We often hear people talk about private companies going public, but it’s not as often that it goes the other way around – from a public company to a private one. There’s a lot of paperwork involved either way, but unless you have a plan for repaying your investors, going from public to private also means you are denying your shareholders (especially minority shareholders) the stake in the company for which they have already paid.

The National Company Law Appellate Tribunal (NCLAT) said as much in a recent ruling in which it decided against allowing Tata Sons, the holding company of Tata Group, to convert itself from a public company to a private one. Although the Registrar of Companies had approved the transition, the NCLAT said that approval went against Section 14 of the Companies Act of 2013. The NCLAT also pointed out that the move, made by the directors and majority shareholders of the software conglomerate, would be oppressive towards the company’s minority shareholders.

The NCLAT also reinstated Cyrus Mistry as the company’s executive chairman. He had previously been fired back in October of 2016 due to a supposed lack of performance, but the NCLAT ruled that his firing had been illegal.

Mistry’s family owns an 18.4% stake in Tata Sons, making them a minority shareholder of the conglomerate, and Mistry’s legal troubles with Tata Sons began in 2016 with accusations of mismanagement and oppressing minority shareholders – charges that eventually led to Mistry getting ousted as executive chairman. Continue reading ›

Maryland’s highest court, the Court of Appeals, recently settled a longstanding question regarding whether Maryland law recognized an independent cause of action for breach of fiduciary duty. With its opinion in Plank v. Cherneski, the Court resolved an area of confusion that has troubled Maryland courts for more than 23 years since the Court’s 1997 opinion in the seminal case of Kann v. Kann.

In 1997, the Kann court held:

There is no universal or omnibus tort for the redress of a breach of fiduciary duty by any and all fiduciaries. This does not mean that there is no claim or cause of action available for breach of fiduciary duty. Our holding means that identifying a breach of fiduciary duty will be the beginning of the analysis and not its conclusion.

Investing is supposed to be a long-term strategy to build wealth, but expecting shareholders to wait more than 60 years before they can get a fair return on their investment is far beyond what any investor would consider reasonable.

That was allegedly the case for the minority shareholders of Promega Corp., the biotechnology company based in Fitchburg, Wisconsin. According to a lawsuit filed by shareholders back in 2016, Bill Linton, Promega’s founder and CEO, allegedly used manipulative and bullying tactics to become a majority shareholder of the company. His actions allegedly left the minority shareholders with no hope of getting a decent return on their investments before 2078 at the earliest.

Circuit Judge Valerie Bailey-Rihn, who has been hearing the case, has said that she was leaning towards the plaintiffs and agreeing that they had been oppressed by Linton’s actions. Now the only two things left to determine are 1) how to punish Promega and provide restitution for the minority shareholders who were allegedly oppressed by Linton’s actions; and 2) how to determine the price of the stocks for which the minority shareholders are allegedly owed compensation. Continue reading ›

Depending on the state in which they live, consumers sometimes have a hard time recovering the money they may have been deceived into giving to scammers who take their money and disappear, or to buy products that turn out to be harmful. Sometimes they can’t sue because they signed away their right to sue a company in their purchase agreement, or the amount spent is too small to justify the costs of an individual lawsuit. Other times they simply aren’t aware that the company has done something wrong. Regardless of the reason, it can be disheartening to see the number of consumers who are unable to recover funds lost as a result of scams or a company’s bad practices, but there is hope for those consumers.

One of the jobs of a state attorney general is to protect consumers against companies using predatory practices. Earlier this year Mark Brnovich, Arizona’s state attorney general, reported that his office had succeeded in recovering more than $38 million in restitution for consumers in 2019 alone.

Brnovich said the money has been recovered using a combination of out-of-court settlements, lawsuits filed (or backed) by the state, civil penalties, as well as costs associated with matters of consumer protection.

But the office of the state attorney general can’t protect consumers without the help of those same consumers. The state attorney general’s office relies on consumers, not only to notify them of potential scams and/or misconduct perpetrated by companies but also to provide evidence and testimony to help them pursue legal action, especially against large corporations. The Arizona state attorney general’s office reported having processed more than 14,000 written complaints, as well as 40,000 phone calls from consumers.

