Articles Posted in Breach of Fiduciary Duty

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Despite stepping down as CEO of Uber, the ride-sharing start-up he founded, Trevor Kalanick’s troubles are far from over. On top of allegations that the company mistreats its drivers, discriminates against and sexually harasses women at work, and stole trade secrets from another ride-sharing service, Kalanick is now being sued by Benchmark, one of Uber’s investors.

In 2016, Kalanick proposed an amendment to Uber’s charter, giving him the right to nominate three new directors to the start-up’s eight-member board. At the time, Kalanick got Benchmark to approve the amendment, but Benchmark is now saying Kalanick deliberately misrepresented key information regarding the company and the amendment, and is now asking for the amendment to be voided.

Six years ago, Benchmark invested in what was then a tiny ride-sharing start-up, called Uber. It bought a 20% stake in the company, which has since grown to be worth billions of dollars. Kalanick and Gurley (and, by extension, Uber and Benchmark) remained close for years until Kalanick and Uber started getting hit by one scandal after another. At that point, Gurley began to put some distance between himself and Kalanick, finally joining other investors to push Kalanick out as CEO of the company.

Although he was forced to give up his seat on the board when he stepped down as CEO, Kalanick immediately reappointed himself to one of the board seats he controls as a result of the amendment he had added last year, and he still holds a 10% stake in the company. It’s not as much as Benchmark’s 13% stake, but it’s enough to make life at Uber difficult for anyone who opposes Kalanick – something he has allegedly set out to do. Continue reading

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex fraud class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Park Ridge and Evanston business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business law suits involving copyrights, trademarks, 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. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Naperville and DeKalb business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business law suits involving copyrights, trademarks, 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. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.

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If someone leaves their employer to start their own company (which then gets bought by a competitor of their former employer), can it be a coincidence when that person just happens to end up working for a competitor a few months later on the same material he had been helping his former employer develop?

What if it wasn’t a coincidence? What if it was all an elaborate plot for the competitor to poach the employee, as well as internal documents containing invaluable trade secrets from his former employer?

Alphabet, Google’s parent company, is seeking a court order for documents it thinks will prove that’s exactly what happened when Anthony Levandowski left his job at Google to start his own company, Otto, which was quickly bought by Uber.

Levandowski was working on lidar technology (the technology that allows self-driving cars to navigate their environments) for Waymo, Google’s own ride-share company, before leaving to start Otto in early 2016. Otto was a company that made self-driving trucks, and just a few months after its creation, it was bought by Uber for a few million dollars and Levandowski became the head of Uber’s self-driving department. Continue reading

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin Austermuehle’s Illinois business trial lawyers have over a quarter of century of experience in litigating complex class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Naperville and Elgin business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business law suits involving copyrights, trademarks, 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. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso Lubin Austermuehle’s Illinois business trial lawyers have over a quarter of century of experience in litigating complex class action, copyright, non-compete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes.  Our Naperville and Elmhurst business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business law suits involving copyrights, trademarks, 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. You can contact us by calling (630) 333-0000 or our toll free number (877) 990-4990.  You can also contact us online here.

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Getting taken to the cleaners by a dishonest employee or contractor is headache enough for any business, but having  no fraud coverage insurance coverage is a world of hurt.  Businesses are well advised to analyze their policies carefully to make sure they have proper coverage.

In the case of an Indiana telecom company called Telamon, its two different insurance policies provided no relief, according to the Seventh Circuit Court of Appeals (Telamon Corp. v. Charter Oak, No. 16-1205, 7th Cir. (2017)). Telamon engaged independent consultant Juanita B. to provide services, and her role eventually expanded well beyond the original agreement. She was named vice president of major accounts and became senior manager for the company’s business in New York and New Jersey. In that capacity, she oversaw the removal of old telecommunications equipment from AT&T sites to sell to salvagers. Juanita pocketed the profits, for a total of $5.2 million in losses for the company by the time it discovered her scheme.   Continue reading

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A recent shareholder suit challenging the sale of a Chicago-based company to IBM was dismissed by a Delaware chancery court because the merger was supported by an informed and uncoerced vote of 80% of stockholders. When IBM acquired healthcare software developer Merge Healthcare, Inc., in 2015 for $1 billion, a group of Merge stockholders brought a class action complaint against Merge for what they charged was an improper sale process. The plaintiffs alleged the directors breached their fiduciary duties of loyalty and care due to self-interest in the transaction. (In Re Merge Healthcare Inc. Stockholder Litigation, Consol. C.A. No. 11388-VCG, Del. Chancery Court, 2017.)

The class action sought damages resulting from IBM’s acquisition of Merge’s publicly owned shares, which was supported by nearly 80% of Merge stockholders. On August 6, 2015, Merge’s board entered into an agreement granting the company’s common stockholders $7.13 in cash for each of their shares, a 31.8% premium to the market price. Preferred stockholders received $1,500 cash per share. The merger was completed on October 13, 2015, at an approximate value of $1 billion.

As part of the merger, certain Merge managers, including one of the defendant board members, entered into employment or transition arrangements with IBM. Continue reading

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Most of us don’t think of A-list movie stars as having trouble paying for anything they want, but even when you’re making millions, it’s possible to spend more than you make. It can happen to the best, either through irresponsibility or mismanagement.

Because the extremely wealthy usually hire people to manage their money for them, everyone tends to start pointing fingers when things go wrong and it’s usually up to the courts to determine who was ultimately at fault.

According to The Management Group (TMG), Johnny Depp, the 53-year-old Oscar nominee and their former client, has been spending $2 million a month and allegedly still owes them $4.2 million for a loan they gave him. The unpaid loan allegedly forced them to start foreclosure proceedings on properties owned by the celebrity.

TMG claims it has been doing everything in its power to curb Depp’s outrageous spending habits for the better part of two decades. But the actor allegedly failed to respond appropriately, blamed his business managers, and continued to overspend. Continue reading

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Because stock trading is full of opportunities for traders to take advantage of their positions, the law takes accusations of fraud very seriously, but it works the other way, too. Traders have to work hard to protect their reputations because their livelihood depends on it. As a result, stock traders tend to react quickly if they’re ever accused of insider trading or any other forms of fraud.

According to a recent defamation lawsuit, Allstate allegedly falsely accused four traders of illegally taking advantage of their insider trading knowledge by intentionally timing trades in such a way that would inflate their own bonuses. Daniel Rivera, the managing director of Allstate’s equity division, along with three senior portfolio managers, were the four employees accused and fired as a direct result of those accusations.

In October 2009, Allstate announced the work of its equity division would be outsourced to Goldman Sachs. In December of that same year, it fired Rivera and his three senior portfolio managers (Kensinger, Meacock, and Scheuneman) for allegedly violating Allstate’s code of ethics. Because the four employees were supposedly fired with cause, they were not eligible for severance pay. The timing is certainly suspicious, but if Allstate did this as an to save money and avoid paying four senior employees their severance packages, the plan, if this was the plan, a fact which Allstate surely denies, then the plan backfired. Continue reading