Chicago Business Litigation Lawyer Blog

Northern District of Illinois Federal Court Grants Injunction in Misappropriation of Trade Secrets Case

May 10, 2011 | Peter S. Lubin and James V. DiTommaso

Trade secrets are the lifeblood of many companies these days, and protecting those secrets is always of the utmost importance. Through our years of experience advising and representing companies, we here at DiTommaso Lubin know how to maintain the security of your trade-secret portfolio and prosecute those who attempt to misappropriate any of your trade secrets. Because employees with trade-secret knowledge come and go with such frequency these days, our Des Plaines trade-secret attorneys wanted to share a recent court decision that illustrates the perils companies face due to departing employees.

In Mintel International Group LTD v. Neergheen, Plaintiff Mintel initially employed Defendant in its London-based marketing department, and upon his hiring, Defendant signed an employment contract that included non-compete and confidentiality restrictive covenants. Defendant was then transferred to Plaintiff’s Chicago office where he signed a second employment contract containing non-compete and confidentiality clauses similar to those in the first agreement. This second contract also contained a clause prohibiting the solicitation of Plaintiff’s employees and customers – all of the clauses were in effect for one year after the cessation his employment with Plaintiff. Defendant eventually left the employ of Plaintiff and began working for a competitor company in a different product area in order to comply with his non-compete. Plaintiff failed to ask Defendant to return the laptop given to him by the company during his exit interview, and also failed to ask him about proprietary information he had emailed to himself prior to his departure – despite knowing that he had taken possession of the information before he left.

Eventually, Plaintiff filed suit against Defendant alleging violations of the Computer Fraud and Abuse Act (CFAA), the Illinois Trade Secrets Act (ITSA), and breach of the non-disclosure, non-compete, and non-solicitation provisions in his employment contract with Defendant. Plaintiff sought injunctive relief and money damages. After a bench trial, the Court found that Defendant had not violated the CFAA because he had only emailed copies of Plaintiff’s files to a private email address, which did not satisfy the damage requirement of the statute. The Court next held that, while the copied files qualified as trade secrets, Defendant did not violate the ITSA because there was no proof that he had or would use the information in his position at a competing company. Finally, the Court found that the restrictive covenants were not invalid as a matter of law, and enjoined Defendant from: ever using any of Plaintiff’s proprietary info, contacting any of Plaintiff’s customers for nine months, or working for his new employer in the same area as he had with Plaintiff for a period of six months.

A Compilation of Excellent Videos on Car Dealer Fraud — Our Chicago Car Dealer Fraud Attorneys Stand up For Consumer Rights

May 8, 2011 | Peter S. Lubin and James V. DiTommaso

//www.youtube.com/watch?v=XNXtjk-w6Vs

We bring suit for odometer fraud and other car dealer scams such as selling rebuilt wrecks as certified used cars. Super Lawyers has selected our DuPage and Cook County auto-fraud and lemon law attorneys as among the top 5% in Illinois. We only collect our fee if we win or settle your case. We recently settled a used car fraud case for $100,000 for a $9,000 car that was three cars welded together. Our co-counsel in auto-fraud cases has achieved two six figure punitive damages awards in the last year against Illinois car dealers. For a free consultation call us at our toll free number 630-333-0333 or contact us on the web by clicking here.

New York Times Reports: “Star Chef, Facing a Suit, Files for Bankruptcy” to Shut Down Wage and Overtime Class-Action

May 5, 2011 | Peter S. Lubin and James V. DiTommaso

Star Chef, Facing a Suit, Files for Bankruptcy
By NICK FOX
Published: April 26, 2011
The Chapter 7 petition by the celebrity chef Geoffrey Zakarian may help him to fend off more than $1 million in legal claims from his former kitchen staff at Country.

Many restaurants around the country are being sued in class-actions and collective actions for failing to pay overtime and other violations of federal and state wage laws. The New York Times has reported a very interesting story regarding one such lawsuit against celebrity chef Geoffrey Zakarian. The story explains how Zakarian’s former partners have taken the unsual step of filing affidavits in favor of the class after paying a $200,000 settlement. Zakarian and his partners are involved in litigation where they allege his used the restaurant Country as his personal piggy bank and breached fiduciary duties to them. To avoid the cook staff’s class action lawsuit and the high cost of defending it Zakarian has filed for bankruptcy.

The article states:

Of the 179 creditors listed in the Chapter 7 bankruptcy petition he filed on April 6 in federal court in Bridgeport, Conn., 152 are former cooks at Country. They are part of a class action lawsuit against Mr. Zakarian and his management firm that claims that when he was an owner of the restaurant and its chef, he failed to pay the workers time and a half for overtime, falsified pay records to shortchange them and deducted from their paychecks for staff meals they were not given. They are seeking $1 million in damages and $250,000 in penalties.

