant's Duration - Travelhost v. Modglin

1397460_83945743.jpgA Texas federal court, after initially dismissing a motion for preliminary injunction as moot, granted the plaintiff’s motion for reconsideration in Travelhost, Inc. v. Modglin. The court ruled that, although the two-year time period of the non-compete agreement had already expired, the plaintiff was entitled to a preliminary injunction and an equitable extension of the non-compete agreement for an additional two years. The court based its reversal of its prior ruling on evidence subsequently obtained from the defendant through discovery, which suggested that the defendant had engaged in an ongoing pattern of behavior in violation of the non-compete agreement.

The plaintiff, Travelhost, publishes print and online materials related to travel. It entered into a contract with the defendants, The Real Chicago Publishing LLC (RCP) and Trent Modglin, in 2007, in which RCP would distribute Travelhost’s Chicago magazine and sell advertising in the downtown Chicago area. The contract included a two-year covenant not to compete with Travelhost within the Chicago area. Modglin is RCP’s sole member, and he reportedly agreed to be individually bound by the non-compete agreement.

RCP distributed eight issues of the magazine between 2007 and late 2009. According to Travelhost, RCP began distributing and selling advertising for a competing magazine, “The REAL Chicago,” sometime after November 2009. Travelhost sued RCP and Modglin in March 2011, requesting preliminary and permanent injunctions. RCP never filed an answer to the suit, so the court entered a default preliminary injunction and default judgment against it. The suit proceeded against Modglin alone.

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Court Rules that Parent Company, After Acquiring a Subsidiary, May Not Sue to Enforce the Subsidiary's Employment Agreement - CDW, LLC, et al v. NETech Corporation

1387985_58109282.jpgAn Indiana federal district court ruled, in CDW, LLC, et al v. NETech Corporation, that neither a parent company nor one of its subsidiaries may sue to enforce the employment contracts of another of its subsidiaries, when one subsidiary is clearly the party to the agreement. The dispute involved covenants of noncompetition in a company’s employment contract and a claim for tortious interference with a business contract.

Berbee Information Networks Corporation employed several individuals as sales executives. These three individuals signed employment contracts that included a paragraph stating that they agreed, upon termination of their employment with Berbee, not to accept employment in direct competition with Berbee for up to twelve months. “Competition” included solicitation of Berbee employees or clients and use of Berbee’s proprietary business information. In September 2006, Berbee became a subsidiary of CDW, LLC when CDW purchased it and merged it with another subsidiary. Berbee, all parties to the eventual lawsuit agreed, was the surviving corporation of the merger.

CDW operated several subsidiaries that, like Berbee, engaged in the business of technology sales. Each subsidiary served a different market, such as commercial businesses, nonprofits, or government agencies. CDW transferred the three Berbee employees at the center of the dispute to another subsidiary, CDW Direct, between 2008 and 2009. These employees all left CDW Direct at different times to work for NETech Corporation. They each received letters after commencing work at NETech from an attorney for CDW alleging that they were in violation of their noncompetition agreement, demanding that they cease work for NETech and return all confidential materials obtained from Berbee or CDW.

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California Federal Court Dismisses Class Action Lawsuit Claiming Unpaid Commissions - Park v. Morgan Stanley & Co., Inc.

323px-Morgan_Stanley_on_Times_Square.JPGThe United States District Court for the Central District of California dismissed a class action claim brought by a financial advisor employed by a major financial services company. In Park v. Morgan Stanley & Co., Inc., the plaintiff claimed breach of contract and violation of California’s Unfair Competition Law (UCL), based on allegations that the defendant failed to pay commissions owed to plaintiff and other employees. The court ruled that the plaintiff failed to plead sufficient facts to support his claim for breach of contract, and that the UCL claim lacked support as a result.

