Chicago Business Litigation Lawyer Blog

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A Michigan court recently pumped the breaks on a class action toxic pollution suit against Dow Chemical, finding that while property owners may be able to prove that the chemical giant contaminated local rivers and surrounding property with toxins, the plaintiffs did not meet the standards for bringing the suit as a class action.

The Michigan Messenger’s Eartha Jane Melzer reports that “[o]perations at Dow’s Midland plant have spread dioxin — a highly toxic and cancer-causing byproduct of the chemical manufacturing process — and other chemicals, through the Tittabawassee and Saginaw Rivers and into Lake Huron. Flooding of the rivers downstream from Dow has deposited dioxin-laden sediments on properties in the floodplain.”

Dow Chemcial v. Henry concerns a suit by roughly 150 Tittabawassee property owners filed against Dow on behalf of the more than 2,000 people with property in the floodplain in 2003 and claiming that their property had lost value due to contamination. Two years later, Saginaw County Judge Leopold Borello certified the class of property owners, a ruling that Dow appealed to the Michigan Supreme Court.

In order to be certified as a class, Michigan law requires that a group of plaintiffs meet the following criteria:

(a) the class is so numerous that joinder of all members is impracticable;
(b) there are questions of law or fact common to the members of the class that predominate over questions affecting only
individual members;
(c) the claims or defenses of the representative parties are typical of the claims or defenses of the class;
(d) the representative parties will fairly and adequately assert and protect the interests of the class; and
(e) the maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice.

MCR 3.501(A)(1). On appeal, the state supreme court remanded the case to Judge Borello, requiring that he analyze the action under criteria (c) and (d) above.

Upon further consideration, Borello reversed his earlier approval of class status for the group. In so doing, he relied on the recent U.S. Supreme Court decision in Wal-Mart Stores v. Dukes, a 5-4 ruling in which the court reversed a lower court’s decision to certify a class of women employees alleging bias in pay and promotions, noting that the company’s decentralized structure meant that the case involved millions of employment decisions and that the women failed to show “some glue holding the alleged reasons for all those decisions together.”

Continue reading "Michigan Toxic Pollution Class Action Stalls in Circuit Court - Dow Chemical v. Henry" »

The Chicago Tribune has recently reported on two lawsuits arising out of the bankruptcy of the franchisor for the Giordano's pizza chain.

In one suit the bankruptcy trustee has sued franchisee for failing to use the the required pizza dough thus allegedly harming the quality and uniformity of Giordano's pizzas. This type of lawsuit often arises in the franchise setting the article explains. The article states:

It's common, especially in the restaurant business, for a franchisor to dictate suppliers in their franchise agreements.

"If a customer does not receive essentially the same product, same quality and same experience, the brand image is tarnished and the customer less likely to patronize the franchise in the future," said Christian Burden, a Quarles & Brady LLP partner focusing on disputes involving distributors and franchises. "To use the quintessential example of the Big Mac, from the franchisor's perspective, a Big Mac in Chicago must taste and appear generally the same as a Big Mac in Los Angeles, Toronto, Brazil, and so on."

But it's also not unheard of for franchisees such as those at Giordano's to look for alternative sourcing. ...

You can read the full article by clicking here.

The other Tribune article details a lawsuit filed by the former Giordano's franchisor claiming that the franchisor's lender-banks, former lawyers and other franchisees conspired to rob them of the business. You can view a copy of the complaint in this lawsuit by clicking here. The article describes the lawsuit's claims as follows:

The lawsuit said that the men enlisted Fifth Third Bank, Giordano's chief lender, as well as Chicago lawyer Michael Gesas and several Giordano's franchisees "to participate in the scheme" in which they'd push the Apostolous out and take over the company. Secret meetings were held from September 2010 to February 2011, the lawsuit said. Gesas didn't respond to a request for comment.

First, they intended to weaken the Chicago-based deep dish pizza chain financially, the suit said. Then, the Apostolous "were fraudulently induced" into signing agreements in August 2010 and October 2010 that worsened their lending terms with Fifth Third, which is owed more than $40 million in the bankruptcy.

Fifth Third threatened to "throw the family in the street" if they didn't go along with the new terms, the lawsuit said. Aynessazian, who also owns eight Giordano's franchises, Roche and Gesas made "material omissions" to the Apostolous and failed to represent the interests of the Glenview family, the suit said.

Before the execution of the October 2010 deal with Fifth Third, Apostolou had a heart attack, leaving him even more dependent on his lawyers and Aynessazian. The stress also prompted him to see a psychiatrist, the lawsuit said.

"The final step of the scheme involved seizing control of (Giordano's) by pressuring the Apostolous into filing a Chapter 11 bankruptcy by which the assets and value of (Giordano's) could be usurped for the benefit of Fifth Third, and the Apostolous' ownership interests could be purchased at a materially deflated price for the benefit of the franchisee takeover group," the lawsuit said.

