Articles Posted in Business Disputes

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Our firm today filed an amicus brief or friend of the court brief in the on behalf of the National Association of Consumer Advocates and Consumers for Auto Reliability and Safety in an important consumer rights case and commercial law case, arising out of an interpretation of a provision of the Uniform Commercial Code. That provision expressly allows for consumers to revoke acceptance of and return for a full refund a product with hidden defects without having to allow the seller the opportunity to repair the defects. The express language of UCC requires this result yet the trial and the appellate court ignored the plain language of the UCC and that the majority of states interpret this provision of the UCC to allow for revocation of acceptance without any opportunity to cure. The Illinois Supreme Court decisions dictate that Illinois should follow the majority view of the other States in interpreting UCC provisions.

This case involves an RV that Plaintiffs bought in April for a summer vacation. When the RV turned out to be allegedly defective (massive water leaks), and when, by August, the RV Dealer/Warrantor allegedly would not give an estimate as to when it would repair the RV, and allegedly refused to “cure,” Plaintiffs revoked acceptance and canceled their contract.  Continue reading

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When a contract dispute arose between two telecommunications companies over the rates charged during the switching process of telephone call transmission, district court committed error in granting partial summary judgment to plaintiff, as it was likely that the same facts and issues would appear before the appellate court in the future after the FCC resolved certain regulatory issues.

Local Exchange Carriers and Interexchange Carriers are types of telecommunications service providers. LECs operate in limited geographical regions, and IXCs transport calls between them, enabling consumers to make long distance telephone calls. IXCs pay a fee in exchange for access to an LEC’s network. These rates are set either by regulatory agencies or in negotiated agreements between the IXC and the LEC.

In February 2009, Peerless Network, a LEC, and Verizon, an IXC, entered into one such agreement. The contract provided for lower rates for certain switching services. If a rate in the agreement did not apply, Peerless billed Verizon at its tariff rates, which were the rates that Peerless had filed with the Federal Communications Commission. In 2013, the relationship between Peerless and Verizon broke down, and Verizon began withholding payment. In September 2014, after negotiations failed to resolve the dispute, Peerless sued Verizon.

Peerless’ complaint alleged several counts, including breach of the Tandem Service Agreement, and breach of federal and state tariffs. Verizon asserted that Peerless was not entitled to the higher rates that it charged, due to its status as an Access Stimulator, which is a LEC that charges high rates to companies engaged in high volume call services, such as adult entertainment calls, chat lines and “free” conference call lines. Such LECs charge high rates to IECs and then pass a portion of the tariff revenue back to the companies that generated the high call volume. In turn, the FCC regulates the maximum rates that LECs meeting this definition can charge. Continue reading

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Best-Chicago-Commercial-Litigation-Lawyers-200x300Knowing where to bring a lawsuit and what state’s laws to apply can have a huge impact on the success of business litigation. Courts have developed extensive and complicated rules and procedures for determining where a lawsuit should be brought and which jurisdiction’s laws to apply, but that procedure is rarely simple or straightforward. Conflicts between the laws of two or more states can complicate the matter further. Agreeing in advance to jurisdiction and venue can provide certainty and save a great deal of time and money in the unfortunate event litigation does ensue. For this reason, companies often address in the contract itself how any disputes or litigation will be handled. A common example includes “forum selection” or “choice of venue” provisions, which identify a specific state (or even a specific county within a state) as the proper jurisdiction and venue for litigation.

Forum selection is a particularly important part of a contract when the parties are from different jurisdictions, especially when the laws of those jurisdictions differ significantly from one another. A forum selection provision gives a business the security of knowing that any litigation will take place in a familiar location applying a familiar set of substantive laws. However, a poorly worded forum selection provision may not provide the security hoped for as a recent opinion from Delaware’s Chancery Court in a partnership dispute case demonstrates. The case, In re Bay Hills Emerging Partners I, L.P., et al, involved the issue of whether a forum selection provision in a limited partnership agreement required all lawsuits to be filed exclusively in Kentucky. Continue reading

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IMG_6355_3-300x189The district court rejected personal jurisdiction over a business and two of its employees where the alleged breach of contract and tortious interference occurred in a different state, and the employees and business lacked sufficient contacts with Illinois to justify jurisdiction.

Tower Communications and TSC Construction are competitors in the business of building and repairing wireless communication infrastructure. In 2017, both companies were working on an infrastructure construction project that spanned North and South Carolina. Tower sued TSC, alleging that during this project TSC poached Tower’s employees, Gary Juknevicius and Ruslan Tulegenov, and that TSC obtained confidential information from the poached employees and used that information to benefit its business.

The employment agreements that Juknevicius and Tulegenov had provided that they could not work for a competing company that worked on the same project as Tower for a period of six months after their employment ended. The agreement also prevented the employees from soliciting Tower’s employees, and from disclosing confidential information to a competitor. Included in the agreements was an arbitration clause. Continue reading

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A bank’s negligence suit against a check-cashing company was dismissed when the district court found that there was no private right of action under which the bank could sue to enforce regulations regarding the safeguarding of personal financial information.

USAA provides banking services to members and veterans of the United States military. PLS Group, Inc. provides payday loan and check cashing services at 300 retail locations in eleven states. PLS charges its customers a fee to cash checks or purchase money orders. PLS often cashes checks drawn on USAA bank accounts. When it cashes a check, PLS obtains information about the drawer of the check, including their name and signature, account and routing numbers, and encoded information used to verify the legitimacy of the checks.