The plaintiff was employed by the defendant as a financial advisor by Morgan Stanley & Co., Inc. Part of his job involved the sale of financial products to investors. He received commission payments from the defendant as compensation for sales, in amounts based on an “applicable commission grid.” This grid was allegedly contained in a “written agreement” between the plaintiff and the defendant that the court described in its order as “unspecified.” According to the plaintiff, the defendant said that it would base commissions on the full amount of revenue received for the financial products sold. The plaintiff alleged that the defendant took a portion of the revenue received before applying the commission grid, thus reducing the total amount of the commissions paid to the plaintiff and other employees.

The plaintiff filed a federal class action lawsuit on November 15, 2011, claiming breach of contract and violations of the UCL. The lawsuit alleged that the defendant’s policies knowingly denied earned compensation to certain employees, resulting in breach of contract and unjust enrichment to the defendant. The defendant filed a motion to dismiss the claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the plaintiff had not stated a cause of action on which the court could grant relief. The court cited precedents from the U.S. Supreme Court and the Ninth Circuit Court of Appeals to establish that, in order to defeat the defendant’s motion, the plaintiff needed to demonstrate enough allegations of fact to make his claims facially plausible. The court found that the plaintiff did not meet this standard, and it granted the defendant’s motion to dismiss.

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Use of Equity Compensation to Retain High Level Employees

Equity compensation, such as stock options, restricted stock units, and performance shares, are often used to retain high level employees. Equity compensation can be an incredibly useful tool for retaining quality employees, but if the equity compensation is not awarded properly, litigation can result. Employers and boards of directors should be aware of the risks associated with equity compensation in order to avoid litigation and to protect themselves in the event that litigation results.

What is Equity Compensation?

Equity compensation consists of granting certain employees stock options with the right to exercise those rights at a predetermined price. The right to exercise stock options vests over time so the employee gains control over the stock option once he or she has been employed by the company for a specific period of time or has fulfilled a certain performance milestone.

Equity compensation is frequently used by startup companies to attract employees since the business may lack the capital to compensate employees through a traditional salary. But equity compensation is also used to retain high-level employees in established companies.

Common Sources of Business Disputes and Litigation

Business disputes regarding equity compensation often arise following termination of the employee who has received the equity compensation. Some common disputes that result in business litigation include:
Vesting and exercise. Disputes regarding when the stock options vest and when the employee can exercise their rights to the equity compensation units often arise.
Stock plan administration, including control and exercise rights over stock units.
Bankruptcy. Disputes regarding the inclusion of equity compensation in the bankruptcy estate may arise in the event that the company faces financial difficulties prior to the vesting or exercise of the rights.
Allegations of corporate waste. Equity compensation awarded to directors could be viewed as a corporate waste of assets that survives the “business judgment rule” if the directors have a financial interest in the equity compensation awards. For instance, a Delaware Chancery Court recently held that an allegation of corporate waste could survive a motion to dismiss because the directors granted restricted stock units to themselves.
Divorce. Because equity compensation is a common tool for closely-held businesses, including business partnerships, disputes can arise when a partner or equity employee divorces regarding whether the equity compensation is included in the marital estate.

What to Do in the Event of an Equity Compensation Business Dispute

The terms and requirements of equity compensation can be incredibly complex with far-reaching financial and legal implications. If your company is involved a business dispute regarding equity compensation, you may wish to consult with a knowledgeable business litigation lawyer like the Chicago business litigators at DiTommaso-Lubin.

Our Chicago business law attorneys focus on representing clients who are facing complex business disputes, including disputes regarding equity compensation. Our strong knowledge of the law and our vast litigation experience enables our Chicago business litigation attorneys to quickly analyze the strengths and weaknesses of your case. Contact our office at (877) 990-4990 or (630) 333-0000 to learn more about equity compensation business disputes.


Service Agreements Require Timely Payment, Compliance with Contractual Terms to Be Enforceable by Consumers - M&B Graphics v. Toshiba Business Solutions

The_way_a_photocopier_works.pngA company that leased photocopier machines to a printing company prevailed on a motion for summary judgment in a breach of contract claim brought by the business leasing the copy machines. In M&B Graphics, Inc. v. Toshiba Business Solutions (USA), Inc., the U.S. District Court for the Eastern District of Michigan ruled that the defendant was justified in terminating service agreements for its machines due to the plaintiff’s noncompliance with the terms of the agreements.