Neither legal action has been widely reported in the news media, nor has the bitterness between Mr. Zakarian and two former partners that has led those two men to take the workers’ side and face off in court against him.

The article goes on to provide many more interesting facts regarding Zakarian’s alleged mistreatment of his employees and partners. You can read the full article by clicking here where you can also conenct to links to the Complaint and various affidavits filed in the lawsuit. The affidavit by one former line cook describes how the workers were forced to work many unpaid hours. You can view it by clicking here.

Overtime Class-Action Certified in Northern District of Illinois Federal Court

May 4, 2011 | Peter S. Lubin and James V. DiTommaso

Every man and woman who goes to work each day has the right to be paid for his or her labor, but sometimes the companies for whom they work either fail to do so, or miscalculate the wages that they owe their employees. Those miscalculations may be intentional or they may be by mistake, but that does not change the fact that they must pay for the errors. At DiTommaso Lubin, we represent many workers who were not paid the regular and overtime wages they are owed, and our Barrington class-action overtime attorneys are always tracking new court cases in the field of wage and hour law.

One recent case from the US District Court in the Northern District of Illinois is Chavez v. Don Stoltzner Mason Contractor, Inc. The action was filed by Plaintiffs, who were former employees of Defendant and provided masonry installation services to Defendant. Plaintiffs claimed that Defendant illegally adjusted their time records downward to avoid paying them the required time-and-a-half rate for the overtime that they worked. Plaintiffs also alleged that they were required to work on Saturdays without pay for an extended period as well. Eventually, Plaintiffs filed a class-action in Illinois state court alleging violations of the Fair Labor Standards Act (FLSA) and Illinois Minimum Wage Law (IMWL) for unpaid overtime wages. Defendant subsequently removed the case to federal court. Plaintiffs then sought to certify an IMWL class-action under Federal Rule of Civil Procedure 23 and pursue their FLSA claims individually.

The Court granted class certification under Rule 23(b)(3), holding that the numerosity requirement was met because there were between seventy and 130 potential plaintiffs, and joinder of that many actions would be impracticable. Next, the Court found Rule 23’s commonality requirement was met because Defendant had a common practice of underpaying its employees’ overtime wages, and the typicality requirement was satisfied because all potential plaintiffs’ claims were based upon the same violations of the IMWL. Because there was no evidence the named Plaintiffs had a conflict of interest with the remaining class members and their counsel was deemed competent to pursue their claims, the Court found that the class was adequately represented. Finally, in granting class certification, the Court held that there was a single common issue (Defendant’s policy of not compensating employees for overtime) overriding the litigation, and that a class-action was the superior method for resolving the claims.

Employers Should Ensure They Have Adequate Evidence Before Filing Suit Against Former Employees

May 4, 2011 | Peter S. Lubin and James V. DiTommaso

Most employers at some point will face the prospect of an employee failing to perform their job adequately. Additionally, some employees breach fiduciary duties owed the company or commit fraud and other harmful acts during the course of their employment. Hytel Group, Inc. v. Butler is a recent case out of the Appellate Court of Illinois that is just such a dispute between a Plaintiff employer and its Defendant ex-employee. Our Schaumburg business litigation attorneys discovered this decision and want to pass along the information to our readers.

In Hytel Group, Inc. v. Butler, Plaintiff Hytel Group initially hired Defendant Butler as comptroller for the company in February of 2008 and fired Butler four months later in June of that year. During Butler’s employment, Hytel’s lender, GBC Funding, filed suit in response to Hytel allegedly defaulting on several obligations under their loan agreement and Hytel’s failure to respond to the notices of default sent to them by GBC. Furthermore, GBC alleged that Hytel failed to cooperate with a restructuring officer approved by GBC pursuant to another agreement. This agreement was for GBC to refrain from exercising their rights under the loan agreement in exchange for Hytel’s cooperation with the restructuring officer. Hytel then filed the action in question in December 2008 against Defendant Butler alleging that she breached her fiduciary duty of loyalty and committed fraud when she failed to perform certain job duties because of a relationship she developed with GBC.

After Butler was fired by Hytel, but before Hytel filed suit, she filed a claim with the Illinois Department of Labor for unpaid final wages, and she moved to dismiss Hytel’s lawsuit under the Citizen Participation Act. The motion was based upon the allegation that Hytel was suing her in retaliation for filing the wage claim. Butler also moved to dismiss Hytel’s suit on procedural grounds because Hytel failed to properly state a cause of action for breach of fiduciary duty or for fraud. In dismissing Hytel’s claims, the trial court found that the Citizen Participation Act did apply to Butler’s wage claim, that she did not have a fiduciary relationship with Hytel, and that Hytel did not sufficiently allege all the elements of fraud. Plaintiff Hytel appealed the trial court’s ruling on the basis that Butler’s wage claim was a private dispute and the Citizen Participation Act is concerned with protecting free speech and citizen participation in government.

