Articles Posted in Litigation/Business Trials/Business Lawsuits/Business Litigation

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Our Chicago libel and slander lawyers concentrate in this area of the law. We have defended or prosecuted a number of defamation and libel cases including cases representing a high profile athlete against a well known radio shock jock, a consumer sued by a large car dealer in federal court for negative internet reviews and videos, one of Loyola University’s largest contributors when the head basketball coach sued him for libel after he was fired, a lawyer who was falsely accused of committing fraud with the false allegation published to the Dean of the University of Illinois School of Law where the lawyer attended law school and the President of the University of Illinois.

Our Chicago defamation attorneys defend individuals’ First Amendment and free speech rights to post on Facebook, Yelp and other websites information that criticizes businesses and addresses matters of public concern. Our Chicago Cybersquatting attorneys also represent and prosecute claims on behalf of businesses throughout the Chicago area including in Carol Stream and Glen Elyn and Elmhurst, who have been unfairly and falsely criticized by consumers and competitors in defamatory publications in the online and off line media. We have successfully represented businesses who have been the victim of competitors setting up false rating sites and pretend consumer rating sites that are simply forums to falsely bash or business clients. We have also represented and defended consumers First Amendment and free speech rights to criticize businesses who are guilty of consumer fraud and false advertising.

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Non-compete agreements were initially intended to keep trade secrets safe. They originated in the tech industry where certain employees have the potential to take highly sensitive information with them when they leave the company. This could be disastrous to the company if employees decide to leave to work for a competitor and take all the confidential information they’ve been working with.

In order to prevent this from happening, companies had employees sign noncompete agreements (often as part of their employment agreement) stating they would not work for a direct competitor within a certain radius of the employer and a certain time frame (usually six months to a year).

Despite these sensible beginnings, employers of all industries have incorporated noncompete agreements into the employment contracts of just about all their workers. Even minimum wage employees on the bottom of the corporate ladder have been forbidden from working for a competitor. Continue reading

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Just like any relationship, the breakup of a law firm is complicated, especially when a partner start a new business of their own. In the case of Bernstein & Grazian, P.C. v. Grazian & Volpe, P.C., 402 Ill. App. 3d 961, 931 N.E.2d 810 (2010), the actions of the partners themselves throughout the dissolution of the firm and the fiduciary duty owed to one another play a large role in the division of fees once the firm has closed its doors.

Attorney and partner of Bernsterin and Grazain, Bernstein left the firm to open his own practice. Grazian complained that his former partner allegedly breached his fiduciary duty by opening up his own firm while still working for the current firm. Bernstein denied these claims and the trial court ruled in his favor. The Court determined that there was no breach of fiduciary duty by Bernsiten and that there he was entitled to 10% of the fees for all of the open cases at Bernstein and Grazian before he left. Continue reading

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Trade Secrets come in all shapes and sizes. They can be as complicated as the recipe for a favorite soft drink or can be as straight forward as a list of clients for a particular company. Whatever the trade secret, they are crucial, essential and sensitive pieces of information many company is willing to litigate over to protect. Companies go out of their way to protect such assets when they hire new employees. There are many ways to protect trade secrets. Non-compete, non-solicitation and/or non-disclose clauses within an employee agreement are just a few ways protection can be sought.

In Triumph Packing Group v. Ward, 834 F. Supp. 2d 796 (N.D. Ill. 2011), Triumph, a privately-owned manufacturer of packing supplier to large supplies of consumer goods, brought a suit against Mr. Ward, Chief Operating Officer of Triumph, who was fired in 2011. Upon employment with Triumph, Ward signed an employment agreement which included a non-compete clauses as well as a non-solicitation clause. After time spent at Triumph, it was discovered that Ward had been allegedly diverting resources from his employer to allegedly engage in business with a former customer of Triumph, as well as to allegedly fund new business endeavors with AGI, a global packing company who hired Ward as their Vice President. Through his employment with Triumph, Mr. Ward was able to allegedly obtain Triumph’s customer and pricing information. Triumph argued that Mr. Ward had obtained “lean manufacturing and efficient operations” which Triumph deduced to be trade secrets. Triumph argued that Mr. Ward would inevitably misappropriate Triumph’s trade secrets with his new businesses endeavors. Ward denied all of the claims. Continue reading