You can read the full article by clicking here.

Continue reading "Chicago Tribune Reports on Litigation Arising Out of Bankruptcy of Giordano's Pizza Franchisor" »

CNN reports that French Shoe Designer Christian Louboutin lost the first round of a trademark lawsuit seeking to protect his iconic red soled high heels. Louboutin's lawyer blasted the Court's decision and vowed he would fight on in an appeal. The story explains that many designers want to use red soled shoes and don't think they should be excluded from doing so with one designer receiving a monopoly on that color. The story states:

"Everyone sees the flash of red and associates the red with Louboutin," attorney Harley Lewin said Thursday about his client. In fact, Louboutin's red soles have graced many a red carpets, adorning the feet of celebrities Oprah Winfrey, Heidi Klum and Sarah Jessica Parker. ... In his decision Wednesday, U.S. District Judge Victor Marrero acknowleded that in choosing a red sole for his shoes, Louboutin had "departed from longstanding conventions and norms of his industry," to create a product, "so eccentric and striking that it is easily perceived and remembered." However, Marrero went on to say that, "Louboutin's claim to the 'the color red' is, without some limitation, overly broad and inconsistent with the scene of trademark registration." "This was a trademark that never should've been issued," David Bernstein, attorney for the defendant, Yves Saint Laurent said. ... Judge Marrero's decision drew parallels between painters and fashion designers, calling them both members of a creative industry where no one should be barred from using color to achieve their aesthetic. Doing so could, "interfere with creativity and stifle competition." Bernstein agrees. "No designer should be able to monopolize a color." ... Lewin says his client "separated his shoes from everyone else's by using a red sole." Lewin said he's never had such an outpouring from his fellow attorneys, law professors and members of the fashion industry, telling him, "This [verdict] is an abomination. Tell your client to appeal."

You can read the full story by clicking here.

Continue reading "CNN reports: Designer Loses First Round of Trademark Lawsuit on Red Soled High Heels -- Lawyer Vows to Continue the Fight on Appeal and Lambasts Judge's Decision" »

The New York Times reports that the SEC has now opened for business its new whistblower office as required by the Dodd-Frank financial reform bill. The office will respond to consumer tips regarding securities fraud. If a consumer tip leads to a successful prosecution and recovery, the consumer and the federal goverment will benefit (and, securities fraud will be deterred). Under the whistle blower program, corporate insider tipsters could receive up to 30 percent of the money the SEC collects from the corporate wrong doer and its officers or directors. To qualify for the fraud tip bounty, an employee needs to provide new information that leads to successful enforcement achieving more than $1,000,000 in fines. The SEC will tap into the $450 million Investor Protection Fund to hand out the rewards. The S.E.C. says the program will help it save money as insider tipsters provide a road map to the financially strapped SEC investigators and attorneys.

Continue reading "SEC Opens New Whistle Blower Office" »

This American Life reports in an excellent piece on how a billioinaire inventor who founded a company to aggregate patents and to sue for infringement. This practice may in fact be hindering innovation and the economy the story reports:

Nathan Myhrvold is a genius and a polymath. He made hundreds of millions of dollars as Microsoft's chief technology officer, he's discovered dinosaur fossils, and he recently co-authored a six-volume cookbook that "reveals science-inspired tech­niques for prepar­ing food."

Myhrvold has more than 100 patents to his name, and he's cast himself as a man determined to give his fellow inventors their due. In 2000, he founded a company called Intellectual Ventures, which he calls "a company that invests in invention."

But Myhrvold's company has a different image among many Silicon Valley insiders.

The influential blog Techdirt regularly refers to Intellectual Ventures as a patent troll. IPWatchdog, an intellectual property site, called IV "patent troll public enemy #1." These blogs write about how Intellectual Ventures has amassed one of the largest patent portfolios in existence and is going around to technology companies demanding money to license these patents.

Patents are a big deal in the software industry right now. Lawsuits are proliferating. Big technology companies are spending billions of dollars to buy up huge patent portfolios in order to defend themselves. Computer programmers say patents are hindering innovation.

But people at companies that have been approached by Intellectual Ventures don't want to talk publicly.

"There is a lot of fear about Intellectual Ventures," says Chris Sacca, a venture capitalist who was an early investor in Twitter, among other companies. "You don't want to make yourself a target."

You can read a print version of the entire story by clicking here or download the audio version at This American Life's website by clicking here.

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Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin's Oak Brook and Chicago business trial lawyers have over a quarter of century of experience in litigating complex class action, consumer rights and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination 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.