In October 2012, PLS settled a suit brought by the Federal Trade Commission which alleged that PLS did not properly secure its’ customers’ information. Despite making changes to its processes, problems with unauthorized access to customers’ personal information continued. Nine individuals were later indicted by the government for engaging in a check-cashing scheme that used information from PLS employees to create fraudulent checks. Some of these counterfeit checks were drawn on USAA bank accounts. PLS employees involved in the scheme received a portion of the proceeds from the scheme. Continue reading

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A developer of healthcare software was denied damages for breach of contract. The court found that the developer had failed to take advantage of a substitute opportunity when its customer ceased paying on its consulting agreement and transferred its obligations to a successor company. Rather than contracting with the successor company, the owner of the software developer formed an entirely separate company to administer the new consulting arrangement. The court rejected this convenient manuever as a failure to mitigate damages, finding that the new arrangement would have completely offset the developer’s losses.

Orawin is a software technology consulting company, owned and operated by a single person. In 2002, the company developed software for SeniorDent, Inc., a dental management company that focuses on providing dental care to nursing home residents. In 2013, the two companies entered into a Consulting Services Agreement which required Orawin to maintain the software’s dental and vision operating systems and provide modifications determined by SeniorDent. SeniorDent agreed to pay Orawin a monthly retainer upon receipt of invoices.

SeniorDent later attempted to merge with Healthcare Delivered, LLC (“HCD”). HCD and Orawin entered into an amended consulting agreement, transferring all rights and obligations from SeniorDent to HCD. Two months later, the merger of SeniorDent and HCD fell apart, and HCD distributed SeniorDent to a holding company owned by the original owners of SeniorDent (“F&R”). HCD then transferred all of its rights to SeniorDent to the holding company. The owner of Orawin later sought payment for consulting services from HCD, and was told that the F&R was responsible for paying his invoice. The owner of Orawin later formed a new company, O&O, to provide services to the newly reorganized SeniorDent. SeniorDent paid O&O its standard fee beginning in December 2015 and has continued to pay every month since. Continue reading

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A technology company that was accused of purchasing intellectual property and assets in a deceptive manner was denied its motion to dismiss a complaint against it for breach of contract and fraud. The plaintiffs alleged that the technology company deceived them, inducing them to sell their assets and intellectual property with promises that the company would maintain and expand the WiFI network that the plaintiffs ran when the technology company intended only to use the IP and assets to attract new rounds of investment. The court found that the technology company failed to develop its arguments in its motion and that its failure to elaborate and cite authority waived its arguments.

Chirstiaan Cilliers, Daphne Cilliers, World WiFi Network, Inc., and Sunrise Global Marketing, Inc. sued Cobalt Holdings, Inc., in federal court alleging fraud, breach of contract, and several state-law claims. The plaintiffs claimed that Cobalt fraudulently induced them to enter into agreements to sell all of their business assets and intellectual property, consisting of a roaming WiFi network it had developed and maintained in several Caribbean countries. The plaintiffs alleged that Cobalt told them that it intended to further develop the WiFI network when it, in fact, held no licenses to operate WiFI networks in the Caribbean and wanted to acquire the network and intellectual property solely to attract investors as part of a planned round of funding. Continue reading

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Chicago’s elite Grace restaurant has been shuttered for nearly a year, but the acrimony surrounding its implosion continues to be played out in Illinois courts.

Grace closed abruptly in late 2017 amid a dispute between its star chef and owner, who is now suing the chef and former manager/sommelier for tortuous interference and breach of fiduciary duty.

Michael Olszewski, who opened the Randolph Street hot spot with Curtis Duffy and Michael Muser in 2013, claims Duffy and Muser worked at events in far-flung locations around the globe outside of their employment with Grace, ordered and shipped food on the restaurant’s accounts for these events without his permission or compensation to the business, according to the complaint filed in Cook County Circuit Court.

Olszewski’s suit also claims Duffy and Muser “hatched a scheme” to solicit Grace’s employees to leave the restaurant and thereby force its temporary closure, resulting in lost profits and severe damage to business expectancies. The lawsuit seeks compensatory and punitive damages for the harm caused by Duffy and Muser’s “egregious misconduct.”

Duffy’s culinary skills earned Grace three Michelin stars, making it one of only two Chicago restaurants to gain that distinction. Before the establishment closed, Duffy and Muser tried unsuccessfully to buy it from Olszewski. He accused Duffy and Muser of coming and going from Grace as they pleased, in Muser’s case taking spontaneous and unapproved vacations, with increasing frequency. Continue reading

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Trump and Today’s America

Part of the Trump Brand has come about from a success story that has arisen due to being able to overcome being bankrupt.  Trump turned around and transformed the brand of a Reality TV show series by the name of, “The Apprentice,”  to eventually triumph from TV into becoming the President of the United States of America.  Did his bankruptcy define his business? Most likely not.  A story emerged, one of a businessman transition to the leadership of a country.

The Decision to File

Of course, filing a bankruptcy is a huge decision.  Sometimes the trigger can be circumstances beyond control.  Even in today’s age, there may still be a stigma applied, as some view it as a moral failure.  As it stands and within a year, we have seen corporate bankruptcies at their highest point.

When a company files for a Chapter 11 bankruptcy, it seeks protection from creditors in trying to restructure debt.  The judge oversees this.  Effectively, it transfers the ownership of the company from shareholders to the creditors.  For the most part, shareholders are the ones that suffer the greatest loss.  Creditors are normally made whole.

What is at Stake?

The tax scheme makes allowances when creditors and shareholders of failing companies write off losses.  In 2018, the new tax law adds uncertainties, but shareholders and creditors knew that losses incurred in 2018 would face the new corporate tax rate of 21%, and so the government would only pick up 21% of the losses. Continue reading