Articles Posted in Business Disputes

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers in the Categories of Class Action, Business Litigation and Consumer Rights Litigation. DiTommaso-Lubin’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 Orland Park and Oak Park 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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Stock options exercised by railroad employees are a form of monetary compensation taxable to the employer and employee under the Railroad Retirement Tax Act, according to the Seventh Circuit Court of Appeals (Wisconsin Central Ltd., et al. v. United States, No. 16‐3300 (7th Cir. 2017)).

In 1996, three Midwestern railroad subsidiaries of the Canadian National Railway Company began including stock options in their employees’ compensation plans. In its appeal from a district court ruling, the railway argued that income from the exercise of stock options that a railroad gives its employees is not a form of “money remuneration” to them and is therefore not taxable to the railway under the Act, which defines “compensation” as “any form of money remuneration paid to an individual for services rendered as an employee… .”

The Railroad Retirement Tax Act of 1937 is the railroad industry’s version of the Social Security Act; it imposes a payroll tax on both employer and employee to pay for pensions and other benefits.

The question before the Seventh Circuit was whether the tax should be levied on the value of stock options exercised by employees when the market price reaches a certain level. The Internal Revenue Service argued that it should, and in a 2-1 decision, the court agreed.

Writing for the majority, Judge Richard Posner stated: “Stock has so well‐defined a monetary value in our society that there is no significant economic difference between receiving a $1,000 salary bonus and a share or shares of stock having a market value of $1,000.” Continue reading

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Super Lawyers named Illinois commercial law trial attorneys Peter Lubin and Vincent DiTommaso Super Lawyers 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 Elmhurst and Naperville 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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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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Peter Doig isn’t exactly a common name, but the world-famous painter of that name had the bad fortune of bearing a similar name to that of Peter Edward Doige, who is apparently the true creator of a landscape painting at the center of a highly unusual lawsuit that was recently filed in the U.S. District Court of Northern Illinois.

Doige, not the painter Doig, served a short sentence in an Ontario correctional facility for LSD possession in the mid-1970s, which is where he met Robert Fletcher, who was allegedly serving as his parole officer. Fletcher said he watched Doige create a landscape painting that bears some strong resemblances to the paintings Doig is famous for and that regularly sell for $10 million or more. Fletcher said he bought the painting for $100 as a way to help Doige stay on the straight and narrow and helped him get a job.

The painting in question hung on a wall in Fletcher’s office for 40 years before a friend noticed it and told him it was by a famous painter: Peter Doig. Fletcher said he watched a talk Doig had given at a university and recognized his mannerisms as belonging to the man he helped all those years ago. Fletcher then got into contact with an art dealer in Chicago and they began making arrangements to sell the painting. Continue reading

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When billions of dollars are on the line, the end of a personal friendship can jeopardize business investments, as well as personal relationships, especially when one party’s mental competence is called into question. That’s exactly what happened when Sumner M. Redstone, the head of a media empire that includes Viacom and CBS, among others, disinherited his former lover and long-time friend, Manuela Herzer, and banished her from his multi-million-dollar mansion, which she was set to inherit before he kicked her out and changed his will.

Herzer filed a lawsuit claiming that, at 93 years old, Redstone’s mental capacity had deteriorated to the point where he was no longer fully aware of what he was doing and that he was improperly influenced by his daughter, Shari Redstone, with whom he had been estranged and just recently reconciled. Herzer’s complaint alleged Shari is influenced solely by her father’s wealth, while both Sumner and Shari accuse Herzer of being the gold digger.

After hearing testimony from Herzer and Shari, among others, including video testimony from Sumner, the California judge in charge of the case dismissed it. Herzer plans to appeal that decision, but even if she doesn’t succeed, her complaint has had consequences that have reached all over the country. The question of Redstone’s mental capacity has lead high-level executives in his companies to question whether he’s mentally capable of effectively running all the companies under his vast media empire. Continue reading

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The U.S. Court of Appeals for the Seventh Circuit recently held that client victims of a lawyer’s fraud take precedence over a commercial lender in being paid out of funds owed to the lawyer’s firm. Attorney William C. of Indiana-based Conour Law Firm, LLC is serving a 10-year prison term for stealing $4.5 million from clients’ trust funds. His victims obtained a judgment against him in 2014. Timothy D., an attorney at Conour, had previously left to join the Ladendorf Firm, bringing 21 Conour clients with him who eventually generated over $2 million in fees. William’s victims, as well as the Conour Firm’s lender, ACF 2000 Corp., claimed the right to a portion of those funds. Writing for the Seventh Circuit in ACF 2006 Corp v. Devereux, No. 15-3037 (7th Cir. 2016), Judge Easterbrook summed up the ensuing battle: “This appeal presents a three-corner fight about who gets how much of that money.”

At issue was how much of the $2 million belonged to the Conour Firm for the services it performed before Timothy D. left, and how those funds should be divided between the victims and ACF 2000. At trial, the federal district court concluded that the Conour Firm was entitled to some $775,000 under principles of quantum meruit, and that ACF had priority of payment over the victims. Continue reading

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A corporate defendant waives the right to enforce an arbitration clause in an employment agreement if it asserts an affirmative defense to a complaint that is unrelated to arbitration. So ruled the First District Appellate Court of Illinois in a recent breach of employment contract case called Koehler v. Packer Group Inc., 2016 IL App (1st) 142767.

Michael K. was CEO of Packer Engineering, a subsidiary of The Packer Group. When he reported evidence of alleged financial improprieties on the part of Packer’s chairman to the company’s board, he claims he was dismissed in retaliation. He filed suit against the company for breach of his employment contract, and also against various Packer officers individually for tortious interference with contract, claiming they induced the company to breach the contract. The defendants argued that, pursuant to the contract’s terms, Michael’s claims should have been resolved in arbitration.

Michael’s four-year employment agreement contained an arbitration clause waiving the right to resolve disputes in court. The contract was signed by Michael, Packer’s chairman, and several Packer executives. Michael claimed that after he refused to go along with the alleged financial improprieties, he was offered the option of demotion or termination and chose termination. In his complaint, he sought future salary and bonus compensation plus punitive damages. In its answer, Packer asserted the affirmative defense of Michael’s own breach of the employment agreement, then later moved to dismiss the complaint on the grounds that the arbitration provision deprived the court of jurisdiction. The individual defendants argued that the arbitration clause also applied to Michael’s suit against them for tortious interference, claiming they had signed the agreement in their corporate and not individual capacities. The circuit court ruled that Packer waived its contractual right to arbitrate when it answered Michael’s complaint without asserting the right.   Continue reading