Articles Posted in Business Disputes

|

In the case of Pickering v. Owens-Corning Fiberglas Corp., 265 Ill. App. 3d 806, the plaintiff sought punitive damages against the defendant for the defendant’s failure to warn consumers of the dangers associated with asbestos exposure. Punitive damages are damages awarded in addition to compensatory damages and are intended to punish the defendant for their wrongful conduct and to deter similar conduct in the future.

In this case, the plaintiff sought to discover the net worth of the defendant as part of their efforts to establish punitive damages. The defendant objected to the request for net worth discovery, arguing that it was irrelevant to the issue of punitive damages and that it was overly burdensome and intrusive.

The court held that net worth discovery was relevant to the issue of punitive damages and that the defendant had a duty to disclose its net worth. The court noted that punitive damages are intended to punish the defendant and that the amount of punitive damages awarded should be proportionate to the defendant’s ability to pay. The court also noted that net worth discovery is a common practice in cases involving punitive damages. Continue reading ›

|

“The focus of the crime fraud exception is on the intent of the client (citation omitted), not the legitimacy of the services provided by the attorney. An attorney may be completely innocent of wrongdoing, yet the privilege will give way if the client sought the attorney’s assistance for illegal ends.” People v. Radojcic, 2013 IL 114197, ¶ 49.

A lawyer’s participation in intentional breaches of fiduciary duty triggers the crime-fraud exception even though a fiduciary breach is no necessarily a crime or act of common law fraud. Intentional fiduciary breaches are regularly called constructive fraud however and give rise to the crime fraud exception. See Mueller Indus., Inc. v. Berkman, 399 Ill.App.3d 456, 469-73 (2d Dist. 2010) abrogated by People v. Radojcic, 2013 IL 114197 on other grounds (“In concluding that an intentional breach of fiduciary duty may serve as the fraud necessary to establish the crime-fraud exception, we take note of Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky.1991). … The Kentucky Supreme Court held that the breach of fiduciary duty was ‘on an equal par with fraud and deceit.”’) Lawyers who aid and abet fiduciary breaches and other torts are subject to suit. As Thornwood, Inc. v. Jenner & Block, 344 Ill. App. 3d 15, 28–29 (1st Dist. 2003), as modified on denial of reh’g (Nov. 10, 2003) recognized, a lawyer may not “escap[e] liability for knowingly and substantially assisting a client in the commission of a tort.” Continue reading ›

|

Yes, it is possible to sue a lawyer in a shareholder derivative action in certain jurisdictions including Illinois. A shareholder derivative action is a lawsuit brought by a shareholder on behalf of a corporation against a third party. The lawsuit is typically brought when the corporation has been harmed by the actions of a third party, but the corporation’s management has failed to take action.

In a shareholder derivative action, the shareholder acts as a representative of the corporation and brings the lawsuit on the corporation’s behalf. If the shareholder is successful in the lawsuit, any damages or remedies awarded go to the corporation, not to the individual shareholder.

In some cases, the corporation’s harm may be caused by the actions of the corporation’s own lawyers. For example, if a lawyer provides negligent or inadequate legal advice to the corporation, causing the corporation to suffer damages, the corporation’s shareholders may be able to bring a shareholder derivative action against the lawyer on behalf of the corporation.

In order to bring a successful shareholder derivative action against a lawyer, the shareholders must be able to show that the lawyer breached their duty of care to the corporation and that this breach caused harm to the corporation. The shareholders must also show that they have exhausted all other available remedies, such as asking the corporation’s management to take action against the lawyer.

In conclusion, it is possible to sue a lawyer in a shareholder derivative action if the lawyer’s actions have harmed the corporation. However, such lawsuits can be complex and challenging, and it is important to seek the advice of a qualified attorney before pursuing this type of legal action. Continue reading ›

|

The family of Marvin Gaye rocked the music world in 2015 when they sued Robin Thicke and Pharrell Williams for copying elements of Gaye’s hit, “Got to Give It Up,” in their own hit, “Blurred Lines.” Up until the jury sided with Gaye’s family, most musicians had assumed the musical elements in question were public domain.

That lawsuit seems to have opened up the floodgates, given the number of copyright lawsuits that have been filed in the music industry in the past eight years. Not all the lawsuits have ended in the plaintiffs’ favor, but enough have to give musicians pause when writing a new song.

