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The Seventh Circuit in a recently issued decision held that an employer cannot invoke an arbitration provision to evade a shareholder class-action lawsuit seeking broad relief under the Employee Retirement Income Security Act (ERISA), a federal law aimed at protecting participants in private employer retirement plans. In its decision, the Court found that claims under ERISA are generally subject to arbitration, but ultimately concluded that the District Court did not err in denying the defendants’ motion to compel arbitration of plaintiff’s class action under section 1132(a)(2) of ERISA due to a class action waiver in the arbitration agreement that would have precluded the plaintiff from asserting certain statutory rights.

The plaintiff, James Smith, worked for Triad Manufacturing, a shelving and fixture company, back in 2015 and 2016. While employed by Triad, he participated in the company’s employee stock ownership program, known as a “defined contribution plan” under ERISA. Triad’s board of directors created the plan for its employees in early December 2015.

According to his lawsuit, after forming the plan, three members of Triad’s board sold all Triad’s stock to the plan at a price of $58.05 per share, totaling more than $106 million. Four days later the board appointed GreatBanc Trust Company as plan trustee. GreatBanc then approved the transaction, seemingly after it had already occurred. Less than two weeks later, Triad’s share price dropped to $1.85, according to the plan’s financial statements. In effect, what had been valued at over $106 million plummeted in two weeks to just under $4 million. The suit alleges that the earliest the plan’s members could sell their shares was the end of 2016 due to vesting requirements, at which time the shares were worth only $1.15. By the end of 2018, the share price had dipped to less than $1 per share. Continue reading ›

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Back in September the resident-run condo board of 432 Park Avenue in Manhattan sued the developer of the building for $125 million to repair 1,500 alleged defects to the luxury condo building. According to the lawsuit, multiple residents experienced flooding in their units and noise as a result of alleged building defects. They also reported elevators that would get stuck and trap residents for hours.

The lawsuit further alleges that the construction issues have affected the building’s management, causing common charges to go up by 39% and insurance premiums to go up 300%.

The building’s developer denies the allegations made in the September lawsuit, arguing the allegations of safety defects were exaggerated, and that many of the problems it acknowledged were either caused and/or exacerbated by the residents themselves. According to the developer, it tried to address some of the issues listed in the residents’ lawsuit, but it claims the condo association either cancelled appointments or blocked access to the building when repairs were scheduled to be made.

As a result, the developer has filed a counter lawsuit against the condo board for defamation. According to the developer’s lawsuit, 90% of the building’s units were sold at the time the condo association filed its lawsuit, but sales dropped dramatically after the residents started making their allegations against the building’s developer. To back up its point, the developer pointed out that, overall, 2019 was a strong year for luxury condo sales, suggesting the lag in sales at the 432 Park Avenue building was most likely due at least in part to resident complaints. The developer has not specified the amount of damages it is seeking in its lawsuit against its residents, but it’s likely to be tens of millions of dollars.

The president of the condo board denies all the allegations made in the developer’s defamation lawsuit. Continue reading ›

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The Illinois Supreme Court recently issued its decision in a putative class-action lawsuit concerning the practice of State Farm of depreciating the cost of labor when paying out claims to holders of homeowner policies. In a 6-0 decision, the Illinois Supreme Court held that insurers may not depreciate labor costs when determining the “actual cash value” (ACV) of a covered loss where the policy does not define that term.

The case stems from a dispute following a homeowner’s insurance claim by the plaintiff Jarret Sproull under his policy issued by State Farm. Sproull’s home was damaged by wind in 2015. Sproull contacted State Farm and made a claim under his homeowner’s policy. Under Sproull’s policy, State Farm agreed to pay “only the actual cash value at the time of the loss of the damaged part of the property” initially and then the actual cost of repair or replacement after repairs were completed. Using a program called “Xactimate,” State Farm estimated a replacement cost value of $1,711.54 to repair the damage to Sproull’s home. After subtracting $1,000 for the deductible and $394.36 for depreciation and taxes, State Farm calculated an actual cash value of $317.18 and cut Sproull a check for that amount.

Believing that State Farm improperly calculated his actual cash value by depreciating labor in addition to materials, Sproull filed a putative class-action complaint in state court alleging that State Farm breached its contract by improperly depreciating the cost of intangible components of replacement cost, such as labor and concealing its practice from policyholders.

State Farm sought dismissal of Sproull’s complaint by arguing that its method of calculating actual cost value was mandated by an Illinois Department of Insurance (DOI) regulation which defined actual cash value as “replacement cost of property at time of loss less depreciation, if any.” The policy itself did not define the term actual cash value. The trial court denied the motion, finding the phrase “actual cash value” to be ambiguous in the context of State Farm’s policy. Continue reading ›

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The Nazis viewed modern art as “degenerate” and therefore confiscated whatever pieces of art they found to be “degenerate,” but that didn’t stop them from profiting off those pieces of art.

