Choosing Lubin Austermuehle for business litigation comes with several advantages, particularly due to their experience and client-focused approach. Here are some key reasons why they are a compelling choice:
  1. Experience Across Business Litigation Domains: Lubin Austermuehle handles a wide range of business litigation matters, including disputes related to shareholders, LLC members, and partnerships, as well as issues involving trade secret theft, copyright and trademark infringement, and non-compete agreements. They are also experienced in emergency injunctive relief and a variety of other complex litigation areas such as consumer fraud and employment disputes​ (Chicago Business Litigation Lawyer Blog)​.
  2. Dedicated Legal Team: The firm’s attorneys, including noted lawyers like Peter Lubin and Patrick Austermuehle, are recognized for their legal acumen. Both have received accolades such as “Super Lawyer” and “Rising Star,” underscoring their professional excellence​ (Chicago Business Litigation Lawyer Blog)​​ (Chicago Business Litigation Lawyer Blog)​.

In Illinois, the concept of LLC member or shareholder oppression is generally conceived as actions that are “illegal, oppressive, or fraudulent”. For shareholders of a corpo”ration that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association, the Illinois Business Corporation Act (IBCA) states that the Circuit Court may intervene if it is established that the directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent with respect to the petitioning shareholder.

In the context of LLC members, the Illinois Limited Liability Company Act (805 ILCS 180/35-1) provides for the dissolution of the company upon the application by a member or transferee of a distributional interest, upon entry of a judicial decree that the managers or those members in control of the company have acted or are acting in a manner that is oppressive and was, is, or will be directly harmful to the applican].

However, it’s important to note that in a manager-managed LLC, a member who is not also a manager does not violate a duty or obligation under the Act or under the operating agreement merely because the member’s conduct furthers the member’s own interest.

The specific conduct that courts have found to be oppressive varies. Some cases have found that conduct is oppressive if it is “arbitrary, overbearing and heavy-handed”. Other cases have found that even where corporate formalities are observed, the payment of a high amount of compensation to corporate officers, while refusing to pay dividends to benefit minority shareholders, can be considered oppressive conduct, depending on the corporation’s overall financial picture. Continue reading ›

In the complex and often contentious world of business, minority shareholders and LLC members can sometimes find themselves sidelined, oppressed, or unfairly treated. In such situations, securing legal representation that is not only skilled in business law but also deeply understands the nuances of minority shareholder and LLC member rights is critical. Lubin Austermuehle, a firm with a robust practice in Illinois, stands out as a prime choice for minority owners seeking justice and equitable treatment. Here’s why:

Extensive Experience in Business and Shareholder Law

Lubin Austermuehle has spent decades navigating the intricacies of business and shareholder litigation, making them seasoned veterans in the field. Their deep experience extends to handling cases of shareholder and LLC member oppression—a niche that requires a detailed understanding of both state laws and the delicate dynamics of business operations and fiduciary duty law. Their track record of successfully resolving disputes, both in and out of court, reassures potential clients of their capability and strategic expertise.

It is well settled that “Illinois courts abhor restraints on trade” and therefore “postemployment restrictive covenants are carefully scrutinized . . . because they operate as partial restrictions on trade.” McInnis v. OAG Motorcycle Ventures, Inc., 2015 IL App (1st) 142644 at ¶26; see also Medix Staffing Sols., Inc. v. Dumrauf, 17 C 6648, 2018 WL 1859039, at *2 (N.D. Ill. Apr. 17, 2018) (granting motion to dismiss and noting that “[u]nder Illinois law, covenants not to compete are disfavored and held to a high standard”); Grand Vehicle Works Holdings Corp. v. Frey, 03 C 7948, 2005 WL 1139312, at *6 (N.D. Ill. May 11, 2005) (“Illinois courts disfavor and closely scrutinize restrictive covenants because they are repugnant to the public policy encouraging an open and competitive marketplace”); Cambridge Eng’g., Inc. v. Mercury Partners 90 BI, Inc., 378 Ill.App.3d 437, 447 (1st Dist 2007) (refusing to enforce restrictive covenant).

For a restrictive covenant to be enforceable, the terms must be “reasonable and necessary to protect a legitimate business interest of the employer.”  Medix Staffing Sols., Inc. 2018 WL 1859039, at *2. Thus, a restrictive covenant is reasonable only if it: “(1) is no greater than is required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-promisor, and (3) is not injurious to the public.” Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶ 17. “The employer seeking to enforce a restrictive covenant bears the burden of demonstrating that the full extent of the restraint is necessary for protecting its interests.” Cambridge Eng’g., Inc., 378 Ill.App.3d at 447. The employer must also establish a protectable interest in its customers by showing for example that it has near-permanent relationships with certain customers based upon the employer’s relationship with the customers. Giffney Perret, Inc, 2009 WL 792484, at *11. Here, the non-solicitation agreement fails to meet that standard and ITsavvy will not be able to meet its steep burden of proof.

A restrictive covenant that precludes an employee from solicting or selling to any of his former employer’s customers anywhere, with no geographic scope and no limitation based upon whether the customer did business with an employee or was a long-term customer of the employee before he or she began working for the employer is generally unenforceable in Illinois, unless the employee had contact with and/or worked with all or nearly all the employer’s customers.