M&B Graphics (M&B), a Michigan printing company, began leasing three photocopiers from Toshiba Business Solutions on August 10, 2009. The lease had a term of sixty-three months, with monthly payments of $2,520. The parties also executed service agreements for each of the three copiers. Toshiba would perform routine repairs and maintenance on the copiers, and M&B would pay a flat monthly fee and a per-copy fee. Toshiba had the right to terminate the service agreements if M&B failed to make timely payment of the monthly service fees or failed to use the copiers in strict accordance with Toshiba’s specifications. Either party could terminate the agreements by giving written notice thirty (30) days prior to the anniversary date.

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Chicago Class Action Attorneys at DiTommaso-Lubin Obtain Certification of a Class Action Against Abercrombie & Fitch For Refusing to Honor Promotional Cards Which Say on Their Face They Have No Expiration Date

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The law firm of DiTommaso-Lubin on behalf of a class of Abercrombie & Fitch customers recently obtained certification of a class-action against Abercrombie regarding $25 promotional cards with no expiration date on the face of the cards. Abercrombie will not honor the cards any longer. Customers obtained the cards in a promotion which required a $100 purchase to receive the $25 cards. The cards came in a paper sleeve which stated a short use period of just a few months. However, the card itself stated that it had no expiration date.

The Federal District Court for the Northern District of Illinois certified a nationwide breach of contract class action based on the Class's position that the card is a contract. It is the Class's position that contractual term of no expiration date on the card itself trumps the sleeve either because the sleeve is mere advertising or because when two terms in a contract conflict the contract should be construed against the entity that drafted it -- in this case Abercrombie & Fitch. The Court has not yet made a decision on the merits of the case. You can read the Court's decision by clicking here. The 7th Circuit Federal Court of Appeals rejected Abercrombie's request to hear an immediate appeal on the class-certification decision.

DiTommaso-Lubin is also representing a consumer of Abercrombie's sister company Hollister in an identical putative class action lawsuit involving the same promotion. The Court has not yet certified a class in that case.

If you are a member of the class alleged in Hollister case, you can contact DiTommaso-Lubin for additional information about participating as a class representative.

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Non-Competition Agreements -- We represent employees and businesses in the Chicago Area Including in DuPage, Cook and Kane Counties in Non-Compete Agreement Lawsuits

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Illinois Appellate Court Denies Request for a New Trial After $1.2 million Verdict for Fraudulent Misrepresentation in Commercial Property Transaction

Most businesses are of the brick and mortar variety, meaning that they have a physical location where they conduct operations, and as a result these business have to either buy or rent properties to acquire the space they need. At DiTommaso-Lubin, our Elgin business attorneys have handled many commercial and industrial building sale disputes, and are always researching the law in that area to better serve our clients. Napcor Corporation v. JP Morgan Chase Bank, NA is one such case about material misrepresentations made in the sale of a commercial property.

426097_studio_ceiling.jpgIn Napcor Corporation v. JP Morgan Chase Bank, NA, Plaintiff purchased a large commercial building from Defendants. Prior to the sale, the building's roof allegedly began to leak significantly, and the building's broker performed an inspection to determine the extent of the damage. The broker allegedly concluded that the existing roof needed to be removed and replaced to fix the problems. Instead of replacing the damaged roof, Defendant constructed a second roof over the first because it was a cheaper option. This second roof was constructed in spite of the fact that Defendant was allegedly warned that the new roof would be susceptible to being torn off by winds. Additionally, the original leakage problem allegedly remained after the new roof's construction.