While the Nazi party refused to display artwork it did not approve of in German museums, they saw nothing wrong with selling the artwork to foreign buyers, which is how many pieces of art confiscated by the Nazis came to be displayed in American museums. That puts those museums in a morally uncomfortable position.

While the Nazis claim they “confiscated” works of art from its citizens, the truth is that they stole the artwork and used the proceeds from selling it to fund a fascist regime that killed millions of people.

In general, American museums recognize that artworks “confiscated” by Nazis are stolen, and that the Nazis had no legal right to sell them. As a result, American museums have returned many pieces of stolen artwork to the heirs of their original owners or creators, but the Philadelphia Museum of Art is still hanging on to “Composition with Blue” by Piet Mondrian, which was “confiscated” by the Nazis and sold to an American during WWII.

Mondrian had given the painting to Sophie Küppers, a German art historian and dealer, shortly after he completed it in 1926. The next year, Küppers moved to the Soviet Union, leaving the painting in Hanover at the Provinzialmuseum. After the Nazis came to power, they “confiscated” the painting, whereupon it was given to Karl Buchholz to sell to a foreign buyer.

Buchholz had a business partner, Curt Valentin, who was based in New York, so Buchholz sent the painting to Valentin to be sold in the United States. Valentin sold it to an art collector named Albert E. Gallatin. Continue reading ›

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Apple recently sued the NSO Group, an Israeli surveillance company that allegedly uses Apple products to spy on targets for its government clients. While the NSO Group has tried to portray itself as a company that helps bring criminals to justice and save lives, a closer look at their clients (and the targets of those clients) tells a more insidious story.

According to internal documents from the NSO Group that were leaked to the press, the surveillance company’s clients include the United Arab Emirates and Mexico, and the targets of those clients have included dissidents, activists, and journalists. The documents also revealed that the teenaged children of those targets (some of whom were living in the U.S.) were also surveilled.

The NSO Group’s legal troubles started back in 2019 when Facebook sued the surveillance company for targeting its WhatsApp users. The surveillance company tried to claim foreign sovereign immunity to have the lawsuit dismissed, but the United States Court of Appeals for the Ninth Circuit rejected that argument, thereby paving the way for the case to proceed through the courts.

The unanimous decision also paved the way for Apple to file its own lawsuit against the NSO Group. When Apple discovered that the NSO Group had created spyware that allowed it to access data on a target’s Apple product and transmit it back to the government servers without the target knowing about it, Apple took steps to both prevent future attacks, and to bring the NSO Group to justice for this invasion of privacy.

When it turned out that NSO’s engineers had created more than 100 fake Apple IDs to carry out the attack, Apple was able to sue the surveillance company for violating Apple’s Terms and Conditions, to which every user must agree in order to set up their account. One section of Apple’s Terms and Conditions specifies that users’ engagement with Apple and its products and services are to be governed by California state law. That’s the clause that allowed the Silicon Valley company to sue an Israeli surveillance company in U.S. federal court. Continue reading ›

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Patrick Austermuehle of our firm filed an Amicus Brief on behalf of the Illinois Trial Lawyers Association and the National Association of Consumer Advocates on a important access to justice issue for consumers who have been defrauded including consumers who have been scammed by used car dealers.

Who Are ITLA and NACA?

The National Association of Consumer Advocates (“NACA”) is a nonprofit corporation whose members are lawyers, law professors, and students practicing or studying consumer-protection law. NACA’s mission is to promote justice for consumers through information sharing among consumer advocates and to serve as a voice for its members and consumers in the struggle to curb unfair and oppressive business practices.

The Illinois Trial Lawyers Association (“ITLA”) is a statewide organization whose members focus their practices in representing injured consumers and workers. Founded in 1952, the organization
has more than 2,000 members. ITLA’s principles and mission are simple: to achieve and maintain high standards of professional ethics, competency and demeanor in the bench and bar; to uphold the Constitutions of the United States of America and the State of Illinois; to secure and protect the rights of those injured in their persons or civil rights; to defend trial by jury and the
adversarial system of justice; to promote fair, prompt and efficient administration of justice; and to educate and train in the art of advocacy. Continue reading ›

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Our founding fathers may not have guaranteed the right to free speech in the first draft of the U.S. Constitution, but it did make it into the very first amendment to the document. A series of Supreme Court rulings during the Civil Rights movement extended the right to free speech, but now at least two Supreme Court Justices want to reverse that decision.

At the height of the Civil Rights movement, The New York Times published an advertisement that criticized terrorism against protestors in the Civil Rights movement in the South. L.B. Sullivan, the police commissioner of Montgomery, Alabama at the time, sued the newspaper, claiming the ad falsely accused him of misconduct. Sullivan was not even named in the ad, but a jury in Alabama ruled in his favor and awarded him $500,000 in damages.

