Until recently, falsely accusing someone of being gay was considered defamatory per se in New York. Recently however, a New York appellate court broke with decades of precedent in ruling that such a statement no longer constitutes defamation per se. In so ruling the court cited recent transformations in the law and cultural attitudes towards homosexuality as justification for changing the standard as it relates to accusations of being gay.

Defamatory statements fall into one of two distinct categories: defamation per se and defamation per quod. When a statement is considered to be defamatory per se, it is considered so obviously harmful to one’s reputation that proof of harm or actual damages are not required.

The plaintiff in the case was a former elder in a Seventh Day Adventist church in New York. According to the complaint, the plaintiff alleged that he was defamed by the pastor of the defendant church when the pastor told members of the congregation that the plaintiff was a homosexual who viewed gay pornography on the church’s computer. The complaint further alleged that the pastor made the statements to influence the church to vote to relieve the plaintiff of his responsibilities at the church and to terminate his membership. The former elder responded by suing the pastor and the church to recover damages for defamation per se. Continue reading ›

The longstanding one-year statute of limitations for defamation actions in Illinois could be on its way out. The Illinois Supreme Court has agreed to weigh in on the question of whether the deadline for filing libel lawsuits needs to be revisited to account for the explosion of online content in the twenty-first century. Defamation and libel attorneys throughout Illinois will be eagerly following this case as it presents potentially the largest change to defamation law in recent memory.

On January 14, the Illinois Supreme Court heard arguments in a defamation case brought by Paul J. Ciolino, a private investigator at the center of the Alstory Simon story, one of Chicago’s most prominent alleged wrongful murder conviction cases. The case is just the most recent installment of a long-running saga that has gripped the attention of Chicagoans for decades. The First District Court of Appeals described the case as follows in its opinion:

This case stems from one of the most famous murder cases in the recent history of our state. The background of the case is gripping. It is no real surprise then that the events surrounding the case have spurred a movie, a book, and other media attention.

In 1982, Jerry Hillard and Marilyn Green were murdered in Washington Park in Chicago. Anthony Porter was convicted for the murders and sentenced to the death penalty. Members of Northwestern University’s Innocence Project took an interest in the case and began reviewing evidence gathered by Porter’s defense attorney during the case. They determined that another man, Simon, was in the area of the murders close to the time that they were committed. Believing that Simon committed the murders, they started collecting evidence in an attempt to build their case that Simon, not Porter, was the murder. Continue reading ›

There are countless stories of a rock band’s members fighting over music and money, but this time it’s the widow of a band’s recently deceased member who’s fighting with the remaining members of the band over the band’s value.

When the singer Chris Cornell died, his widow, Vicky Cornell, inherited his share of the interest in the band, Soundgarden. The other members have offered to buy Cornell’s share for $278,000, but she alleges that amount represents just a fraction of what her share in the band is worth.

Cornell is suing the remaining members of Soundgarden for allegedly devaluing her share in the band, and has asked a judge to decide on an appropriate buyout price based on the value of Soundgarden’s master recordings. Additionally, Cornell is also asking the court to factor in the potential for future sales, including merchandise, tours, and even new music that could be created with artificial intelligence using extant recordings of Chris Cornell’s vocals.

A representative for Soundgarden said the remaining members of the band have acted in good faith in trying to buy out Cornell’s share of interest in the band. The amount they offered was allegedly based on the value of the band as estimated by Gary Cohen, a valuation expert who they claim is highly regarded and respected in the music industry. In trying to settle their disputes with Cornell, the surviving members of the band have allegedly offered to pay Cohen’s estimated value several times over. They say it’s about their music and their legacy, not about the money. But Cornell tells a different story. Continue reading ›

A company that provided administrative and payroll services was acquired by a bank under a stock purchase agreement. The agreement provided for the escrow of $2 million dollars, that was to be released to the sellers after a period of time had passed after the sale. Several months after the sale, a former employee came forward to reveal potentially fraudulent practices on the part of the administrative company. After an investigation by an outside law firm, the bank demanded indemnification from the sellers, but the sellers refused. The bank then sued in an attempt to recover money it had paid out to settle claims with the company’s clients. The district court determined that the indemnification claim was made too long after the bank first learned about the potential issues, but the appellate court found that undisputed facts did not show this to be the case and determined that the district court erred in granting summary judgment.

The Damian Services Corporation provides various administrative and payroll services to independent temporary staffing companies. The baseline level of service that Damian provides is short-term payroll funding to pay the temp agencies’ employees. Damian also offers other services to clients who pay more. Although Damian contracted with its temp agency clients, it invoiced the end-user companies that hired the temporary workers. The end-user employers would then pay Damian, which would, in turn, send the payments to the temp agencies after taking its cut as a fee for its services.