The Appellate Court reviewed the legislative intent behind the Citizen Participation Act and found that the state of Illinois intended the law to be construed broadly. As such, the Court found that Butler’s wage claim was an exercise of her right to petition for redress of grievances and therefore fell within the express language of the Act that protects actions taken in furtherance of a citizen’s right to petition. The Court went on to hold that the Act contains no public concern requirement and the fact that the wage claim was a private dispute did not matter. Finally, the Court found that Hytel’s suit was retaliatory in nature and upheld the trial court’s dismissal of the action and the award of attorneys fees under the Act.

This case provides a warning for business owners who file suit against former employees for a breach of duty, particularly if there is an existing wage or other employment dispute between the parties. Hytel Group, Inc. v. Butler shows that Illinois courts will dismiss such claims pursuant to the Citizen Participation Act if there evidence that the suit filed by the employer is retaliatory in nature. As such, employers should ensure that they have ample evidence to show the legitimacy of their claims before filing, as they may be on the hook for the opposing party’s attorneys fees should the court find a retaliatory impetus for the action.

NPR reports: “The Reasons for Trying Cases That Seem Clear-Cut”

May 4, 2011 | Peter S. Lubin and James V. DiTommaso

This is a very interesting and thought provoking story.

Choosing What Business or Corporate Entity to Use When You Form an Illinois Business

May 3, 2011 | Peter S. Lubin and James V. DiTommaso

https://www.youtube.com/watch?v=kdfJ8QniDC4

An excellent overview of Illinois law describing various legal entities that a business can choose to use when it forms.

Northern District of Illinois Rules that Arbitration Clause in Employee Handbook is Enforceable

May 2, 2011 | Peter S. Lubin and James V. DiTommaso

More and more businesses are utilizing employment agreements with new hires, and often those agreements contain arbitration dispute resolution clauses. As experienced wage and hour class action attorneys, DiTommaso Lubin is familiar with such agreements and our attorneys are always mindful of court rulings that affect this area of the law. The Northern District of Illinois, Eastern Division federal court rendered a decision affecting employment arbitration agreements recently, and we wanted to make our readers and clients aware of the court’s ruling.

Brown v. Luxottica Retail North America Inc. pits a class of salaried retail, lab, and general managers against their employer Lenscrafters. Plaintiffs argued that they were non-exempt employees, and therefore were entitled to overtime compensation. The employees filed suit alleging violations of the Fair Labor Standards Act (FLSA), Illinois Minimum Wage Law (IMWL), and Illinois Wage Payment and Collection Act (IWPCA) for unpaid overtime wages. In response, Defendant moved to compel one of the named plaintiffs to arbitrate her claims and stay the proceedings with respect to that plaintiff. Defendant so moved pursuant to a dispute resolution agreement contained within the employee handbook Plaintiff was given while still employed by Defendant. Defendant required Plaintiff to accept the terms of the handbook in order to continue her employment. The agreement contained a form to allow the employee to opt-out of the arbitration clause and instructions how to fill it out, but Plaintiff had failed to sign the form. Plaintiff objected to Defendant’s motion on the grounds that it was unconscionable and unenforceable.

In considering Plaintiff’s arguments, the Court evaluated the procedural and substantial unconscionability of the agreement. The Court found no procedural unconscionability because the arbitration language was “clearly set off” from the rest of the employee handbook and was easy to find by those who actually read the entire handbook. Next, the Northern District held that there was no substantive unconscionability due to the existence of the opt-out clause and the fact that the Plaintiff chose not to exercise her right to opt-out even though she signed a document stating she had read and accepted the terms of the handbook. Finally, the Court ruled that nothing in the FLSA precludes an agreement to arbitrate an FLSA claim, and granted Defendant’s motion to compel arbitration.

Video on Illinois Covenant Not to Compete Law

May 1, 2011 | Peter S. Lubin and James V. DiTommaso

https://www.youtube.com/watch?v=HLvhcNrJ3u8

The above video provides an excellent overview of Illinois non-compete contract law.

Our Chicago non-compete agreement attorneys have defended high level executives in covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.

Used Car Scam — Today Show Exposes Selling Stolen Cars With Cloned Vin Numbers

May 1, 2011 | Peter S. Lubin and James V. DiTommaso

https://www.youtube.com/watch?v=sS9jANqRpxQ

We bring suit for odometer fraud and other car dealer scams such as selling rebuilt wrecks as certified used cars. Super Lawyers has selected our DuPage and Cook County auto-fraud and lemon law attorneys as among the top 5% in Illinois. We only collect our fee if we win or settle your case. For a free consultation call us at our toll free number 630-333-0333 or contact us on the web by clicking here.