The latest copyright lawsuit to make headlines in the music industry involves another Gaye song, “Let’s Get It On.” Instead of Gaye’s family, this copyright lawsuit has been filed by the family of Ed Townsend, who was the primary songwriter and owned 2/3 of the royalties on the song.

The case hinges on two chord progressions that are similar, but not identical. Even a musical expert testifying on behalf of the plaintiffs admitted the two chords have slight differences, but he maintained that they are interchangeable.

An attorney for the plaintiffs showed the jury a video of Sheeran performing a mashup of the two songs in question. The attorney claimed that Sheeran’s ability to move seamlessly from one song to the other proves that Sheeran stole the chord progression from the 1973 hit. Continue reading ›

|

If a lawsuit is filed and the parties decide to settle before the case gets to court, how can you know what evidence each party found to support their case? You can’t. Chances are good the defendant requested the court to seal the documents, meaning it would not be available to other lawyers, journalists, or the general public.

Over the years, attorneys for corporations have managed to convince the courts their clients need protection from the public, rather than the other way around. The courts’ willingness to go along with this has only endangered consumers who were prevented from being made aware of things like the dangers of opioids, weak car roofs, or guns with faulty triggers.

Over the years, various legislators and judges have acknowledged there are problems with the current system of sealing court documents, but so far they have been either unwilling or unable to make the necessary changes to protect consumers.

When the first rules allowing judges to seal court documents were created, they initially allowed judges to decide which documents to shield by considering them on a case-by-case basis. The rules were later broadened to include anything with the potential to embarrass or annoy a corporation. Continue reading ›

|

Scott Norris Johnson is a quadriplegic who used to work for the IRS and now practices law suing local businesses for failing to comply with the Americans with Disabilities Act (ADA). As the lawyer filing these lawsuits, Johnson is entitled to at least a portion of the settlement money he receives from these lawsuits, but he is required to report that money on his income taxes. According to a recent lawsuit, Johnson knowingly failed to report that income on his taxes, thereby defrauding the U.S. government of hundreds of thousands of dollars.

Johnson pleaded guilty to the charge of tax evasion and agreed to pay $250,000 in restitution and spend 18 months of home detention. The judge presiding over the case, John Mendez, insisted that Johnson be made to pay a fine in addition to the $250,000 in restitution and home detention. That was not part of the plea agreement, but Johnson agreed to pay the $50,000 fine Mendez wanted him to pay.

Mendez pointed out that the money is a drop in the bucket for Johnson, who has assets of $1.3 million and a monthly income of $81,000, thanks to all the ADA lawsuits he’s filing. Mendez was also concerned by Johnson’s lack of remorse for his actions, and pointed out that, were it not for his disability, he’d be serving up to three years in prison. Continue reading ›

|

We’ve all heard stories of the plucky entrepreneur who started a game-changing business and managed to sell it for millions of dollars. It’s a great rags-to-riches story, and it proves the American Dream is real. But what if the business is fake?

Charlie Javice was one of those young entrepreneurs. The company she started was called Frank, and the idea was to simplify the financial aid process for college students. When JP Morgan bought the company from Javice in 2021, it was valued at $175 million, and Javice was made managing director for student solutions. Now JP Morgan is suing her for allegedly exaggerating the company’s value … by a lot.

College students are a goldmine for banks. Almost all college students need to take out a loan in order to pay for their higher education, loans they spend decades paying off while the banks collect interest.

A lot of college students are also taking out credit cards for the first time, and most of them have not been taught how to use credit cards to their advantage. Instead, they’re more likely to end up in debt to the credit card companies.

According to court documents, when JP Morgan bought Frank, Javice allegedly told the bank’s executives that the company had more than 4 million users. The idea was that, by buying Frank, JP Morgan would gain access to a database containing the names and contact details of all those users who would no doubt be in need of financial assistance and a bank to provide its services. Continue reading ›

|

When Stephen Easterbrook was first fired from his position as CEO of McDonald’s, the firing was listed as “without cause,” which allowed Easterbrook to keep his severance pay, including shares in the company. But that was before McDonald’s found out about the extent of Easterbrook’s alleged misconduct.

At the time he was fired, Easterbrook allegedly denied having any inappropriate relationships with any of his employees, except for one relationship, which he claimed had not been physical. Afterwards, an internal investigation found emails that allegedly revealed Easterbrook’s sexual relationships with multiple McDonald’s employees during his time as CEO. Once these emails were uncovered, the company sued Easterbrook in 2020.

