Articles Posted in Corporate Law

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A jury awarded Waukegan-based Atturo Tire Corp. a $110 million verdict for damages related to deceptive trade practices and tortious interference by a multinational competitor.

After a five-day trial, a federal jury in the Northern District of Illinois in Chicago found Toyo Tire Corp. and Toyo USA Corp. liable for unfair competition, defamation, unjust enrichment, deceptive trade practices, and tortious interference with Atturo’s business.

The jury found Toyo told Atturo’s existing and prospective customers and manufacturing partners that Toyo owned a trade dress right in Kayo’s Open Country Mountain Tire and that Atturo infringed upon it with its Trail Blade M/T tire.

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Ashad Umrani and Mundar Jatoi, the plaintiffs, brought a derivative action on behalf of Sindhi Association of North America (SANA) against SANA and several SANA office holders. They alleged misconduct and breach of fiduciary duties, fraud, and spoliation of evidence against SANA executive council members and other office holders.

SANA is an organization under New York State law with office holders spread across North America. SANA is registered as a 501c non-profit organization that works to unite Sindhis in North America; to defend the national rights of Sindhi people; to foster understanding between Sindhis and other nationalities; and to educate people about Sindhi Civilization, according to the group’s website. The defendants, who include SANA office holders in multiple states, were represented by multiple attorneys.

Some of the defendants filed a motion to dismiss based on lack of personal jurisdiction, but others neither filed a motion nor joined the others. The circuit court judge granted the motion to dismiss but directed the parties to specify the order in which defendants were included. This was not done; instead, the motion to dismiss was granted and the defendants were not notified individually.

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The Illinois Supreme Court has reversed a lower court’s ruling in a case involving an alleged breach of fiduciary duty.

In this case, the trial court first ruled that, although defendants had breached their fiduciary duties to the plaintiff, Indeck Energy Services, Indeck had failed to establish any usurpation of a corporate opportunity. The court found that both the turbine and the funding opportunities were still available to Indeck at the time of trial.

After a bench trial in favor of the defendant, the appellate court then reversed the trial court’s ruling, holding that it was “immaterial” whether a corporate opportunity still existed for Indeck. 2019 IL App (2d) 190043.  According to the appellate court, once Indeck established that defendants DePodesta and Dahlstrom had breached their fiduciary duty by choosing not to disclose or tender the funding opportunity to Indeck, that “answered in the affirmative the corporate-usurpation question.”

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Michael Maschmeyer was the co-owner of Chicago Roof, Deck and Garden LLC (CRDG) with 42.5% of the interest in the company. Darren Flynn and Tomasz Bartosiewicz owned the remaining 57.5% interest in the company.

Flynn and Maschmeyer had been partners for several landscaping and real estate development businesses in the past. They formed CRDG to provide outdoor living design, construction and landscaping services. All construction work was done by another company owned by Bartosiewicz and CRDG’s captive subcontractor.

Between 2009 and 2014, Maschmeyer deposited more than $1.7 million in checks made payable to CRDG, all for CRDG labor, to his personal bank account and refused to return $850,000 when confronted by Flynn and Bartosiewicz. Instead, Maschmeyer and his wife, Anne, formed Urban Rooftops LLC, a company directly competing with CRDG.

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Within a year of when Michael Booth signed an employment agreement that had a non- competition clause, he resigned as president of Axion RMS and then went to work for a competitor. It was also alleged that, after leaving Axion RMS, he started luring away former colleagues. Axion sued Booth for the alleged violation of the non-compete contract.

A circuit court judge dismissed the case because (1) the alleged consideration for the restrictive covenant was Booth’s continued employment, and (2) several Illinois Appellate Court cases require, as a bright-line rule, two years of subsequent employment to qualify as adequate consideration for such provisions.

The circuit court judge also denied Axion’s request for leave to file an amended complaint that cured this problem (by alleging that the consideration for the non competition agreement included a boost in Booth’s salary, from $300,000 to $500,000 a year; his receipt of shares in the business; plus a promotion to president from vice president of sales).

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Guitar Center sells musical instruments. It created a new brand of woodwind and brass instruments produced by Eastman known as “Ventus.”

Barrington owns the trademark “Vento,” which is used in relation to instruments it sells.  Barrington began using its mark in commerce in 2009 and achieved gross sales just under $700,000. Barrington filed for registration of its “Vento” mark in January 2010. In March 2011, Guitar Center began selling instruments using the “Ventus” mark, with gross sales totaling about $5 million.

Barrington filed suit against Eastman, Music & Arts, Guitar Center and Woodwind.

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A December 2017 binding arbitration awarded unpaid sales representative commissions, punitive damages and attorney’s fees against Chicago medical device distributor MioMed Orthopaedics Inc. The  circuit court judge in the case confirmed judgment against the company in the amount of $91,654.21, plus costs.

The judgment was entered after Kreisman Law Offices’ attorney Robert Kreisman moved the court for summary judgment. MioMed’s counsel opposed the motion. After the motion was granted and judgment entered, MioMed’s lawyer moved to have the court reconsider that judgment order, which was denied.

Up to now, MioMed has refused to satisfy the judgment. Post-judgment processes are underway. Under Illinois law, judgments carry a 9% per annum interest rate until satisfied.

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A new law in Illinois prohibits employers from entering into noncompete contracts with employees who earn $13 per hour or less. The Illinois Freedom to Work Act (Public Act 099-0860) became effective on Jan. 1, 2017. The law makes it illegal for an Illinois employer to enter into a “covenant not to compete” contract with any of its “low-wage employees.”

The term “covenant not to compete” is defined to extend to any agreement restricting a covered employee from the following:

  • Working for another employer for a specified period of time.
  • Working in a specified geographic area.
  • Performing other “similar” work for another employer.

Any contract with a “low-wage employee” who contains any covenant not to compete is “illegal and void.” The act is limited to agreements entered into after the effective date of Jan. 1, 2017. The act comes out of the movement to curb employers from locking lower-level employees into unfair noncompeting contracts.

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The Illinois Appellate Court for the First District recently reviewed a case regarding the piercing of a corporate veil. Piercing the corporate veil is a practice in which a lawyer will prove that the corporation that would otherwise protect its shareowners from personal liability is really a façade or fiction that allows for the “piercing” of that veil to recover from the true owners. The appeals panel reversed a trial court’s decision that dismissed plaintiffs’ claim in a case involving whether the plaintiffs were employees or independent contractors.

Piercing the corporate veil is not a cause of action but instead a “means of imposing liability in an underlying cause of action.”

A firmly established corporate entity stands on its own unless its corporate veil is pierced for different reasons. In many cases, once a party obtains a judgment against a corporation, the party then may attempt to pierce the corporate veil of liability protection and hold the dominant shareholders responsible for the corporate judgment.

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The Illinois Appellate Court has affirmed a Cook County trial judge’s order regarding the effect of an attorney’s lien notice sent to a defendant’s attorneys rather than the defendant directly.

Randy Brown was the owner and operator of a Harold’s Chicken Shack in suburban Broadview, Ill., until Jan. 15, 2009. On that date, the building’s roof collapsed, and the restaurant was destroyed.

The building was leased to Brown by Tap Investment LLC. It was managed by Universal Realty Group. Tap and Universal were defendants in this case. Brown sued both companies and their principals. His lawsuit was filed on Aug. 2, 2010, and the complaint was signed by a lawyer with the law firm representing Brown. The law firm was based in Naperville, Ill.

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