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We all know that the Supreme Court is responsible for interpreting and clarifying the law. When a dispute between two or more parties reaches the Supreme Court, the Court’s decision in that case has the potential to influence American laws for decades to come. Sometimes, the rulings made by the Supreme Court influence not just the laws, but how those laws are enforced, including when a decision can be appealed to a higher court.

Appealing a Consolidated Lawsuit

For example, in a recent dispute that the Supreme Court will hear this term, multiple lawsuits that have been filed alleging manipulation of the London Interbank Offered Rate (LIBOR). A number of those lawsuits have been consolidated into one complaint. Courts will sometimes do this when one plaintiff is facing multiple lawsuits in which the complaints are all the same or similar. By combining them into one large lawsuit, the courts can deal with the case more efficiently and avoid repeating itself by dealing with the same issues again and again.

Many times, when dealing with a lawsuit that has multiple complaints, a court will dismiss some of the complaints while allowing others to continue through the court system. The question then becomes whether plaintiffs can appeal the court’s dismissal to a higher court. When plaintiffs tried to do this in the recent case involving alleged manipulation of the LIBOR, the Second Circuit Court declined to hear the case, claiming that, because the lower court had only dismissed some of the complaints, the Second Circuit Court lacked the jurisdiction for an appeal. The plaintiffs then appealed the decision to the Supreme Court, which will hear the case this term. The Supreme Court’s decision will determine whether such cases can move up the appellate courts piece by piece, or as one consolidated case.

The Defendant’s Burden in Moving a Class Action Lawsuit to Federal Court

The Supreme Court will also rule on the application of the 2005 Class Action Fairness Act (CAFA). This act gave defendants the power to have a class action lawsuit moved to federal court, if the case fit certain requirements, in order to prevent plaintiffs from filing the lawsuit in the court that would be most likely to rule in their favor, also known as “forum shopping”. In order to move a case to federal court, the class of plaintiffs must consist of members from more than one state and the amount in dispute must be more than $5 million.

In Dart Cherokee Basin Operating Company, LLC v. Owens, the district court and the Tenth Circuit Court both remanded the case back to state court because the defendant did not provide sufficient evidence that the amount in dispute is more than $5 million. The defendant argues that the courts should not need evidence of the amount in dispute until the plaintiff denies the amount. The Supreme Court’s ruling in this case will determine the amount of evidence a defendant needs to provide in order to have a case moved to federal court. Continue reading

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When ruling in cases of alleged defamation, courts have a number of considerations to keep in mind. Whether or not the alleged defamation has any basis in truth is only the first consideration. Courts must also weigh factors such as whether the plaintiff is considered a public figure or a private citizen. Public figures are generally much more limited when filing a defamation lawsuit. This is because the law assumes that it is in the best interest of the public to be able to freely discuss public events, and such discussion often includes public figures. The law also assumed that, unlike private citizens, public figures have better access to the media, which they can use to address such rumors.

In addition to these considerations, courts must not forget to take into account the circumstances surrounding the defamation. For example, if the plaintiff has already been convicted of murder, is it safe to assume that a defamatory comment could not further damage that person’s reputation? This very question is at issue in a recent defamation lawsuit against Nancy Grace, a television personality. The defendant, Michael Skakel, was sentenced to 20 years to life for allegedly murdering his neighbor, Martha Moxley, when they were both fifteen years old.

In January 2012, Grace had a live broadcast program in which she asserted that Skakel’s DNA had been found in a tree near the victim. Skakel maintains that his DNA was never found at the scene and so he filed his defamation lawsuit against Grace, Beth Karas, a legal commentator who appeared on the program, and the producers of the program, Time Warner and Turner Broadcasting System.

