Litigation/Business Trials/Business Lawsuits/Business Litigation

Chicago Tribune Reports on Litigation Arising Out of Bankruptcy of Giordano’s Pizza Franchisor

August 14, 2011 | Peter S. Lubin and Patrick Austermuehle

The Chicago Tribune has recently reported on two lawsuits arising out of the bankruptcy of the franchisor for the Giordano’s pizza chain.

In one suit the bankruptcy trustee has sued franchisee for failing to use the the required pizza dough thus allegedly harming the quality and uniformity of Giordano’s pizzas. This type of lawsuit often arises in the franchise setting the article explains. The article states:

It’s common, especially in the restaurant business, for a franchisor to dictate suppliers in their franchise agreements.

“If a customer does not receive essentially the same product, same quality and same experience, the brand image is tarnished and the customer less likely to patronize the franchise in the future,” said Christian Burden, a Quarles & Brady LLP partner focusing on disputes involving distributors and franchises. “To use the quintessential example of the Big Mac, from the franchisor’s perspective, a Big Mac in Chicago must taste and appear generally the same as a Big Mac in Los Angeles, Toronto, Brazil, and so on.”

But it’s also not unheard of for franchisees such as those at Giordano’s to look for alternative sourcing. …

You can read the full article by clicking here.

The other Tribune article details a lawsuit filed by the former Giordano’s franchisor claiming that the franchisor’s lender-banks, former lawyers and other franchisees conspired to rob them of the business. You can view a copy of the complaint in this lawsuit by clicking here. The article describes the lawsuit’s claims as follows:

The lawsuit said that the men enlisted Fifth Third Bank, Giordano’s chief lender, as well as Chicago lawyer Michael Gesas and several Giordano’s franchisees “to participate in the scheme” in which they’d push the Apostolous out and take over the company. Secret meetings were held from September 2010 to February 2011, the lawsuit said. Gesas didn’t respond to a request for comment.

First, they intended to weaken the Chicago-based deep dish pizza chain financially, the suit said. Then, the Apostolous “were fraudulently induced” into signing agreements in August 2010 and October 2010 that worsened their lending terms with Fifth Third, which is owed more than $40 million in the bankruptcy.

Fifth Third threatened to “throw the family in the street” if they didn’t go along with the new terms, the lawsuit said. Aynessazian, who also owns eight Giordano’s franchises, Roche and Gesas made “material omissions” to the Apostolous and failed to represent the interests of the Glenview family, the suit said.

Before the execution of the October 2010 deal with Fifth Third, Apostolou had a heart attack, leaving him even more dependent on his lawyers and Aynessazian. The stress also prompted him to see a psychiatrist, the lawsuit said.

“The final step of the scheme involved seizing control of (Giordano’s) by pressuring the Apostolous into filing a Chapter 11 bankruptcy by which the assets and value of (Giordano’s) could be usurped for the benefit of Fifth Third, and the Apostolous’ ownership interests could be purchased at a materially deflated price for the benefit of the franchisee takeover group,” the lawsuit said.

You can read the full article by clicking here.

CNN reports: Designer Loses First Round of Trademark Lawsuit on Red Soled High Heels — Lawyer Vows to Continue the Fight on Appeal and Lambasts Judge’s Decision

August 14, 2011 | Peter S. Lubin and Patrick Austermuehle

CNN reports that French Shoe Designer Christian Louboutin lost the first round of a trademark lawsuit seeking to protect his iconic red soled high heels. Louboutin’s lawyer blasted the Court’s decision and vowed he would fight on in an appeal. The story explains that many designers want to use red soled shoes and don’t think they should be excluded from doing so with one designer receiving a monopoly on that color. The story states:

“Everyone sees the flash of red and associates the red with Louboutin,” attorney Harley Lewin said Thursday about his client.
In fact, Louboutin’s red soles have graced many a red carpets, adorning the feet of celebrities Oprah Winfrey, Heidi Klum and Sarah Jessica Parker. …
In his decision Wednesday, U.S. District Judge Victor Marrero acknowleded that in choosing a red sole for his shoes, Louboutin had “departed from longstanding conventions and norms of his industry,” to create a product, “so eccentric and striking that it is easily perceived and remembered.”
However, Marrero went on to say that, “Louboutin’s claim to the ‘the color red’ is, without some limitation, overly broad and inconsistent with the scene of trademark registration.”
“This was a trademark that never should’ve been issued,” David Bernstein, attorney for the defendant, Yves Saint Laurent said. …
Judge Marrero’s decision drew parallels between painters and fashion designers, calling them both members of a creative industry where no one should be barred from using color to achieve their aesthetic. Doing so could, “interfere with creativity and stifle competition.”
Bernstein agrees. “No designer should be able to monopolize a color.” …
Lewin says his client “separated his shoes from everyone else’s by using a red sole.”
Lewin said he’s never had such an outpouring from his fellow attorneys, law professors and members of the fashion industry, telling him, “This [verdict] is an abomination. Tell your client to appeal.”

You can read the full story by clicking here.