The lawsuit resulted in Easterbrook returning his shares in the company, as well as cash, the combined value of which was about $105 million at the time he returned it. Continue reading ›

|

In a recent decision, the Illinois Supreme Court held that clients ordered to pay punitive damages can sue their attorneys to recover the money. In doing so the Court considered and rejected arguments that state law and public policy protect lawyers from being subject to punitive damages awards.

Midwest Sanitary Service Inc. retained St. Louis law firm Sandberg, Phoenix & Von Gontard to represent it in a whistleblower retaliation case filed against it by a former employee. Midwest lost the trial which resulted in a jury award of $160,000 in compensatory damages and, important to the case before the Court, $625,000 in punitive damages against the company. Following the verdict, Midwest sued its lawyers for malpractice alleging that the attorneys had committed various mistakes in the case including failing to designate defense witnesses in time and eliciting harmful testimony from a state official during cross-examination.

For their part, the attorneys sought dismissal of the legal malpractice suit arguing that Section 2-1115 of the Illinois Code of Civil Procedure prohibition against awarding punitive damages in medical or legal malpractice cases precluded Midwest from recovery of the punitive damages award. It also argued that allowing recovery in a legal malpractice suit of punitive damages awarded in an underlying suit would violate the public policy of Illinois. The trial court rejected the law firm’s arguments that it could not be held responsible for the punitive damages award. The Fifth District appellate court sided with the trial court. The Illinois Supreme Court granted the law firm’s petition for leave to appeal.

Initially, the Court noted that the malpractice case was still ongoing and that the appeal had not come from a final and appealable judgment but was an interlocutory appeal brought pursuant to Illinois Supreme Court Rule 308. As such, the Court’s task was to answer the question of whether, in a legal malpractice action, punitive damages incurred in an underlying action, which were proximately caused by the alleged negligence of the attorneys in the underlying action, can be recovered as compensatory damages from the allegedly negligent attorneys in a legal malpractice action. Continue reading ›

|

A Delaware Chancery Court judge recently rendered a post-trial verdict in the In re Tesla Motors Stockholder Litigation in which he found in favor of co-founder and CEO of Tesla Motors, Elon Musk, on claims that Musk breached his fiduciary duties, was unjustly enriched, and created corporate waste in connection with Tesla’s 2016 acquisition of the SolarCity Corporation.

This high-profile, high-stakes lawsuit stemmed from alleged conflicts of interest created by Musk’s leadership and ownership of both companies during the 2016 acquisition. At the time of the merger, Musk was SolarCity’s largest stockholder and chaired its board of directors. At the same time, he owned 22% of Tesla stock and served as CEO and a director of Tesla. When the potential acquisition of SolarCity came up, Tesla’s board elected not to form a special committee of independent directors to negotiate the transaction. It did, however, condition approval of the acquisition on the “affirmative vote of a majority of the minority of Tesla’s disinterested stockholders” and recused Musk from certain Board discussions regarding the acquisition.

Despite these protections, the plaintiff shareholders alleged that Musk, as Tesla’s controlling shareholder, exerted his influence over Tesla’s board to approve the acquisition at an unfair price, following a highly flawed process, in order to bail out his (and other family members’) foundering investment in SolarCity. Plaintiffs named both Musk and members of Tesla’s board as defendants and sought damages as well as equitable remedies. Before trial, all defendants except Musk settled with plaintiffs, leaving only the claims against Musk proceeding to an 11-day trial over July and August 2021. Continue reading ›

Contact Information
Chicago Office
19 S LaSalle St #702
Chicago, IL 60603
Phone: 630-333-0333
Mailing Address
17W220 22nd St #410
Oakbrook Terrace, IL 60181
Phone: 630-333-0333 Please direct all mail correspondence to our Oakbrook Terrace address office.
Highland Park Office
189 Whistler Rd
Highland Park, IL 60035
Phone: 630-710-4990
We accept the following credit cards
Credit Cards Accepted
We accept payment via Venmo at: @L-A-LAW
Phone: 603-333-0333
Visit our site: chicagobusinesslawfirm.com

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Please do not include any confidential or sensitive information in a contact form, text message, or voicemail. The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.

Copyright © 2025, DiTommaso Lubin, PC
JUSTIA Law Firm Blog Design