Chicago Business Litigation Attorney Blog

In Illinois, an employer is subject to vicarious liability for his employees under the doctrine of respondeat superior. Bank of America, N.A. v. Bird.392 Ill.App.3d 621, 911 N.E.2d 1239, 331 Ill.Dec. 1009 (2009). Under this doctrine, an employer can be held liable for his employee’s misconduct if the misconduct is within the scope of the employment. See id. In order to show that an employee’s actions are within the scope of his employment, “the conduct must be of the kind the employee is employed to perform, must occur within the authorized time and space limits of the employment, and must be done at least in part to serve the employer, rather than be for the employee’s personal ends.” Bagent v. Blessing Care Corp., 224 Ill.2d 154, 164-65, 308 Ill.Dec. 782, 862 N.E.2e 985, 991-92 (2007).

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Posted In: Business Litigation , Respondeat Superior , Vicarious Liability

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A stockholder of a Delaware corporation, under 8 Del. C. § 220, has a statutory right to inspect the books and records of the corporation. Norfolk County Retirement System v. Jos. A. Bank Clothiers, Inc., 2009 WL 353746 (Del.Ch.) For a stockholder to obtain the books and records of the corporation they must have a proper purpose for the request. See id. Proper purpose, as defined by § 220, “is a purpose reasonably related to the plaintiff’s interest as a stockholder. See id. Delaware courts have recognized that investigating the possibility of pursuing a derivative action based on perceived wrongdoing by a corporation’s officers or directors represents a proper purpose for a § 220 demand. See id. However, the scope of documents available to a stockholder’s request under § 200 is limited. See id. Delaware courts repeatedly have held that “the scope of inspection should be circumscribed with precision and limited to those documents that are necessary, essential, and sufficient to the stockholder’s purpose.” See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Shareholder Derivative Litigation

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Illinois Courts define promissory estoppel as a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. Restatement (Second) of Contracts § 90(1), at 242 (1981). To establish a claim for promissory estoppel in Illinois, the plaintiff must prove that the defendant made an unambiguous promise to plaintiff, the plaintiff relied on such promise, the plaintiff’s reliance was expected and foreseeable by defendants, and the plaintiff relied on the promise to its detriment. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation, 233 Ill.2d 46, 906 N.E.2d 520, 329 Ill.Dec. 322 (2009).

Promissory estoppel may be an option for a party to recover without the presence of a contract. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation (2009). Under the doctrine of promissory estoppel although there may be absent a bargain for consideration, a person who makes a promise may nonetheless be bound by its terms. Bank of Marion v. Robert Fritz, Inc., 57 Ill.2d 120, 311 N.E.2d 138 (1974). Promissory estoppel is most extensively recognized as a defensive measure with respect to the abandonment of existing legal rights. Newton Tractor Sales, Inc. v. Kubota Tractor Corporation (2009). However, in Illinois and other states, the Courts also understand promissory estoppel as an offensive theory of recovery, or cause of action, in any situation where one party relies on the promise of another party to its detriment in such a manner that it would be an injustice not to enforce the promise. See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Promissory Estoppel

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According to the U.S. Supreme Court, a forum selection clause is prima facie valid and should be enforced unless enforcement is shown by the opposing party to be unreasonable under the circumstances. Applied Card Systems, Inc. v. Winthrop Resources Corp., No. Civ. A. 03-4104, 2003 WL 22351950, *2. Moreover, the United States Supreme Court has explicitly held that a forum selection clause in a standardized, non-negotiable contract may be quite permissible. See Carnival Cruise Lines, Inc. v Shute, 499 U.S. 585, 593-94, 111 S.Ct 1522, 113 L.Ed.2d 622 (1991). The Courts reason that a party, especially one that conducts business around the world, might have a special interest in limiting the jurisdictions in which it could be subject to suit. Tricome v. Ebay, Inc. 2009 WL 3365873 (E.D.Pa.) However, the Courts may deem a forum selection clause invalid if there is some form of contractual unconscionability. See id. For instance, courts may deem the forum selection clause unenforceable if the party challenging the user agreement did not have a meaningful choice regarding the acceptance of its provisions because there were high pressure tactics or external pressures used to require the acceptance of the agreement. See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Forum Selection Clauses

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In Illinois, generally, the law regards a corporation as an entity separate and distinct from its officers, shareholders, and directors and therefore those parties will not be held personally liable for the corporation’s debts and obligations. Melko v. Dionisio, 219 Ill.App.3d 1048, 1063, 162 Ill.Dec. 623, 580 N.E.2d 586, 594 (1991). However, in certain circumstances, the corporate form may be disregarded, such as where the corporation is merely the alter ego or the business conduit of another dominating personality. See id.