The building was then listed for sale, and the pertinent part of the listing stated that the building had a “new roof in 1994 (tear off).” In 1996, Plaintiff purchased the building for $1.309 million through a contract where Plaintiff agreed to accept the building “as is”, and had a 30-day due diligence period. Plaintiff was allegedly not made aware of the leaks, and relied upon Defendant's alleged representation that the old roof had been torn off. Upon moving into the building, Plaintiff allegedly found the leakage problem and over several years three sections of the roof blew off on three different occasions. Plaintiff then filed suit for fraudulent misrepresentation, and was awarded a $1.2 million judgment after a trial by jury.

Defendant appealed the decision and asked for a judgment notwithstanding the verdict and a new trial based upon faulty jury instructions and the exclusion of evidence that Plaintiff agreed to accept the building in its “as is” condition. Defendant contended that the jury instruction failed to state that Plaintiff had the burden of proof to show all the elements of fraud by clear and convincing evidence. The trial court denied Defendant's motion.

The Appellate Court affirmed the judgment and held that the trial court did not abuse its discretion by denying Defendant's motion for a new trial. The Court made its decision because the 'as is' language in the purchase agreement did not preclude Plaintiff from claiming it relied on the alleged misrepresentations, and the clause also did not serve as a defense to fraud. As such, the Court decided, the verdict was not against the manifest weight of the evidence. Finally, the Court denied the request for a new trial because the lower court used an IPI civil jury instruction that accurately stated the law, and in doing so, the trial court did not abuse its discretion.

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Business Owners Beware, Make Sure Your Employment Agreements are Clearly Written and Reasonable

Every business has employees, and as business litigators, the attorneys at DiTommaso-Lubin pride ourselves on being knowledgeable about all the areas of law that affect our clients, including employment laws. Our Orland Park business attorneys recently discovered a case that has an impact on companies who utilize employment non-competition agreements with their employees.

Reliable Fire Equipment Company v. Arredondo pits an employer against two former employees, Defendants Arredondo and Garcia, who worked as fire alarm system salesmen for Plaintiff. Each Defendant signed an employment agreement where Defendant's would allegedly earn commissions of varying percentages of the gross profits on items or systems sold. After working for Plaintiff for several years, Defendants created Defendant High Rise Security Systems, LLC., which was allegedly a competitor to Plaintiff's business. Plaintiff eventually became aware that Defendants were starting an alleged competitor company, and asked Defendants if in fact they had created a fire alarm business. Defendant Arredondo allegedly denied that he was starting such a business, and resigned shortly afterward, with Defendant Garcia tendering his resignation two weeks after Arredondo.

1221952_to_sign_a_contract_3.jpgPlaintiff then filed suit alleging breach of the duty of fidelity and loyalty, conspiracy to compete against Plaintiff and misappropriation of confidential information, tortious interference of prospective economic advantage, breach of the employment agreements, and unjust enrichment. The trial court held that the employment agreements were unenforceable because of unreasonable geographic and solicitation restrictions and the fact that language of the agreements was unclear. A trial on the issues unrelated to the employment agreement ensued, and Defendants successfully moved for a directed verdict because there was insufficient evidence that Defendants competed with Plaintiffs prior to Arredondo's resignation.

Plaintiff then appealed the trial court's ruling that the employment agreements in question were unenforceable and the directed jury verdict. The Appellate Court affirmed the trial court's directed verdict, stating that the lower court had properly weighed the evidence in finding a total lack of competent evidence. The Court then analyzed the restrictive covenants under the legitimate business interest test and found that the geographic restrictions were not reasonable and therefore the trial court did not err in ruling that the restrictive covenants were unenforceable.

Reliable Fire Equipment Company v. Arredondo illustrates why it is so important for business owners to keep an eye on their employees, and serves as a warning for companies wanting to sue former employees based upon non-competition agreements. Furthermore, the case shows that courts frown upon the use of vague language in such agreements, and it is always in your best interests to keep the terms of employment agreements reasonable.

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Appellate Court Applies 10 Year Statute of Limitations in Construction Indemnity Case

1289288_constructions.jpgDiTommaso-Lubin represents clients all over the Chicago-land area, and because Chicago is a growing metropolis, land comes at a premium. This means that there is constant property development going on all over our fair city, and with that development comes unique legal problems. Water Tower Realty Company v. Fordham is a case that was decided in the Appellate Court of Illinois, First District, Third Division that addresses some of the problems that arise when companies perform construction in close proximity to neighboring businesses.