It’s a lot of information to go through, but it helped the Arizona state attorney general’s office bring legal action against large corporations, including e-cigarette manufacturers and pharmaceutical companies. Continue reading ›

Having a bad credit score can negatively impact your life in a big way. It can prevent you from getting loans for things you need – everything from buying a car to getting repairs done on your home can become difficult, if not impossible when you have a low credit score. When you are able to obtain a loan, a low credit score can mean you have to pay a much higher interest rate than you would get if you had a higher credit score. People struggling to pay back debt often have low credit scores, but having a low credit score imposes another financial burden on them, making it even more difficult for them to dig themselves out of debt. When you take all that into consideration, it’s no wonder people are desperate to have their credit scores improved by any means necessary. Unfortunately, this makes them vulnerable to predators claiming to be credit repair companies.

While there are legitimate companies that can help you improve your credit score by removing debt and “hard” credit checks from your credit score, there are also companies out there that claim they can do these things, charge a hefty fee, and then never deliver.

The Federal Trade Commission (FTC) and the office of the Illinois attorney general have each filed lawsuits against companies offering credit repair services while allegedly engaging in deceptive business practices and defrauding consumers. Continue reading ›

Best-Chicago-Business-Dispute-Lawyer-1-300x189AbbVie, a pharmaceutical company headquartered in Illinois, was sued by a trading firm after it conducted a Dutch auction to determine the price for its tender offer to repurchase shares of its own stock. Shareholders participated in the auction, offering to sell their stock back to AbbVie, and the lowest offered prices were selected by AbbVie until AbbVie had reached $7.5 billion worth of repurchases. AbbVie hired a company to receive bids and determine the final price it would purchase shares at. That company published preliminary numbers and later corrected them after the market had closed. The trading firm alleged that by publishing the preliminary numbers and correcting them after the close of trading, AbbVie had violated the Securities Exchange Act. The 7th U.S. Circuit Court of Appeals ruled in favor of AbbVie, affirming the decision of the district court and finding no violation.

AbbVie, Inc. made a tender offer to repurchase as much as $7.5 billion of its outstanding shares. AbbVie conducted a Dutch auction to determine the price. AbbVie began the auction by setting the price at $114. Shareholders participated by offering to sell their shares at or below $114. AbbVie then selected the lowest price that would allow it to purchase $7.5 billion of shares from the tendering shareholders.

The auction took place from May 1, 2018, to May 29, 2018. On May 30, AbbVie announced that it would purchase 71.4 million shares for $105 per share. AbbVie’s stock, which had been trading at $100 closed at $103 on May 30. Approximately an hour after the close, AbbVie announced that it had received corrected numbers from the company it hired to receive bids, Computershare Trust Co. Instead of purchasing 71.4 million shares at $105 a share, AbbVie would purchase 72.8 million shares at $103 a share. The next day, AbbVie’s share price fell to $99.

Walleye Trading LLC filed suit, contending that AbbVie’s announcement of preliminary numbers, followed by corrected numbers after trading closed, violated § 10(b) and 14(e) of the Securities Exchange Act of 1934. Walley also argued that William Chase, a controlling manager of AbbVie, was liable under § 20(a) of the act. The district court dismissed Walleye’s complaint for failing to state a claim, and Walleye appealed. Continue reading ›

We previously wrote about ex-Google engineer Anthony Levandowski, the former head of Google’s self-driving division, who was charged criminally for misappropriation of trade secrets prior to his departure from Google. Levandowski ultimately pleaded guilty to stealing a confidential document related to Google’s self-driving technology. Levandowski’s attorneys had requested that he be let off without any prison time, arguing that a year of home confinement, a fine, restitution, and community service would be sufficient punishment for his crime. The federal government had asked for a prison sentence of twenty-seven months. The judge chose not to accept either proposed sentence and instead handed down an 18-month prison sentence to Levandowski.