Damian encouraged its client staffing agencies to obtain prompt payment by providing discounts or levying fees depending on how long it took for the end-user employers to pay. These discounts and fees were negotiated independently with each staffing firm. In 2009, Damian changed its invoicing practices in such a way that made it much more difficult for staffing firms to receive discounts for prompt payment and more likely to be levied with fines. Continue reading ›

For producers and manufacturers, alike supply contracts have many advantages. For manufacturers, it ensures a steady supply of raw goods for manufacturing, and for producers, it secures a steady stream of revenue. All contracts though come with the risk that one of the parties will breach them. In a recent decision, the Seventh Circuit provided guidance for interpreting the “adequate assurances” provision of Section 2-609 of the Uniform Commercial Code.

The dispute at issue is nearly a decade old. In 2009, BRC Rubber & Plastics Inc., a designer, and manufacturer of rubber and plastic products primarily for the automotive industry entered into a five-year supply contract with Continental Carbon Company for the supply of carbon black, an ingredient often used in the manufacture of rubber products. The agreement included baseline prices for three types of carbon black and provided that the prices were “to remain firm throughout the term of this agreement.”

In 2011, the supply of carbon black became generally tight and shortages were commonplace. In response, Continental sought to unilaterally increase the prices it charged BRC. BRC responded to the news of the price increase by objecting that the increases breached the contract. Continental refused to rescind the increase and its vice president of marketing and development instructed the sales representative in charge of the BRC account to withhold shipments to BRC unless it agreed to the increase.

Even after being informed of the anticipated increase price, BRC continued placing new orders at the contact prices. Continental did not respond to BRC’s objections to the increase but did continue to fulfill the orders until May of 2011. After Continental missed a shipment, BRC contacted Continental but Continental’s representative would not guarantee to supply product under existing purchase orders and claimed that it was “out of his control.” Without a confirmation that Continental would perform in conformity with the contract, BRC scrambled to find alternate suppliers and eventually received a shipment from another provider at spot rates higher than the contract rate. Continue reading ›

Two inventors who were entitled to royalties on the sales of products sued the purchaser of their former company over their royalty rights. The litigation and arbitration took years, and after the third round of arbitration, the arbitrator determined that the inventors were not entitled to compensation from the company they sued. Despite this finding, the two continued to engage in litigation against the firm. After their final suit was dismissed in the district court, the company sought sanctions for bringing a groundless lawsuit. The district court granted the motion, finding that the suit had been barred by the doctrine of res judicata and the plain language of the governing agreements. The appellate panel agreed, determining that the results of the third and fourth rounds of arbitration made the suit frivolous and it affirmed the imposition of sanctions.

In 1997, Tai Matlin and James Waring co-founded Gray Matter Holdings, LLC. In 1999, they entered into a Withdrawal Agreement with Gray Matter. The agreement entitled Matlin and Waring to royalties on the sales of certain key products. In 2003, Gray Matter sold some of its assets to Swimways Corp.

Since that sale, Matlin and Waring have been engaged with Gray Matter in protracted litigation and arbitration over their royalty rights. During the third arbitration, the arbitrator determined that Gray Matter had not transferred its royalty obligations to Swimways in 2003, and therefore remained solely responsible for any royalty compensation owed to Matlin and Waring under the Withdrawal Agreement. Continue reading ›

Statutory fee-shifting is usually meant to incentivize plaintiffs to bring claims involving important rights but relatively low monetary damages. Some statutes provide for fee-shifting not only to successful plaintiffs but also to successful defendants. As the recent decision in the case of Multimedia Sales & Marketing, Inc. v. Marzullo illustrates, plaintiffs considering bringing trade secret misappropriation claims in Illinois courts would be wise to review their claims before filing so to ensure that their claims are not meritless.

The plaintiff in the lawsuit, Multimedia Sales & Marketing, Inc., is a radio advertiser who sued a competitor, Radio Advertising, Inc., along with three former employees who left Multimedia to work for Radio Advertising. Multimedia alleged that the former employees misappropriated Multimedia’s potential customer lead lists or renewal lead lists, which these individuals allegedly used to attempt to woo away Multimedia’s existing and potential customers. Multimedia claimed the lists were protectable trade secrets under the Illinois Trade Secrets Act (ITSA), 765 ILCS 1065/1 et seq.

The trial court disagreed and granted the defendants summary judgment finding that the lists (1) did not qualify as a trade secret under ITSA, and (2) were not “secret” because Multimedia widely shared them with numerous parties including radio stations. Following the grant of summary judgment, the defendants filed a motion for attorney’s fees as permitted by Section 5 of the ITSA. The trial court granted the defendants’ motion and awarded them $71,688 in attorney’s fees. Multimedia then appealed the ruling that the lists did not qualify as trade secrets as well as the award of attorney’s fees. Continue reading ›

A disgruntled investor sued the organization that regulates registrations for certain securities brokers after he lost his investment. The investor argued that the securities broker had a history of misconduct dating back more than 30 years and should have had his membership revoked under the organization’s bylaws. The investor claimed that because the organization violated its own bylaws, it was liable for the actions of the securities broker. The district court determined that the organization did not violate the bylaws because the conduct of the broker had not led to the expulsion of an associated organization, only a voluntary withdrawal. The appellate panel agreed and affirmed the decision of the district court.