The defendants argue that their statements cannot be considered defamation because they are “substantially true”. They point to statements that Skakel made to acquaintances and investigators that he had climbed a tree by Moxley’s home the night of the murder with the intention of masturbating. However, stating such an intention and claiming that a person’s DNA was found near a murder victim are two different things. According to Stephan Seeger, Skakel’s attorney, such as allegations “is not a minor misstatement”.

Stephan points out that “when you see the letters DNA and put that in any story and hang it around my defendant’s neck, the whole world believes that there is DNA evidence and that is lock, stock and done. … Anyone who is watching that show now forms the belief that the DNA was there”.

A Connecticut Superior judge, concluded that Skakel had ineffective counsel at his trial in 2002, and as a result, he overturned Skakel’s conviction. Another judge then released Skakel on $1.2 million bail, which his family provided. Skakel was released on the assurance that he would be returned to prison if a Connecticut appeals court reinstates the conviction. Far from being unable to do any more harm to Skakel, the defamation has the potential to influence the jurors who hear his case on appeal who will decide whether or not to reinstate his conviction.

Seeger points out that the defendants’ “roadkill theory of reputation” which assumes that their defamation cannot do any more harm to Skakel is false. He states that “Their position fails to acknowledge the Plaintiff’s reputational interest as germane to future parole applications, future trial prospects, and any and all other discretionary benefits that he may, as a matter of law or right, seek in prison or in our Courts.” Continue reading

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An arbitration clause is a part of a contract which requires that any dispute between the parties be handled in arbitration, rather than trial courts. An increasing number of companies are implementing these clauses and requiring everyone from their employees to their customers to sign them. The goal is to prevent class actions from forming and taking the company to court for large sums of money. However, these clauses are not always enforceable and many plaintiffs have found ways around them.

An unconscionable contract is a contract that is unenforceable in a court of law. Arbitration agreements may be found unconscionable on “such grounds as exist at law or in equity” to revoke a contract. There are two types of contractual unconscionability: procedural and substantive. Procedural unconscionability addresses the fairness of the bargaining process, which “is concerned with ‘unfair surprise’, fine print clauses, mistakes or ignorance of important facts”. Substantive unconscionability, on the other hand, determines the fairness of the terms of the contract itself. For example, a contract may be considered substantively unconscionable if its terms favor one party too heavily over another.

An arbitration agreement may be substantively unconscionable if the fees and costs to arbitrate are so excessive as to “deny a potential litigant the opportunity to vindicate his or her rights.” In such cases, it is up to the plaintiff to prove to the court that the arbitration would be prohibitively expensive.

First, the plaintiff has to present evidence concerning the cost to arbitrate. The evidence provided “must be based on specific facts showing with reasonable certainty the likely costs of arbitration.” Second, the plaintiff “must show that based on their specific income/assets, they are unable to pay the likely costs of arbitration.” The third and final consideration for the court is whether the arbitration agreement allows for a party to avoid or reduce the costs of arbitration based on financial hardship.

One case that exemplifies this is Clark v. Renaissance West in Arizona. The plaintiff sued the nursing home for medical malpractice, alleging that it was due to their negligence that he formed a pressure ulcer which required surgery and long term care to remedy. Clark had signed a contract with the nursing home that included an arbitration clause but he argued that the clause was unenforceable and took the case to trial. The trial court ruled that the arbitration clause was, indeed unconscionable, and the appellate court agreed after Renaissance West appealed the lower court’s decision.

Most arbitration clauses state that the company will choose and pay for arbitration. In this case however, the contract called for three arbitrators in the event that the parties could not agree on one, and for both parties to split the arbitration fees, regardless of who won the case. Clark brought in an expert who testified that, based on the complexity of Clark’s case, they could be in arbitration for at least five days (assuming an 8-hour day). Taking that into consideration, arbitration alone would have cost Clark about $22,800. Since Clark is retired and living on a fixed income, such an exorbitant amount is clearly beyond his means.