In Water Tower Realty Company v. Fordham, Defendant Fordham constructed a building on a parcel of land in Chicago, and prior to its construction, Defendant agreed to indemnify Plaintiff Water Tower for losses suffered due to the erection of the edifice. Five years after the building was finished, Plaintiff filed suit alleging that during construction Defendant had “so used its property as to make it impossible to lease” an adjacent property. Plaintiff claimed that it had lost over $75,000 in rental business as a result and that Defendant had refused to indemnify Plaintiff for this loss. Plaintiff filed for a dismissal of the action, and the trial court dismissed the claims because they were barred by the applicable statute of limitations as set forth in 735 ILCS 2-619(a)(5). Defendant then appealed the trial court's dismissal.

The Appellate Court analyzed whether the trial court was correct in applying the four year statutory period or whether a ten year period was appropriate. The Court found that the nature of the injury was determinative in making such a decision, with the four year term applying if the injury was due to a construction-related activity, and the ten year term applying if the harm was caused by a breach of contract. In reversing the lower court's dismissal, the Appellate Court concluded that the appropriate statute of limitations was the ten year term because the Plaintiff's injury was caused by Defendant's failure to honor the indemnity agreement. The Court went on to hold that the agreement's indemnity provisions applied to both first party and third party claims, and that it contained no language that could hold Defendant's agents personally liable for Plaintiff's damages.

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Illinois Appellate Court Dismisses Lawsuit Between Truck Manufacturer and Franchisee

DiTommaso-Lubin represents clients from many industries who operate all kinds of businesses, including both franchisors and franchisees. Our Aurora business attorneys came across an appellate decision from the Fourth District here in Illinois that involves a dispute that arose out of a franchise agreement between a heavy-duty truck manufacturer and a truck dealer.

232054_semi-truck_4.jpg Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp. is a disagreement that came about after the two parties entered into a sales and service agreement where Plaintiff Crossroads had the right to purchase Sterling Trucks and vehicle parts from Defendants and Defendants “reserved the right to discontinue at any time the manufacture or sale” of their parts or change the design or specs of any products without prior notice to Plaintiff. Several years after entering the agreement, Defendants allegedly announced that they were discontinuing the production of Sterling trucks and that Detroit Diesel Corporation (the truck's engine manufacturer) would cease accepting orders as well. Defendant sent written notice of these decisions to Plaintiffs. Defendants decided to discontinue manufacture of the Sterling vehicles allegedly because they were duplicative of other vehicles manufactured by Sterling's parent company.

In response to this notice, Plaintiff filed suit alleging violations of the Motor Vehicle Franchise Act, fraud, and tortious interference with contract. Defendants filed a motion to dismiss on all counts, which was granted in part by the trial court because Defendants' discontinuance and re-branding of the Sterling brand constituted good cause for terminating the contract. Plaintiff then filed an interlocutory appeal for the trial court's partial dismissal.

The Appellate Court affirmed the trial court's dismissal of the violations of sections 4(d)(1) of the Franchise Act because Plaintiffs failed to allege specific facts supporting each element of violation under the Act and instead merely made conclusory allegations for each violation. The Court also found that the allegations under section 9 of the Act were improperly plead, as Plaintiff's allegations contained only conclusions without the specific facts required by the Act. The Court then upheld the lower court's ruling as to the allegations under section 9.5 of the Act because the sales and service agreement remained in effect and had not been terminated. Next the Court found the dismissal of the fraud claims to be proper because Plaintiff failed to allege a misrepresentation of a present fact and dismissed the claims under section 4(b) of the act because Defendant's conduct was neither arbitrary nor in bad faith. Finally, the Court did not address the alleged 4(d)(6) violations due to a lack of subject-matter jurisdiction, as such violations are within the purview of the Review Board under section 12(d) of the Act.

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