The case made its way up to the Supreme Court, which reversed the decision. The Court based its ruling on the fact that the First Amendment of the U.S. Constitution prohibits public officials from recovering damages for defamation regarding their official conduct. The only exception to that rule is if the plaintiff can prove the allegedly defamatory statement was made with “actual malice”, meaning the defendant knew the statement was false at the time they made it, and they made it anyway with the intention of inflicting some sort of harm (financial or otherwise) on the plaintiff.

The Court concluded by saying the ruling was in the spirit of the First Amendment, which was designed to encourage free and open debate on public issues, even when it means leaving public figures to get attacked in the press. While the First Amendment initially applied only to public officials (those holding elected government positions), later Supreme Court rulings extended the protection to any speech about any public figure, including entertainers and other celebrities. Continue reading ›

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Recently, the Illinois Appellate Court for the First District issued a significant decision on the question of which statute of limitations govern claims for violations of the Illinois Biometric Information Privacy Act (“BIPA”). In its opinion, the Court ruled that claims for unlawful profiting from or disclosure of biometric data, those brought under sections section 15(c) and (d) of the BIPA, are subject to a one year limitations period while claims involving violations of the notice, consent and retention requirements, those brought under sections 15(a), (b), and (e) of the BIPA, are subject to a limitations period of five years. This decision should bring much needed clarity to class-action plaintiffs and defendants alike.

The BIPA, one of the most robust privacy statutes in the country, imposes various obligations on anyone that collects, stores or uses biometric identifiers such as fingerprints, retina or iris scans, voiceprints, or face geometry from Illinois residents. Failure to comply with the BIPA’s requirements can be costly as violations of the statute entitle successful plaintiffs to statutory damages ranging from $1,000 to $5,000 for each violation (plus attorney fees). This can add up quickly as claims for violations of the BIPA are frequently brought as a class action as we have seen in recent years.

The underlying case was brought by two former drivers for Black Horse Carriers, a trucking and logistics company. The plaintiffs filed the case as a class action. In their lawsuit, the former drivers alleged that Black Horse failed to obtain consent to use drivers’ fingerprints or to institute a retention schedule. They also accused the company of unlawfully disseminating their biometric data by sharing fingerprints with a third-party vendor that processed timekeeping records for the company. Continue reading ›

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In a putative class-action lawsuit filed against Apple concerning alleged violations of the Illinois Biometric Information Privacy Act (BIPA), the parties disputed the scope of discovery to which the plaintiffs were entitled. The plaintiffs sought to compel Apple to produce certain identifying information for Illinois residents with Apple devices containing the Photos App. The plaintiffs also issued document subpoenas to major resellers of Apple products for the personal data of individual customers. The district court ultimately denied the request to compel and quashed the subpoenas, citing concerns about how personal information would be protected given the increase in cyber attacks and hacking incidents.

The suit centers on the Photo App contained on Apple devices that displays photos stored on the devices. According to the plaintiffs, the Photo App collects biometric identifiers and biometric information, including scans of facial geometry and related biometric information, of the individuals in the photos. Apple collects these biometric identifiers, the plaintiffs allege, without first notifying the individuals in writing and obtaining their informed consent. The plaintiffs further allege Apple possessed biometric identifiers and biometric information without creating and following a written, publicly available policy with retention schedules and destruction guidelines. According to the plaintiffs’ complaint, these actions violate the BIPA. Continue reading ›

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A federal appeals court has revived a portion of Representative Devin Nunes’s defamation lawsuit that was dismissed last year finding that the defendant’s tweeting a link to the allegedly defamatory article after the lawsuit was filed could satisfy the actual malice requirement.

In September 2018, Esquire magazine published an article about Representative Nunes and a dairy farm in Iowa owned by Nunes’s family. Political journalist, Ryan Lizza, authored the article titled “Devin Nunes’s Family Farm Is Hiding a Politically Explosive Secret” (online version) and “Milking the System” (print version). The print version included a caption with two questions about Nunes: “So why did his parents and brother cover their tracks after quietly moving the farm to Iowa? Are they hiding something politically explosive?”

Nunes took issue with a number of claims in the article. In his defamation complaint filed in 2019, Nunes identified 11 statements in the article that he alleged were defamatory. Additionally, Nunes alleged that the article falsely implied that he “conspired or colluded with his family and with others to hide or cover-up” that the farm “employs undocumented labor.”

In August 2020, a federal judge in northern Iowa dismissed the case finding that none of the statements identified by Nunes were defamatory as a matter of law and that Nunes, as a public figure, had not met the high bar of showing that the magazine or Lizza had published the article with actual malice.

Nunes appealed the dismissal to the 8th Circuit Court of Appeals. On appeal the Court ruled that the district court correctly sided with the defendants in deciding that the allegedly defamatory statements failed as a matter of law. However, the Court sided with Nunes on his argument that the district court improperly dismissed his claims for defamation by implication. Defamation by implication occurs when the defendant either juxtaposes a series of facts to imply a defamatory connection between them or omits certain facts to create a defamatory implication. Continue reading ›

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