An employer cannot demonstrate any valid basis for preventing an employee from soliciting customers with whom he or she never worked.  See AssuredPartners, Inc. v. Schmitt, 2015 IL App (1st) 141863, ¶ 42 (non-solicitation provision invalid where it went beyond protecting those customer relationships that employee developed while working for an employer); Cambridge Eng’g., Inc., 378 Ill.App.3d at 455 (same); Lawrence & Allen v. Cambridge Human Resources Group, 292 Ill.App.3d 131, 138 (2d Dist. 1997) (“[c]ourts are hesitant to enforce prohibitions against employees servicing not only customers with whom they had direct contact, but also customers they never solicited or had contact with while employed by plaintiff”); Trailer Leasing Co. v. Associates Commercial Corp., 96 C 2305, 1996 WL 392135, at *3 (N.D. Ill. July 10, 1996)) (holding customer non-solicitation provision unenforceable where it includes customers with whom employee had no contact). Continue reading ›

Yes, punitive damages can be awarded in derivative actions, but these awards often come with certain conditions. Punitive damages are typically awarded when the tort committed involves fraud, actual malice, deliberate violence or oppression, or when the defendant displays willful or grossly negligent behavior that shows a wanton disregard for the rights of others. This means that the defendant’s conduct must show a high degree of moral culpability for such damages to be awarded.

There are specific cases in which courts have allowed for punitive damages in derivative actions. For instance, in Caparos v. Morton, punitive damages were awarded in a derivative action for a breach of fiduciary duty against general partners.

It’s important to note that punitive damages are generally only awarded in the presence of compensatory damages. As established in Groshek v. Trewin and reaffirmed in Epic Systems Corp. v. Tata Consultancy Services Ltd., punitive damages cannot be awarded when the recovery of compensatory damages is not justified. This suggests that the availability of punitive damages is governed by whether compensatory damages are recoverable, not by whether an “actual injury” has been inflicted.

The case of Exxon Shipping Co. v. Baker also suggests that a punitive award should be limited to an amount equal to compensatory damages.

In Illinois, punitive damages have certain restrictions. For instance, they may not be recovered in cases of medical or legal malpractice.
Continue reading ›

In the world of franchising, the termination of a franchise agreement can be a complex and contentious issue. Franchisees facing termination must understand their rights and the defenses available to them. Equally important is choosing the right legal representation to navigate these challenging waters.

Defenses to Franchise Termination

  1. Breach of Contract by Franchisor: If the franchisor has failed to uphold their end of the franchise agreement, this can be a strong defense. Examples include not providing agreed-upon support or infringing on the territory rights of the franchisee.
  2. Lack of Proper Notice: Franchise agreements typically require the franchisor to provide notice before termination. If this procedure is not followed, it can be a valid defense.
  3. Unreasonable or Unjust Termination: Franchisees can argue that the termination is unreasonable or unjust. This might be the case if the franchisor terminates the agreement without a valid reason or for a minor infraction that could have been resolved.
  4. Good Faith and Fair Dealing: Franchisees can contend that the franchisor did not act in good faith or deal fairly. This is a broader defense that encompasses various actions by the franchisor that might be deemed unfair or oppressive.
  5. Discrimination: If the termination is based on discriminatory reasons, this can be a legal defense, especially if it violates state or federal laws.
  6. Retaliation: If the termination is in retaliation for the franchisee exercising a legal right, such as reporting violations, it can be contested legally.

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Under Illinois law, various defenses are recognized for libel actions. The first defense is the innocent construction doctrine. This doctrine posits that if a statement could be construed in a non-defamatory way, it cannot be considered defamatory.

Another defense is the expression of opinion. Statements of opinion, even if they are defamatory, do not result in a defamation claim if the statement cannot be reasonably interpreted as stating actual facts. The statement must have a precise and readily understood meaning, be verifiable, and its literary or social context should signal that it has factual content.

The defense of truth is also recognized. A defamatory statement can be defended if it is substantially true and was published with good motives and for justifiable ends. This is reflected in the Illinois Constitution which states: “In trials for libel, both civil and criminal, the truth, when published with good motives and for justifiable ends, shall be a sufficient defense”. It is enough to show that the publication is “substantially true”, or that the “gist”, the “sting”, or the “substantial truth” of the defamation can be justified.

The defense of ‘fair comment’ is another possible defense. In addition, there is a defense of privilege as a means for redressing grievances. Continue reading ›

In the business world of closely held companies in Illinois, minority shareholders often find themselves vulnerable to what is known as a “freeze out” or “squeeze out.” This blog post delves into this phenomenon, exploring what it means, how it happens, and the legal backdrop in Illinois that governs such situations.

What is a Freeze Out/Squeeze Out?

A freeze out or squeeze out occurs when majority shareholders in a closely held company engage in practices aimed at marginalizing, reducing, or eliminating the minority shareholders’ stake in the company. This can be done in various ways, such as refusing to declare dividends, terminating employment, or other tactics that essentially force minority shareholders to sell their shares at a reduced value.