In Illinois, piercing the corporate veil is a task which the courts should generally undertake reluctantly. Pederson v. Paragon Pool Enterprises, 214 Ill.App.3d 815, 819, 158 Ill.Dec. 371, 574 N.E.2d 165, 167 (1991). The Courts should not interfere with the corporate form anymore than it would a private contract, and the corporate veil should only be pierced when it appears that something in the particular situation has “gone amiss.” Tower Investors, LLC v. 111 East Chestnut Consultants, Inc, 371 Ill.App.3d 1019, 864 N.E.2d 927, 309 Ill.Dec. 686. Particularly, in breach of contract cases, courts should apply even more stringent standards to determine when to pierce the corporate veil than they would in tort cases. See id.

Illinois Courts may pierce the corporate veil if the two following requirements are satisfied. First, if there is such a unity of interest and ownership that the separate personalities of the corporation and the parties who compose it no longer exist. Second, if the circumstances are such that adherence to the fiction of a separate corporation would promote injustice or inequitable circumstances. Pederson v. Paragon Pool Enterprises, 214 Ill.App.3d 815, 819, 158 Ill.Dec. 371, 574 N.E.2d 165, 167 (1991). In a breach of contract case, “additional compelling facts,’ “such as a finding of fraud, may also be required. Main Bank of Chicago v. Baker, 86 Ill.2d at 205-06, 56 Ill.Dec. 14, 427 N.E.2d at 101-02 (1981). Where there is no evidence of any misrepresentation, no attempt to conceal any facts, and the parties possess a total understanding of all of the transactions involved, Illinois courts will not pierce the corporate veil in a breach of contract situation. See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Fraud , Piercing the Corporate Veil

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Illinois courts have held that for a partnership or joint venture to exist a written agreement may not be required as long as specific requirements are satisfied. The Uniform Partnership Act defines a partnership as “an association of two or more persons to carry on as co-owners of a business for profit." 805 ILCS 205//6(1) (West 2002). “A relationship between two or more parties may be considered a partnership by the courts if the parties join together to carry on a venture for their common benefit, each contributing property or services and having a community of interest in the profits of the venture." Kennedy v. Miller, 221 Ill.App.3d 513, 521, 163 Ill Dec. 934, 582 N.E.2d 200 (1991). “Partnership legal principles govern joint ventures and the only distinction of consequence between the two is that a joint venture relates to a single enterprise or transaction, whereas a partnership relates to a general business of a particular kind.” Dremco, Inc. v. South Chapel Hill Gardens, Inc., 274 Ill.App.2d 534, 538, 211 Ill.Dec. 39, 654 N.E.2d 501 (1995). Even though a written agreement may not be necessary, a bald assertion that a partnership or joint venture exists is not sufficient to plead the existence of such a relationship. Romanek, 324 Ill.App.3d at 405, 257 Ill.Dec. 436, 753 N.E.2d 1062. Therefore, the courts generally look for some sign of a venture for common benefit between the two parties and in particular for some indication of a sharing of profits. Landers-Scelfo v. Corporate Office Systems, Inc., 356 Ill.App.3d 1060, 827 N.E.2d 1051, 293 Ill.Dec. 170 (2005).

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Contract Formation , General Partnerships , Joint Venture Agreements

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Illinois Courts have held that in a product liability case, strict liability may be predicated on a finding that the product is unreasonably dangerous, regardless of who is at fault. Miller v. Dvornik, 149 Ill.app.2d 883, 889, 103 Ill.Dec. 139, 501 N.E.2d 160, 164 (1986). The focus when determining strict liability is whether a product is unreasonably dangerous and whether the product in its present state, without the installation of optional safety devices, is dangerous because it fails to perform in the manner reasonably to be expected in light of its nature and intended function.” Miller, 149 Ill.App.2d at 888, 103 Ill.Dec. 139, 501. An important aspect of strict liability is that proof of negligence is unnecessary. Heyen v. Sanborn Manufacturing Co., 223 Ill.App.3d 307, 315, 165 Ill.Dec. 407, 584 N.E.2d 841, 846 (1991).