The Commodities Futures Trading Commission promotes the integrity of the U.S. derivatives markets through regulation via the Commodity Exchange Act. Congress authorized the CFTC to establish futures associations with authority to regulate the practices of its Members. Since 1981, there has been a single CFTC-approved registered futures association under the CEA, the National Futures Association. The NFA is charged with processing registrations for futures commission merchants, swap dealers, commodity pool operators, commodity trading advisors, introducing brokers, retail foreign exchange dealers, and relevant associated persons.

One requirement enforced by the NFA is Bylaw 301(a)(ii)(D), which prohibits a person from becoming or remaining a member if they were, by their conduct while associated with another member, a cause of any suspension, expulsion, or order. Between 1983 and 2015, Thomas Heneghan was an associated person of fourteen different NFA-Member firms. Dennis Troyer, an investor in financial products since the 1990s, invested hundreds of thousands of dollars in financial derivatives through NFA Members and their associates.

Although Troyer chronicled history of misconduct by Heneghan, dating as far back as 1985, the first interaction between Troyer and Heneghan was not until October 2008 when Troyer invested more than $160,000 between October 2008 and March 2011 under Heneghan’s advisement. In 2009, Heneghan came under the scrutiny of the NFA. This scrutiny continued for several years as Heneghan changed affiliation across several NFA member firms. Heneghan was eventually barred from NFA membership, associate membership, and from acting as the principal of an NFA member in 2016. Continue reading ›

Many states have passed laws in the past few years taking aim at automatic renewals in contracts such as subscription-based services. As people have found themselves home more and more during the COVID pandemic, the number of subscription services with automatic renewals have exploded. New York recently passed a law more strictly regulating these automatic subscription renewals. The new law is set to take effect on February 11, 2021.

New York’s new law is meant to replace an existing law concerning automatic renewals which was narrow in scope and applied only to contracts “for service, maintenance, or repair to or for any real or personal property” with a renewal period longer than one month. The scope of the new law is much broader, covering any company offering goods or services to consumers through any kind of subscription plan that automatically renews—which includes free trials, free gifts, and reduced-price trial periods that convert to paid subscriptions automatically charged to consumers’ credit cards. As the press release accompanying the passage of the law explained, the new law is meant to better protect consumers who may not understand how to cancel such subscriptions and to avoid “convoluted renewals [that] have created a public health hazard for New Yorkers during the pandemic, including some who were told they had to visit their gyms in person to cancel memberships.”

New York’s new statute prohibits automatically renewing a contract without a consumer’s “affirmative consent” for the renewal. Absent this affirmative consent, some goods the provider may have sent the consumer can be deemed “unconditional gifts.” Absent from the new law, however, are guidelines for how providers are to obtain this consent.

The new law also requires clear and conspicuous disclosures before enrollment. Specifically, it requires that “automatic renewal terms,” such as the cancellation policy, recurring charges, and length of the renewal term, among other things be presented in a “clear and conspicuous” way and in “visual proximity” to the request for a consumer’s consent. Consumers must also receive an acknowledgment in “a manner that is capable of being retained by the consumer” that includes the automatic renewal terms and information regarding how to cancel the agreement. Providers must also provide a web-based option for cancellation. And if a provider makes any material changes to its renewal terms, those new terms must be provided to consumers in a “clear and conspicuous” notice. Continue reading ›

An AI company harvested publicly available photographs from social media sites across the internet and then used those photographs to derive a biometric facial scan of each individual in the photograph. The company sold this database to law enforcement agencies to use in identifying persons of interest or unknown individuals. A woman sued in a class action, arguing that the harvesting of biometric data violated Illinois’ Biometric Information Privacy Act. The company removed the case to federal court, and the federal court ruled that the plaintiffs’ claims lacked standing under Article III. The appellate court agreed with the district court and affirmed, ordering that the case be remanded to state court.

Clearview AI is in the business of facial recognition tools. Users may download an application that gives them access to Clearview’s database. The database is built from a proprietary algorithm that scrapes pictures from social media sites such as Facebook, Twitter, Instagram, LinkedIn, and Venmo. The materials that it uses are all publicly available. Clearview’s software harvests from each scraped photograph the biometric facial scan and associated metadata, which it stores in its database. The database currently contains billions of entries.

Many of Clearview’s clients are law enforcement agencies. The clients primarily use the database to find out more about a person in a photograph, such as to identify an unknown person or confirm the identity of a person of interest. Users upload photographs to Clearview’s app, and Clearview creates a digital facial scan of the person in the photograph and then compares the new facial scan to those in its database. If the program finds a match, it returns a geotagged photograph to the user and informs the user of the source social-media site for the photograph.

In the wake of a New York Times article profiling Clearview, Melissa Thornley filed suit in Illinois state court under the Illinois Biometric Information Privacy Act (BIPA). BIPA provides robust protections for the biometric information of Illinois residents. Thornley’s complaint, filed on behalf of herself and a class, asserted violations of three subsections of BIPA. Clearview removed the case to federal court. Shortly after removal, Thornley voluntarily dismissed the action. Thornley then returned to the Circuit Court of Cook County in May 2020 with a new, significantly narrowed, action against Clearview. The new action alleged only a single violation of BIPA and defined a more modest class. Continue reading ›

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