In handing down his sentence, US District Judge William Alsup said that a sentence without imprisonment would give “a green light to every future brilliant engineer to steal trade secrets.” Levandowski was originally charged with 33 counts of stealing trade secrets in connection with Levandowski’s downloading thousands of documents to his personal laptop before leaving Google to work on his own self-driving startup, Otto, which was later acquired by Uber in August 2016 for a reported $680 million. As part of his plea deal, Levandowski admitted to stealing one document called “Chauffeur TL weekly updates,” which tracked the progress of Google’s “Project Chauffeur” that later became Google’s self-driving division, Waymo. According to reports, Judge Alsup described the stolen document as a “competitor’s game plan” and called Levandowski’s theft the “biggest trade secret crime I have ever seen.” In exchange for pleading guilty to this one charge, the government agreed to drop the other charges against Levandowski. Continue reading ›

Best-Chicago-Business-Dispute-Lawyer-300x189A manufacturer of electrical connectors for automobiles sued another manufacturer and several competitors alleging theft of trade secrets. The plaintiff alleged that it had a contract to supply connectors to Bosch for use in cars manufactured by General Motors. After several years of performance under the contract, the manufacturer alleged that Bosch passed its designs off to its competitors in an effort to find a company to manufacture the required connectors at a cheaper price. The manufacturer sued in Illinois, but the district court found that it lacked jurisdiction over the case because the alleged theft did not take place in Illinois, and the fact that the connectors were used in vehicles that were ultimately sold in Illinois car dealerships was too attenuated to support jurisdiction. The 7th Circuit affirmed the decision on appeal.

In 2005, General Motors retained engineering company Bosch to build a “body control module” for some of its cars. A body control module is a computer system that controls certain electronic functions inside a car, like its locks and its power windows. To build the body control module, Bosch required a “183-pin connector,” an electrical adapter that can connect 183 electrical circuits. Bosch turned to Illinois company J.S.T. Corporation for the task. J.S.T. accepted the contract and designed and built for Bosch a 183-pin connector. J.S.T.’s connectors performed well and Bosch retained J.S.T. as its sole supplier of connectors for years. Continue reading ›

Layoffs have become commonplace in the COVID-19 era as employers are forced to trim staff levels amid shelter-in-place orders. Many of these employers intend to rehire their former employees when the economy picks back up. Employers should be aware, however, of the impact, these gaps in employment can have on the enforceability of non-compete agreements and other restrictive covenants the employer and employee may have previously entered into.

The U.S. Circuit Court of Appeals for the First Circuit recently considered a similar situation and ultimately held that the employer could not enforce a non-compete agreement against a former employee that had been fired and then rehired. The legal saga started when Novo Nordisk, a pharmaceutical company, sought entry of a temporary restraining order and preliminary injunction against Thomas Russomano, one of its former employees, seeking to enforce the terms of a confidentiality and non-compete agreement that Russomano signed when he began his employment with Novo Nordisk. The District Court denied Novo Nordisk’s motion because it found that Novo Nordisk failed to show a likelihood of success on the merits, a necessary requirement to obtain injunctive relief.

Russomano began his employment with Novo Nordisk in January 2016. As a condition of his employment, he signed confidentiality and non-compete agreement which prohibited him from working for a competitor during his employment and for a period of twelve months following the end of his employment. In October 2016, Novo Nordisk informed Russomano that his position was being eliminated, and he was terminated in mid-November. After an approximately three-week period, the company rehired Russomano to another position. Russomano signed second confidentiality and non-compete upon being rehired. Continue reading ›

When workers get sued by their employer for breaching their employment contract, it’s fairly common for the workers to argue that the contract was invalid, but it’s less common for them to claim their signature on the contract was forged. That’s what Eric M. Frieman said when USI Insurance Services, LLC, sued him for allegedly stealing clients away from Wells Fargo to work with his new employer, RCM&D Self-Insured Services Inc., otherwise known as SISCO.

Frieman started working for Wells Fargo Insurance Services USA Inc. in 2008 as an employee benefits producer. In 2010, he signed an employment contract with Wells Fargo that included clauses that forbade him from working for a competitor and/or soliciting clients from Wells Fargo to switch to his new employer.

But when Frieman left Wells Fargo in 2016 to go work for RCM&D, he allegedly actively solicited 18 clients he had served while working at Wells Fargo and invited them to switch over to RCM&D, which they did. USI purchased Wells Fargo in 2017 and they are named as the main plaintiffs in the non-compete lawsuit against Frieman.

Rather than denying that the employment contract he signed with Wells Fargo is valid, Frieman claimed that he had never signed the document and that his signature had been forged. He insisted he only has one signature and that the signature above his name on his employment contract with Wells Fargo does not match his signature. Continue reading ›

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