Moreover, Illinois Courts have held that strict liability can be imposed upon any party who sells a product in a defective condition unreasonably dangerous to the user or consumer. Lamkin v. Towner 138 Ill.2d 510, 528, 150 Ill.Dec. 562, 563 N.E.2d 449, 457 (1990). A seller who puts a defective product into the stream of commerce runs the risk of being held strictly liable for injuries caused by the product, regardless of whether the seller actually knew of the defect, contributed to the defect or failed to discover the defect. Sims v. Teepak, Inc., 143 Ill.App.2d 865, 867, 97 Ill.Dec. 914, 493 N.E.2d 721, 723-24 (1986).

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm. Litigators Walid J. Tamari and Grant Blumenthal practice in the law firm's complex litigation practice group.

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Posted In: Business Litigation , Products Liability , Strict Liability

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Illinois courts have held that a contract may be deemed unconscionable when it is improvident, oppressive, or completely one sided. Streams Sports Club, Ltd. v. Richmond, 99 Ill.2d 182, 191, 75 Ill.Dec. 667, 457 N.E.2d 1226, 1232 (1983). Additionally, Illinois courts have provided two requirements, procedural unconscionability and substantive unconscionability, that could be present for a contract to be deemed unconscionable and therefore unenforceable. Zobrist v. Verizon Wireless 354 Ill.App.3d 1139, 822 N.E.2d 531, 290 Ill.Dec. 946 (2004).

The first requirement, procedural unconscionability, is defined by the courts as some type of impropriety during the process of forming the contract depriving the party of a meaningful choice. See id. The factors the courts consider are: the circumstances surrounding the transaction, including the manner in which the contract was entered into, whether each party had a reasonable opportunity to understand the terms of the contract and whether important terms were hidden. Franks Maintenance & Engineering, Inc. v. C.A. Roberts Co., 86 Ill.App.3d 980, 989-90, 42 Ill.Dec. 25, 408 N.E.2d 403, 410 (1980). In Illinois, however, just because a contract is presented by a party in a superior bargaining position without allowing the other party to negotiate any contract terms does not necessarily mean that the clause or contract is unconscionable. Koveleskie v. SBC capital Markets, Inc., 167 F.3d 361, 367 (7th Cir.1999).

The second requirement, substantive unconscionability, is defined by the courts as situations where a clause or term in a contract is allegedly one sided. See Zobrist. However, if the plaintiff knowingly and freely assents to a clause that works a substantial disadvantage against the plaintiff, he or she cannot be later heard to complain of the clause. See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a business litigation firm based in Chicago, Illinois. Walid J. Tamari and Grant Blumenthal are partners in the law firm's complex litigation practice group.

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Posted In: Breach of Contract , Business Litigation , Defenses to Breach of Contract

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For the purposes of determining trade secret protection, an Illinois Court has held that information about customers’ needs and requirements may have a different status under the law that depends on whether the business sells goods or if the business provides a service. Del Monte Fresh Produce, N.A., Inc. v. Chiquita Brands International Inc., 616 F.Supp.2d 805 (2009).

Courts are more likely to deem information about customers’ needs and requirements a trade secret when the business provides professional services. See id. Under these circumstances, customers maintain trust in a particular seller, and that trust is a valuable business asset created by years of management that the employee is not likely allowed to take with him. See id.

However, information about customers’ needs and requirements generally may not be considered a trade secret when dealing with the selling of ordinary goods. See id. The current price and quality, rather than a past investment in meeting customers needs, are the decisive factors in the continued success of the business, and they are not appropriated by the departing employee. See id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

About Tamari & Blumenthal, LLC: Tamari & Blumenthal, LLC is a Chicago-based business litigation and business law firm. The law firm represents clients in a broad range of business disputes. Attorneys Walid J. Tamari and Grant Blumenthal are the law firm’s co-managing partners.

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Posted In: Business Litigation , Misappropriation of Trade Secrets , Trade Secrets

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Illinois courts have held that fraud consists of anything calculated to deceive, including positive acts, omissions, concealment, breach of legal or equitable duty, and breach of a trust or confidence. Rybak v. Provenzale, 181 Ill.App.3d 884, 899 (2d Dist. 1989). The basic concept of fraud is founded on conduct calculated to deceive. Illinois Jurisprudence, Personal Injury and Torts § 13:01. Fraud has been said to comprise anything calculated to deceive and may consist of a single act, a single suppression of truth, suggestion of falsity, or direct falsehood, innuendo, look, or gesture. Id. A fraudulent misrepresentation may consist of actions, words, or other conduct that constitutes a statement of fact. Id. A representation is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by the recipient. Miller v. Lockport Realty Group, Inc., 377 Ill.App.3d 369, 377 (1 Dist. 2007).