Common Tactics Used

  1. Withholding Dividends: Majority shareholders may decide not to declare dividends, thereby cutting off a key financial benefit of holding shares.
  2. Employment Termination: Minority shareholders who are employed by the company might be terminated or demoted.
  3. Denying Access to Information: Minority shareholders might be denied access to important company information, impacting their ability to make informed decisions.
  4. Dilution of Shares: The company might issue more shares, diluting the minority’s ownership percentage.

Legal Framework in Illinois

In Illinois, the rights of minority shareholders in closely held corporations are protected under various statutes and case law. The Illinois Business Corporation Act provides certain protections and remedies for minority shareholders, including the right to a fair valuation of their shares.

  1. Fiduciary Duties: Majority shareholders have fiduciary duties to the minority. Breach of these duties can form the basis for legal action.
  2. Oppression Remedies: The law provides remedies for “oppressive” actions by majority shareholders. This can include actions that are burdensome, harsh, or wrongful.

In Illinois, there are several significant cases that provide guidance on the treatment of minority shareholder or LLC member freeze-outs or squeeze-outs.

In “Vanco v. Mancini”, the court acknowledged the vulnerability of minority shareholders to freeze-outs or squeeze-outs where the majority, for personal rather than legitimate business reasons, deprives the minority shareholder of their office, employment, and salary. The court highlighted the availability of judicial remedies, including the dissolution of the corporation, in such instances.

The case of “Rexford Rand Corp. v. Ancel” further expanded on this issue. The court suggested the necessity of a fiduciary duty on shareholders in a close corporation as a protective measure against oppressive conduct by the majority. It also indicated that a minority shareholder who has been frozen out should rely on an oppressed shareholder lawsuit against the corporation seeking damages or dissolution. Interestingly, the court discussed whether a freeze-out terminates a shareholder’s fiduciary duty to a close corporation and concluded that a minority shareholder who has been frozen out no longer exercises influence over corporate affairs that gives rise to a fiduciary duty.

“Small v. Sussman” held that the injuries alleged by a minority shareholder were injuries to the corporation, thus only a shareholder derivative action was available. It also found that a freeze-out merger that, through a reverse stock split, eliminated a minority shareholder’s fractional share, did not support a constructive fraud claim. The court ruled that a minority shareholder cannot recover on a conversion claim against the majority shareholder and corporation in connection with a freeze-out merger that eliminated his fractional share.

Further to this, “Jaffe Commercial Finance Co. v. Harris” held that a majority, by merely voting its strength to effectively oust minority from participation in the business of a corporation, did not act oppressively within the meaning of the statute authorizing liquidation. Similarly, in “Jahn v. Kinderman”, it was held that frozen-out minority shareholders in closely held corporations may seek dissolution of the entity, and majority shareholders may avoid this result via a buyout of the minority at a “fair value” to be determined by the circuit court if the parties are unable to reach an agreement.

Lastly, “Bone v. Coyle Mechanical Supply, Inc.” found that majority shareholders’ conduct in failing to hold annual meetings, failing to observe corporate formalities in increasing bonuses and compensation, and effectively “freezing-out” minority shareholders could be considered as outrageous, due to evil motive or reckless indifference to the rights of others.

Please note that these cases provide a general outline of the law in Illinois on minority shareholder or LLC member freeze-outs or squeeze-outs, and the specific holdings may vary depending on the facts of each case.

Continue reading ›

In the complex world of trade secret theft and non-compete litigation, having the right legal team on your side is critical. Lubin Austermuehle, with its strong online presence at and, stands out as a premier choice for handling these intricate legal matters. Here are compelling reasons why they should be your go-to firm:

1. Experience in Trade Secret and Non-Compete Litigation

Lubin Austermuehle has a proven track record in successfully handling trade secret theft and non-compete cases. Their deep understanding of the legal complexities in these areas ensures that they can provide effective strategies tailored to each unique case.

2. Dedicated and Experienced Legal Team

The team, including highly recognized attorneys like Peter Lubin and Patrick Austermuehle, brings a wealth of experience and accolades. Their expertise is not just in the courtroom; they understand the nuances of negotiating settlements and crafting agreements that protect their clients’ interests.

3. Commitment to Protecting Client Interests

The firm is committed to protecting the rights and interests of their clients. Whether you are defending against an accusation of trade secret theft or challenging an unfair non-compete agreement, Lubin Austermuehle works tirelessly to ensure the best possible outcome for their clients.

4. Client-Centric Approach

Understanding that every case is unique, Lubin Austermuehle prides itself on a client-centric approach. They listen to their clients, understand their specific needs, and develop strategies that are not just legally sound but also aligned with the clients’ business objectives. Continue reading ›

Extensive Experience in Partnership, LLC Member, and Shareholder Disputes

At Lubin Austermuehle, we understand the complexities of business disputes in closely held companies. Whether you are facing a partnership disagreement, LLC member conflict, or shareholder dispute, our experienced attorneys are here to provide you with the guidance and representation you need to protect your interests.

Personalized Attention for Closely Held Companies

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