The appellate court’s decision is a mixed blessing for plaintiffs trying to avoid unfair arbitration provisions. On the one hand, the plaintiff won and the arbitration clause has been rejected. On the other hand, this case has proven the lengths to which plaintiffs must go in order to prove that the arbitration clause is unconscionable.

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The Seventh Circuit has affirmed most of a district court ruling involving an Illinois partnership dispute involving claims for fraud, excessive partnership distributions and fraud in a trademark application for a corporate logo. The cases highlights that partnership disputes can result in very time consumer and expensive litigation when there is no clear-cut written partnership agreement. In this case, the victorious defendants were awarded substantial attorneys fees.

The case arose out of the following facts. Three individuals Swift, Schaltenbrand, and Siddle joined together as partners to operate a mail-order pharmacy, divide the profits from that business, and eventually sell the book of customers to another pharmacy. After some initial success, the partners began taking profit distributions that far exceeded the partnership’s profits and according to the Seventh Circuit did not square with any formula. All of the partners according to the Seventh Circuit’s description of the facts seemed pleased to strip the enterprise of monies and to even take out loans to do that:

Soon after the partnership started gaining steam, however, the partners began exploiting their informal arrangement for personal gain. Swift, Siddle, and Schaltenbrand repeatedly requested andreceived) profit distributions that far exceeded the amounts to which they were entitled under the agreement.
Despite the fact that the partnership was a money‐losing  enterprise,  the  partners  continually found the funds for distributions. For example,
evidence presented to the court indicated that, from 2005 to 2009,
the partnership operated at a net loss of over$400,000. During this same period,
however, Swift, Schaltenbrand, and Siddle received  nearly  $4  million  in  combined distributions.

Swift even persuaded Schaltenbrand to take out loans to facilitate
these unjustified  payments  to  the  partners.  For  his part, Swift concealed his excessive demands (which he knew had
no  basis  in  the  actual  profitability  of  the  partnership) commingling them with DeliverMed’s requests for  cost reimbursements.
Swift and Schaltenbrand each became aware of  the  other’s  excessive
distributions, but neither of them cared. So long as each
partner was able to obtain his own unjustified share of
partnership funds, no one made a fuss.
However, when a dispute erupted between the partners
Swift sued Schaltenbrand and Siddle claiming that
they had taken more money than the allegedly
agreed upon percentages and that he was therefore
entitled to larger distributions and owed money.

The district court listened to 14 days of testimony before ruling in favor Schaltenbrand and Siddle holding that Swift never properly included fraud claims, wasn’t a credible witness and couldn’t support his damages claims for greater distributions with evidence of a contract setting the agreed upon percentages. The court also invalidated a copyright registration that Swift’s marketing company obtained for a logo used by the partnership, finding that Swift knowingly misrepresented a material fact in the application to register a copyright in the logo.

The Seventh Circuit affirmed in part, agreeing that Swift did not prove Schaltenbrand and Siddle breached any obligation to provide him with a certain percentage of the distributions or even that such an obligation or contract to provide set percentages existed. The Seventh Circuit also found Swift waived fraud claims by failing to include them in the final pretrial order. The Seventh Circuit held that the district court erred by invalidating the copyright registration without first consulting the Register of Copyrights as to the significance of the inaccurate information. The Copyright Act requires courts to perform this “curious procedure” before invalidating a registration based on a fraud on the Copyright Office. The Seventh Circuit remanded the case so that Register could be notified and the issue decided based on the requirements of the statute.

You can view the entire opinion here.

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ESPN reports:

While current NCAA players fight for their right to make money, a large group of former college football players scored a major victory Thursday.

Shortly after Electronic Arts announced it would stop producing a college football game beginning next year, the video game company — together with Collegiate Licensing Company, which holds the licensing rights to the trademarks of the majority of colleges and universities — filed papers to the U.S. District Court in Northern California that it had settled its case brought by former players.

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