Vincent L. DiTommaso

online at

visit superlawyers.com

Peter S. Lubin

online at

visit superlawyers.com

DiTommaso-Lubin's Wheaton, Naperville, and Hinsdale litigation 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 Aurora and Elgin, 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 class action attorneys and Chicago business trial lawyers, please call us toll-free at 1-877-990-4990 or contact us through the Internet.

Consumer Law and Policy Blog Reports:

In a case now before the 4th Circuit Court of Appeals, Chase Bank asserts that it may repossess an auto loan borrower’s car without complying with consumer protections in state commercial law. The Maryland District Court found for Chase Bank, concluding that 1) the National Bank Act preempts state repossession notice law and 2) Chase was not bound by the mandatory loan contract term specifically incorporating Maryland repossession law, because as an assignee of the contract, Chase had not voluntarily agreed (!) to the choice of law provision.

The opening brief of the appellants is here and the lower court opinion is here. The logic of the lower court opinion is remarkable. It seems to suggest that even the repossession rules of Article 9 of the Uniform Commercial Code could be preempted by the National Bank Act and OCC regulations. What is truly extraordinary, however, is the idea that a national bank could on the one hand invoke the privilege, created by the UCC and other state law, to repossess collateral without judicial process, while on the other hand disregarding the restrictions and consumer protections that accompany that privilege. If the entirety of state commercial and debt collection law conflicts with the National Bank Act, then there was no state law basis for Chase to seize Ms. Epps' car, and the purported repossession was nothing more than grand theft.

Continue reading "Consumer Law and Policy Blog Reports: "Grand Theft Auto, or Preemption Run Amok"" »

Continue reading "Video -- The Federal Goverment Loses Hundreds of Billions of Dollars Each Year to Fraud -- Our Chicago Business Trial and Fraud Lawyers Bring Qui Tam and Whistle Blower Claims to Assist in Recovering Some of Those Monies" »

Barry Minkow, who, while still in high school, founded ZZZZ Best, a carpet cleaning and restoration company that turned out to be a massive Ponzi scheme, talks about one of the many ways he manipulated auditors.

Continue reading "Video -- Fraudster Barry Minkow Describes How He Conceals Fraud From Auditors -- Our Chicago Litigation Attorneys Combat Business Fraud and Breaches of Fiduciary Duty" »

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Many real-estate loans for large transactions include a so called "bad boy" clause which penalizes borrowers for declaring bankruptcy. Many borrowers didn't take these clauses seriously in the past believing that they could declare bankruptcy and argue that the clauses were uneforcable as violating public policy encourcaging business business reorganizations as permitted by federal bankruptcy laws.

The Wall Street Journal however reports that a federal court following a trial has enforced a "bad boy" clause and penalized Lightstone Holdings LLC $100 million for putting the Extended Stay LLC hotel chain into bankrupcy. The article states:

A New York state judge has ruled that investor David Lichtenstein's Lightstone Holdings LLC owes lenders $100 million because he violated a clause in his loan documents prohibiting him from seeking bankruptcy protection for the Extended Stay Inc. hotel chain.

The ruling Thursday by New York Supreme Court Judge Melvin L. Schweitzer stands to focus more attention on so-called bad-boy clauses in real-estate loans. Those clauses require the borrower to pay lenders a set penalty for putting the property pledged as collateral on a loan into bankruptcy or otherwise wasting its value. ...

The ruling marks a victory for lenders, including Bank of America Corp., Wells Fargo & Co.'s Wachovia Corp. and the Federal Reserve's Maiden Lane fund as successor to Bear, Stearns & Co. Those lenders collectively provided Lightstone roughly $2 billion of mezzanine loans, but their claims were wiped out after Extended Stay filed for bankruptcy protection in 2009. ...

Mr. Lichtenstein had agreed to the "bad boy" clause while arranging for nearly $8 billion of financing for his 2007 purchase of the 660-hotel chain from Blackstone Group LP. The deal was one of the last big, debt-financed real-estate buyouts before the lending markets, and subsequently the global economy, went into one of its worst downturns ...

Throughout the bankruptcy, Lightstone's attorneys argued that the bad-boy clause wasn't enforceable.

The full article provides additional insights. You can read the full article by clicking here.

Continue reading "Wall Street Journal Reports: "Judge Rules Against Lightstone And Enforces Bad Boy Clause in Real-Estate Loan Penalizing Borrower For Declaring Bankruptcy"" »

Every day there are hard working people who are denied the overtime wages that they have rightfully earned. At DiTommaso-Lubin, we have much experience representing those with unpaid overtime claims in class-action litigation. As such, we track the changes in the wage laws and are always looking out for new court decisions in the field.

Alvarez v. City of Chicago is a recent class-action case brought by paramedics in the city of Chicago for the systematic miscalculation of their overtime wages. In so doing, Plaintiffs alleged that Defendant willfully violated the Fair Labor Standards Act (FLSA) when it failed to properly compensate the Plaintiffs. The parties each filed motions for summary judgment, and the trial court ruled in favor of Defendant. In making the ruling, the trial court found that the Plaintiffs were not similarly situated and they could not be “readily divided into homogenous subgroups.” The lower court then dismissed the claims and directed the parties to arbitrate the dispute.