SEC Opens New Whistle Blower Office

August 14, 2011 | Peter S. Lubin and Patrick Austermuehle

The New York Times reports that the SEC has now opened for business its new whistblower office as required by the Dodd-Frank financial reform bill. The office will respond to consumer tips regarding securities fraud. If a consumer tip leads to a successful prosecution and recovery, the consumer and the federal goverment will benefit (and, securities fraud will be deterred). Under the whistle blower program, corporate insider tipsters could receive up to 30 percent of the money the SEC collects from the corporate wrong doer and its officers or directors. To qualify for the fraud tip bounty, an employee needs to provide new information that leads to successful enforcement achieving more than $1,000,000 in fines. The SEC will tap into the $450 million Investor Protection Fund to hand out the rewards. The S.E.C. says the program will help it save money as insider tipsters provide a road map to the financially strapped SEC investigators and attorneys.

This American Life Reports: “When Patents Attack”

July 24, 2011 | Peter S. Lubin and Patrick Austermuehle

This American Life reports in an excellent piece on how a billioinaire inventor who founded a company to aggregate patents and to sue for infringement. This practice may in fact be hindering innovation and the economy the story reports:

Nathan Myhrvold is a genius and a polymath. He made hundreds of millions of dollars as Microsoft’s chief technology officer, he’s discovered dinosaur fossils, and he recently co-authored a six-volume cookbook that “reveals science-inspired techniques for preparing food.”

Myhrvold has more than 100 patents to his name, and he’s cast himself as a man determined to give his fellow inventors their due. In 2000, he founded a company called Intellectual Ventures, which he calls “a company that invests in invention.”

But Myhrvold’s company has a different image among many Silicon Valley insiders.

The influential blog Techdirt regularly refers to Intellectual Ventures as a patent troll. IPWatchdog, an intellectual property site, called IV “patent troll public enemy #1.” These blogs write about how Intellectual Ventures has amassed one of the largest patent portfolios in existence and is going around to technology companies demanding money to license these patents.

Patents are a big deal in the software industry right now. Lawsuits are proliferating. Big technology companies are spending billions of dollars to buy up huge patent portfolios in order to defend themselves. Computer programmers say patents are hindering innovation.

But people at companies that have been approached by Intellectual Ventures don’t want to talk publicly.

“There is a lot of fear about Intellectual Ventures,” says Chris Sacca, a venture capitalist who was an early investor in Twitter, among other companies. “You don’t want to make yourself a target.”

You can read a print version of the entire story by clicking here or download the audio version at This American Life’s website by clicking here.

Video on Internet Fraud

July 23, 2011 | Peter S. Lubin and Patrick Austermuehle

Lubin Austermuehle’s Oak Brook and Chicago Attorney Peter Lubin Named 2011 Illinois Super Lawyers as Class-Action, Business Litigation and Consumer Rights Attorneys

July 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Super Lawyers named Chicago and Oak Brook business trial attorneys Peter Lubin a Super Lawyer in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Oak Brook and Chicago business trial lawyers have over a quarter of a century of experience in litigating complex class action, consumer rights, and business and commercial litigation disputes. We handle emergency business law suits involving injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud.

Peter S. Lubin

online at

Consumer Law and Policy Blog Reports: “Grand Theft Auto, or Preemption Run Amok”

July 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Consumer Law and Policy Blog Reports:

In a case now before the 4th Circuit Court of Appeals, Chase Bank asserts that it may repossess an auto loan borrower’s car without complying with consumer protections in state commercial law. The Maryland District Court found for Chase Bank, concluding that 1) the National Bank Act preempts state repossession notice law and 2) Chase was not bound by the mandatory loan contract term specifically incorporating Maryland repossession law, because as an assignee of the contract, Chase had not voluntarily agreed (!) to the choice of law provision.

The opening brief of the appellants is here and the lower court opinion is here. The logic of the lower court opinion is remarkable. It seems to suggest that even the repossession rules of Article 9 of the Uniform Commercial Code could be preempted by the National Bank Act and OCC regulations. What is truly extraordinary, however, is the idea that a national bank could on the one hand invoke the privilege, created by the UCC and other state law, to repossess collateral without judicial process, while on the other hand disregarding the restrictions and consumer protections that accompany that privilege. If the entirety of state commercial and debt collection law conflicts with the National Bank Act, then there was no state law basis for Chase to seize Ms. Epps’ car, and the purported repossession was nothing more than grand theft.

Video — The Federal Goverment Loses Hundreds of Billions of Dollars Each Year to Fraud — Our Chicago Business Trial and Fraud Lawyers Bring Qui Tam and Whistle Blower Claims to Assist in Recovering Some of Those Monies

July 21, 2011 | Peter S. Lubin and Patrick Austermuehle

Video — Fraudster Barry Minkow Describes How He Conceals Fraud From Auditors — Our Chicago Litigation Attorneys Combat Business Fraud and Breaches of Fiduciary Duty

July 18, 2011 | Peter S. Lubin and Patrick Austermuehle

Barry Minkow, who, while still in high school, founded ZZZZ Best, a carpet cleaning and restoration company that turned out to be a massive Ponzi scheme, talks about one of the many ways he manipulated auditors.

Dirty Car Salesmen Come Clean

July 18, 2011 | Peter S. Lubin and Patrick Austermuehle