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

Litigators, Walid J. Tamari and Grant Blumenthal, are co-chairs of the firm's commercial litigation practice group.

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Posted In: Business Litigation , Fraud

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Generally, Illinois courts require a false representation relating to a matter of fact, rather than opinions, to establish a cause of action for fraud. Illinois Jurisprudence, Personal Injury and Torts § 13:06. Opinions are usually matters of judgment, estimates, and guesses, and a person relies on such at his or her own risk. Id. As a general rule, Illinois law will not support a claim for fraud predicated on an opinion. Schrager v. North Community Bank, 328 Ill.App.3d 696, 704 (1st Dist. 2002).

However, an exception exists where the circumstances suggest that a plaintiff may have justifiably relied on the opinion as though it was a statement of fact. Schrager, 328 Ill.App.3d at 704. A statement that appears to be an opinion when standing alone, may in fact be a statement of fact for purposes of fraud when evaluated in context and in light of all the facts and circumstances of a case. Illinois Jurisprudence, Personal Injury and Torts § 13:06. Illinois courts consider the following factors to help determine whether a statement is one of fact or opinion: the sophistication of the parties; the accessibility of outside information; and whether the speaker has held himself or herself out to have special knowledge. Id.

Wherever a party states a matter which might otherwise be only an opinion, but does not state it as the expression of his own opinion, but as an affirmative fact material to the transaction, the statement clearly becomes an affirmation of the fact within the meaning of the rule against fraud. Schrager, 328 Ill.App.3d at 704. Therefore, the First District Illinois Appellate Court held that the general rule of analyzing whether a statement is one of fact or opinion is that it is the sense in which the statement is reasonably understood, not the form of the statement which is important or controlling. Id. Whether a statement is one of fact or of opinion depends on all the facts and circumstances of a particular case. Illinois Jurisprudence, Personal Injury and Torts § 13:06.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , Fraud

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The Illinois First District Appellate Court held that to state a cause of action for false light invasion of privacy, the plaintiff must prove that: (1) the plaintiff was placed in a false light before the public as a result of the defendant's actions; (2) the false light in which the plaintiff was placed would be highly offensive to a reasonable person; and (3) the defendant acted with actual malice, that is, with knowledge that the statements were false or with reckless disregard for whether the statements were true or false. Brennan v. Kadner, 351 Ill.App.3d 963, 971 (1st Dist. 2004).

For purposes of establishing a cause of action for false light invasion of privacy, Illinois courts have adopted the “actual malice ” rule. Dubinsky v. United Airlines Master Executive Council, 303 Ill.App.3d 317, 330 (1st Dist. 1999). Actual malice has been defined by the Illinois Supreme Court as “knowledge that the statements made by a defendant were false or that such statements were made with reckless disregard as to their truth or falsity.” Poulos v. Lutheran Social Services of Illinois, Inc., 312 Ill.App.3d 731, 741 (1st Dist. 2000). To sustain a cause of action for false light invasion of privacy, the plaintiff must prove actual malice by clear and convincing evidence. Illinois Jurisprudence, Personal Injury and Torts § 17:48.

Furthermore, the actual malice requirement is premised on the nature of the false light tort as involving intentional wrongdoing and outrageous conduct. Illinois Jurisprudence, Personal Injury and Torts § 17:48. Thus, in false light invasion of privacy cases, it is not necessary to determine whether the plaintiff is a private or public figure, as is required in some defamation cases, because actual malice must be proven regardless of whether the plaintiff is a private or public figure. Id.

Informational Purposes Only: The content of this writing was prepared by Tamari & Blumenthal, LLC for informational purposes only. The content of this writing is not intended to constitute and does not constitute legal advice. Reading the content of this writing or communicating with our office staff or attorneys by telephone, fax or e-mail does not make you a client of Tamari & Blumenthal, LLC. To become a client, you must sign and return our governing engagement agreement. Persons reading the content of this writing should not act upon this information without contacting and speaking with an attorney. Do not issue or provide us with confidential information until an attorney-client relationship has been formally established with our firm.

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Posted In: Business Litigation , False Light Invasion of Privacy

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