On appeal, the Appellate Court disagreed with the trial court's decision, and held that the case could proceed by using sub-claims if the Plaintiffs were similarly situated and common questions predominated. The Court also held that the case should not have been dismissed; instead the Plaintiffs should be allowed to proceed individually if class certification is inappropriate. The Court then remanded the case with instructions for the district court to consider which form of judicial resolution would be most efficient.

Continue reading "Appellate Court Overturns Dismissal of Chicago Paramedics Unpaid Overtime Class-Action" »

When starting a new business venture, choosing the right partners is one of the most important decisions any company owner will make. Unfortunately, not all partnerships work out, and in some instances that is due to the dishonest machinations of fellow owners. Our Elgin business attorneys recently discovered one such case where one business partner was allegedly defrauded by two other owners in a transaction to jointly purchase and operate a gas station in Tinley Park.

Hassan v. Yusuf pits Plaintiff, a man who thought he was investing in the purchase of a gas station, against his two business partners who were also involved in the deal. Defendants solicited an investment of $120,000 from Plaintiff, equal to their own contributions, to purchase the gas station in question, but allegedly failed to inform Plaintiff that he was only purchasing one-third of the business, and had no claim to the real-estate upon which the station was built. After Plaintiff entered into an oral agreement to purchase the station with Defendants and run the day-to-day operations of the business, Defendants acquired title to the property and conveyed that title to a corporation solely owned by Defendants. The business was profitable at first, but eventually began operating at a loss. Defendants then demanded Plaintiff invest more money in the venture to cover these losses, but Plaintiff had no additional funds to invest, and requested an accounting of the business's financial records and documentation showing his ownership and portion of the losses. Defendants failed to provide said documentation, and Plaintiff ceased working at the station and eventually filed suit.

The Circuit Court of Cook County found that Defendants had defrauded Plaintiff through their misrepresentations regarding the purchase of the business and accompanying real estate. In its judgment, the trial court granted Plaintiff rescission of the contract and damages for the total amount of money he invested in the business. After the trial verdict, Defendants appealed the finding of fraud on the basis that there was not clear and convincing evidence of a misrepresentation that Plaintiff would be an owner of the real estate under their agreement.

The Appellate Court upheld the Circuit Court's decision, finding the record sufficient to support a finding that Defendants misrepresented to the Plaintiff that he was purchasing a one-third interest in the station and accompanying real estate, even though they had no intention of actually doing so. Furthermore, there was clear evidence of a fiduciary relationship between the parties, which gave rise to a claim for fraud by omission when Defendants failed to make explicit to Plaintiff that he was not acquiring an interest in the land. The Court went on to state Plaintiff's reliance upon Defendants' misrepresentations were justifiable, and upheld the trial court's decision to rescind the contract, but reduced the damages award in an amount equal to Plaintiff's share of the profits from the station. The Court did so because giving Plaintiff his share of the profits would be inconsistent with the remedy of rescission, which is supposed to place a party in the same position they would be in had the contract never occurred.

Continue reading "Appellate Court of Illinois Upholds Circuit Court's Rescission of Oral Agreement to Jointly Purchase a Gas Station due to Fraudulent Misrepresentation" »

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CNN reports that a federal court has allowed a law suit to proceed against Chiquita for allegedly contributing to human rights abuses in Colombia by paying bribes to the right wing paramilitary groups that actually committed the atrocities. Chiquita which once operated 200 banana plantations in Columbia claimed that it was a victim of extortion and was forced to pay the bribes which it also paid to left wing rebels. Chiquita already plead guilty to federal criminal charges involving the same bribes and paid a $25 million fine.

The article states:

A federal judge in Florida said Friday that lawsuits against Chiquita Brands International, filed by family members of thousands of Colombians who were tortured or killed by paramilitaries, will be allowed to go forward.

Chiquita, which has admitted to making payments to paramilitaries, had asked for the suits to be dismissed, arguing it was a victim of extortion and has no responsibility for any crimes armed groups committed.

But U.S. District Judge Kenneth A. Marra denied the company's request, allowing plaintiffs to move forward with claims for damages against the company for torture, war crimes and crimes against humanity. He granted Chiquita's motion to dismiss claims for damages related to terrorism.

"While the court allowed some claims to move forward, it is important to understand that at this stage of the proceedings, the court is required by law to treat plaintiffs' outrageous and false allegations as if they were true. Plaintiffs now have the burden of proving these allegations," Chiquita spokesman Ed Loyd said in a statement.

You can read the full article by clicking here.

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